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. Last Updated: 07/27/2016

Markets Fall With Dollar, Oil

The country's stock markets dipped into negative territory Tuesday, reflecting a fall in oil prices and climbing investor concern over the decline in the dollar and the fate of U.S. financial markets.

The ruble-denominated MICEX Index fell as much as 5.2 percent before pairing losses to close the day down 3.1 percent. The dollar-denominated RTS Index dropped 2.9 percent.

The dollar continued its fall Tuesday as investors began to worry that a planned $700 billion bailout for the U.S. financial sector would not be enough to set the ailing market straight.

Despite overall losses on the Russian markets, large gains were posted by several of the country's biggest precious-metals producers following last week's surge in the global price of gold. The MICEX Metal and Mining Index ended the day down 0.8 percent, beating the overall market.

Polyus Gold, the country's largest producer of the metal, gained as much as 29 percent just before noon, although it fell back in the second half of the day, finishing with a respectable 8 percent increase on the MICEX. Polymetal, one of Russia's biggest silver producers, also had a strong day, gaining 12 percent.

The price of gold increased by $44, or 5 percent, to $909 per ounce in New York on Monday, after gains of 13 percent last week, Interfax reported.

Eric De Poy, an independent financial analyst, said the global gold rush was indicative of investor anxiety over the value of the dollar and the state of the U.S. economy.

"It is a time of uncertainly, and in times of uncertainly, when there are big questions about the dollar and other currencies there is always going to be this flight to precious metals, gold, silver and even copper."

Other top miners were not so fortunate, however. Norilsk Nickel shed 5.4 percent, and Magnitogorsk Iron & Steel Works was down 7.5 percent. Severstal lost 5.6 percent.

Falling oil prices, driven by concern over a decline in U.S. energy demand, took a toll on several of the country's biggest energy stocks, with the MICEX Oil and Gas Index losing 3.6 percent.

Oil dropped 10 percent in New York trading as of the markets' close in Moscow, Bloomberg reported, ending several days of gains.

Surgutneftegaz led the slide, closing the day down 7.6 percent, while regional producer Tatneft lost 6.6 percent. Rosneft, the country's biggest oil producer, finished the day up 3.7 percent.

"The irony of it," said De Poy, "is that the Russian oil stocks won't always go up when the price of oil is going up. But when the price of oil goes down, the stocks go down with it."

The country's banking stocks had a relatively quieter day, with Sberbank, the country's largest lender, posting a 2.5 percent loss and VTB ending the day almost even, down 0.2 percent.

Yaroslav Lissovolik, chief economist at Deutsche Bank, attributed Tuesday's losses in Russian bank stocks to "concern in the market over the state of affairs in the U.S. equity markets and the potential financial stability package."