Here's a Sign Oil Killed Russian Stock Rally Trump Started

Updated on
  • Micex Index closed below 200-day moving average on Tuesday
  • Russian stocks have lost 13% since January record high

Russia’s stocks rally may be over.

The Micex Index closed below its 200-day moving average for the first time in more than a year on Tuesday, a bearish sign to some investors. The measure slumped 13 percent from a record high in January amid a fading oil rally and dwindling bets of a detente with the U.S. Under President Donald Trump.

For those following technical analysis, a warning came in January when the Micex formed the so-called head-and-shoulders pattern that can signal a trend is about to reverse. The next month the index sank the most worldwide. Investors pulled the most cash from Russia’s biggest exchange-traded fund in more than three years last week.

“We’re now seeing the disillusionment of those investors who believed the new U.S. president will be able to quickly reverse the sanctions and improve the relations with Russia,” Pavel Laberko, a London-based money manager at Union Bancaire Privee, said.

That contrasts with the bullish sentiment at the end of last year, when money managers’ top calls in emerging markets for 2017 focused on Russia.

The Micex closed down 2.5 percent on Thursday, its biggest drop since mid-January 2016, as crude oil sank for a third day in London. The benchmark gauge added 0.3 percent to 1,979.49 by 11 a.m. in Moscow on Friday. Outflows from VanEck Vectors Russia ETF continued, with $14.5 million pulled on March 9, according to data compiled by Bloomberg.

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— With assistance by Blaise Robinson, and Srinivasan Sivabalan

(Updates with today’s market move, ETF outflows in last paragraph.)
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