The meeting between Lavrov and Rubio turned the market around: the Moscow Exchange index surged above 2,140 points
The Russian stock market is showing an impressive recovery. On July 22, the Moscow Exchange index broke through the psychologically important level of 2,100 points, and in the afternoon accelerated its growth, reaching 2,140.35 points. This corresponds to a gain of 2.96% for the session.
The key catalyst for the turnaround was the announcement of an agreement on negotiations between Russian Foreign Minister Sergey Lavrov and U.S. Secretary of State Marco Rubio. The meeting is scheduled for the first half of Thursday, July 23, and will take place in Manila on the sidelines of the Russia-ASEAN ministerial meeting.
The market reaction was lightning-fast. Before this news emerged, the Moscow Exchange index was declining by 0.7%, but by 12:17 PM Moscow time, it had moved into confident positive territory, gaining 1.03% and settling at 2,100.20 points. In the afternoon, growth accelerated, and at one point, quotes rose to 2,144.66 points.
19-week downtrend under threat
The market has been rising for the third consecutive session after a prolonged crash that lasted 19 weeks. If the current momentum holds until the end of the week, the index will break the record losing streak. However, I believe it is still premature to talk about a full trend reversal. The current bounce is primarily profit-taking on short positions and an emotional reaction to geopolitical positivity, rather than a change in fundamental drivers.
Second and third-tier stocks showed explosive dynamics. Shares of Sollers surged by more than 70%. Among the leaders in growth were also shares of Samolet, SFI, Whoosh, Astra Group, KamAZ, Delimobil, and Svetofor. As analysts note, many investors opened short positions on these stocks to hedge their portfolios, and during the bounce, these assets showed outperformance due to short covering.
A striking example is the shares of EuroTrans, which gained about 100% over two days. However, such volatility is associated with low liquidity and severe oversold conditions of the stocks. After short positions are closed, quotes may well return to their previous lows.
Looking ahead: The Central Bank rate is the main anchor
The overall index result was barely affected by the jumps in low-liquidity stocks. The foundation of the Moscow Exchange remains Sberbank, LUKOIL, Gazprom, and Norilsk Nickel, whose bounce was noticeably more modest.
Much will depend on the upcoming Central Bank meeting and the regulator's comments on the expected rate level by the end of the year. With a consistent policy from the regulator, the market could recover 15–20% by the end of the year, although volatility will remain high. For now, we are witnessing a classic "rally on hopes," and investors should remain cautious.
My conclusion: The current growth is a corrective bounce on geopolitical positivity, not the start of a sustainable upward trend. Fundamental factors, including the Central Bank's tight monetary policy and geopolitical risks, have not disappeared. Investors should not chase emotions—the market bottom may not have been reached yet.