Micex Declines on Renewed Ukraine Clashes: Russia Reality Check

As markets react in real time to Russia’s incursion into Crimea and the annexation of the Black Sea peninsula, the Micex Index extended a weekly retreat as fighting between Ukrainian troops and insurgents overshadowed a cease-fire proposal.

The equities gauge lost 0.6 percent to 1,486.30 at the close in Moscow, set for a 1 percent drop this week and paring its advance since Feb. 28, a day before President Vladimir Putin’s incursion, to 2.9 percent.

The clashes yesterday left four Ukrainian soldiers dead and 20 wounded, with about 200 militants killed in the Donetsk region, Defense Ministry spokesman Vladyslav Seleznyov said. The renewed fighting may sidetrack President Petro Poroshenko’s proposal for a unilateral cease-fire to stem the daily battles that have ravaged the country’s easternmost regions since March.

The chart shows the performance of stocks, bonds and the ruble, along with indicators of Russian investment risk. Yields on government notes due February 2027 rose one basis point to 8.62 percent, taking the increase since Feb. 28 to 26 basis points. The ruble weakened 0.2 percent to 34.4690 per dollar, bringing its advance in the period to 4.1 percent.

The top panel displays the value of the Micex Index of 50 Russian equities, government debt in the Bloomberg Russia Local Sovereign Bond Index, and the ruble relative to the dollar. Credit default swap rates on Russian bonds due in five years appear in the bottom panel. The yield gap between Russian debt and U.S. Treasuries and the one-month implied volatility of the ruble are also tracked.

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