The Russian stock market, which is largely isolated from other countries, experienced its sharpest price slump on Tuesday since the country invaded Ukraine in February.

The MOEX Russia lost up to 11 percent, closing 8.8 percent lower.

On Wednesday morning, price losses continued with a minus of more than 3 percent.

The sell-off deepened as the so-called “People's Republics” of Donetsk and Luhansk, as well as the Kherson and Zaporizhia regions, announced they will hold referendums on joining Russia between September 23-27.

This is reported by the Bloomberg news agency.

The moves add to the country's increasing international isolation after Turkish President Erdogan urged Russian President Putin to return occupied territory to Ukraine as part of a peace settlement.

With valuations already under pressure from international sanctions, the Russian market will be further weighed down by Europe's intensified efforts to cut energy imports, as well as recent military setbacks in Ukraine.

Investor sentiment continued to deteriorate on Tuesday after the newspaper Kommersant reported that the Russian government plans to increase taxes on mining and exports of commodities.

The index was dragged down by shares in energy giants Lukoil, Gazprom and Novatek, as well as Sberbank and internet company Yandex.

Russian stock exchange for world stock markets ultimately meaningless

According to Iskander Lutsko, chief strategist at ITI Capital, about 30 percent of the slump is due to possible tax increases for exporters and 70 percent to concerns about the referenda and speculation about the partial mobilization in Russia announced in the morning.

"We cannot expect drastic moves to continue, but most likely the market will remain under pressure as there is an apparent geopolitical shift bringing negative sentiment to the markets," he said.

The events on the Russian stock exchange are ultimately meaningless for world stock markets.

Even before the attack on Ukraine, price movements in Moscow had no significant impact on other exchanges.

Since then, however, Russian shares can no longer be traded on important stock exchanges anyway.

Even though Russia has meanwhile reopened its stock exchange to investors from "friendly" states, their share of trading is very small, so that contagion effects are difficult to imagine from this side as well - especially as they are limited to the derivatives market.

The markets in the west, on the other hand, are looking to the American central bank, the Fed, which will raise interest rates again in the evening.

This means that they do not need a price slide in Moscow to give in themselves.

The market-wide FAZ index, which includes one hundred values, loses 0.7 percent to 2012 points, the Dax is a little less strong to 12,591.46 points.

Thanks to the fact that, contrary to international practice, dividends are included in these, the Dax has so far only given up its price gains from the summer rally.

The FAZ index, on the other hand, is at its lowest level since May 2020.

The Fed is expected to raise interest rates again in the middle of the week in the fight against high inflation.

Most experts assume that the central bankers will raise the key interest rate by 0.75 percentage points for the third time in a row.

However, some market participants expect more.

Traders put the proportion of those who expect a full percentage point at one fifth.

the day before, the Swedish Riksbank had already increased its key interest rate by a full percentage point.

Investors in Asia were also cautious.

The Nikkei index fell 1.4 percent to 27,313 points.

The Bank of Japan (BoJ), which is the only major central bank not to hike interest rates this year, expected stock market traders not to deviate from its loose monetary policy course, even if the country had inflation above 2 percent for the fifth month in a row - Destination of the bank identifies.