Ben Aris in Moscow -
Russian stocks hit a five-month high on June 24 after President Vladimir Putin asked Russia's upper house of parliament to repeal a law that granted him the right to use military force in Ukraine, as investors speculate the standoff with the West over Ukraine's fate might be nearing an end. By 15:00 Moscow time, the dollar-denominated RTS index was up 2.79% at 1407.34, surging past the 1400 mark for the first time since January; the ruble also made back some of the ground it has lost recently, up 0.7% against the dollar from the previous close.
Russian stocks have been rallying since the selloff in March as the situation in Ukraine deteriorated and Russia annexed Crimea. The RTS was the world’s best-performing equity index in May, according to Bloomberg.
Ukraine’s stocks have also been rising recently for the same reasons. “Ukrainian equities kicked off the week in robust demand on Monday, June 23. The WIG Ukraine Index of Warsaw-traded stocks rose 0.6%, extending its win streak to four sessions at a 2.5% gain," analysts from Concorde Capital said in a note. The best performers were grain trader and sunflower oil producer Kernel, which has seen the price of its stock rise 3.9% in the last two trading sessions.
Putin cited the decision of Ukrainian President Petro Poroshenko to call a unilateral ceasefire at the end of last week, which has seen hostilities fall off dramatically. “Because of the beginning of the three-party talks to settle down the situation in the eastern parts of Ukraine, the head of state has addressed to the Federation Council to repeal the resolution on the use of Russian armed forces on the territory of Ukraine,” ITAR-TASS quoted presidential press secretary Dmitry Peskov as saying.
Deputy Head of the Federation Council’s International Committee Andrey Klimov confirmed the upper house will back Putin’s proposal and repeal the resolution on Wednesday, June 25.
Rebel leaders in the eastern cities of Luhansk and Donetsk said on June 23 that they would respect the ceasefire until June 27, when Ukraine is due to sign off on the EU's free trade and association agreement.
Poroshenko welcomed the ceasefire, saying that it was the first "practical step" towards bring calm back to the Donbass region of eastern Ukraine, in a statement released on the presidential website.
Still, the final resolution of the conflict will be difficult. The eastern provinces of Ukraine remain awash in weapons and militias that are under no one's control. And there is much resentment amongst the local population following the death of over 250 civilians. However, analysts have been speculating that Putin might be cutting his losses, as the chaos has forced Ukrainians to choose sides and for the most part they have chosen to be Ukrainian, not Russian.
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