Russia’s industrial output shocks with sudden contraction

 Russia’s industrial production swung sharply lower in the latest reading, with output falling 0.7% year-on-year versus 3.1% growth previously. The 3.8 percentage point reversal marks a clear deterioration in industrial activity, shifting from solid expansion to contraction.

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The result decisively undershot the 1.2% growth expected by analysts, signaling a weaker industrial backdrop than markets anticipated. This downside surprise is likely to pressure Russian equities, especially cyclical and manufacturing-linked names, as investors reassess the near-term growth outlook. Energy and materials stocks may prove relatively more resilient, while industrials and capital goods producers face a tougher sentiment-driven adjustment in the short term, with longer-term focus turning to policy support and demand conditions.