Russian Equity Market Spins Out of Control

December 16, 2014

Yesterday world financial markets closed with a slump. The Russian equity market posted the biggest drop. As such, the MICEX index fell 2.38 percent down to 1,424.99 points while the RTS index plummeted to 718.32 points losing 10.12 percent altogether. That was the way the equity market reacted to the swiftly declining ruble rate on Monday. In its turn, the ruble went down due to the Russian Central Bank’s forecast on Monday that Russia’s economy would contract by 4.8 percent in 2015.

Last night, Russia’s Central Bank decided to raise the key interest rate from 10.5% to 17% at once with the purpose of calming the panic on the currency market. As a result, the rate of the dollar to the ruble went down by 6 rubles but later the dollar started to go up again. 

The NYMEX price of WTI oil futures for January dropped by $1.90 reaching $55.91 a barrel. On London’s ICE, Brent oil futures for January went down by $1.10 and finished trading at $60.75 a barrel.

Both European and US indices are on the decline. Yesterday US Manufacturing Index data were released, according to which the index went into the red by 3.58 points instead of growing from 10.16 points in November to 12.10 points in December, as predicted. Besides, investors are waiting for the results of the Federal Reserve meeting on Wednesday. Many analysts agree that the Federal Reserve will forego the long-term period when discussing plans for the current key interest rates which are close to zero. 

In the USA, the Dow Jones Industrial Average fell 0.58 percent down to 17,180.84 points, the Standard & Poor's 500 dropped 0.63 percent down to 1,989.63 points, and the NASDAQ Composite slumped 1.04 percent finishing the trading session at 4,605.16 points.

European indices posted the following results – Britain’s FTSE 100 fell 1.87 percent down to 6,182.72 points, France’s CAC 40 shed 2.52 percent down to 4,005.38 points, and Germany’s DAX 30 dropped 2.72 percent closing at 9,334.01 points.

On the global Forex market, EUR/USD is getting nearer 1.2510. Today the pair may reach 1.2565 and roll down from this level.

Anna Gorenkova, NordFX Analyst

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