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Media stories are countless – President Donald Trump has acted more friendly toward Russia and Russian president Vladimir Putin. We must ask, why are Russian equities down 4% in 2017, 10% off their recent highs? It’s clear, the stress the White House is experiencing over its relationship with Russia is weighing on Russian equities. There were very high hopes the Trump administration could be more willing to roll back sanctions placed on Russia in response to its actions against Ukraine (Circa 2014-15).
Of course, oil’s 2017 headwinds have played a key role here, much of Russia’s economic activity is centered around crude. Energy is by far the largest sector weight in the RSX. It’s no secret, Russia is one one of the world’s largest non-OPEC producers.
Once up 86% from the January 2016 lows, Russian equities have lost 10% from their recent highs. Down 4% on the year but stull up 14% since the election of Donald Trump – in line with the S&P 500. This descending wedge above speaks to a key technical level Russian equities are dancing on – we’re about to see a significant move…