Reuters
Russian markets fell yesterday as the European Union considered new sanctions against Moscow over its involvement in Ukraine, but broader emerging-market equities hit fresh 17-month highs on a rally in Chinese stocks.
The 28-nation EU reached an outline agreement on Friday on its first economic sanctions on Russia. Moscow said the moves would hamper cooperation between the two and undermine the fight against terrorism.
“The sanctions are still the overriding theme of the market – the EU has been much more proactive than anyone expected a few months back,” said Manik Narain, an emerging FX strategist at UBS. “In this environment, investors are pretty wary about Russian assets.”
Russian markets came under more pressure when an international arbitration panel in the Netherlands ordered Moscow to pay $51.57bn in damages to shareholders in the defunct oil giant Yukos, saying officials under President Vladimir Putin had manipulated the legal system to bankrupt the company.
Moscow’s dollar-denominated RTS index was down 2.7%. Its rouble-traded MICEX was down nearly 2%. Shares in Russia’s top oil producer, Rosneft also fell 2%. Most Yukos assets were handed to Rosneft in auctions.
The rouble fell 0.7% against the dollar to its lowest in nearly three months. Russian five-year credit default swaps rose 18 basis points from Friday’s close to 2 1/2-month highs of 228 basis points, according to Markit.
More broadly, the MSCI emerging stocks index climbed to 17-month highs as investors bet the US Federal Reserve would maintain its loose monetary policy.
Chinese stocks rose more than 2% on growing bets that the world’s second-largest economy has turned a corner.
In South Africa, the rand remained flat against the dollar before a press briefing later yesterday from the country’s striking NUMSA union, after the union said there had been some development in strike talks.
The Israeli shekel fell 0.3% to a 10-day low before a central bank rate decision later yesterday. All 10 economists polled by Reuters expect the bank to leave the benchmark rate at 0.75% for a fifth straight month.
An Israeli halt of fire in the Gaza Strip is “unlimited,” a military source said yesterday, as fighting with Palestinian militants abated.
Turkish markets were shut for holidays.