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The Russian RTS index plunged 11.6 percent and was on track to post its biggest one-day decline since Dec. 16, 2014, when it fell 12.4 percent.
Monday's sharp declines come after the U.S. sanctioned several Russian oligarchs, officials, businesses and agencies on Friday.
The sanctions also sent aluminum prices surging on Monday. Benchmark aluminum on the London Metal Exchange hit its highest level in more than a month.
Russian stocks crashed on Monday, while aluminum prices spiked, after the United States levied its harshest sanctions to date against Russia.
The Russian RTS index plunged 11.6 percent and was on track to post its biggest one-day decline since Dec. 16, 2014 when it fell 12.4 percent. Meanwhile, the VanEck Vectors Russia exchange-traded fund ( RSX ) dropped more than 9 percent.
Monday's sharp declines come after the U.S. sanctioned several Russian oligarchs, officials, businesses and agencies on Friday. The U.S. also froze assets from these entities that were under U.S. jurisdiction. The sanctions prohibit U.S. citizens or entities from doing business with the sanctioned Russian entities. "Additionally, non-U.S. persons could face sanctions for knowingly facilitating significant transactions for or on behalf of the individuals or entities blocked today," the Treasury Department said Friday.
One of the people slapped with sanctions was oligarch Oleg Deripaska, a billionaire who ran Russian aluminum company Rusal , which was also sanctioned. Deripaska has also been charged in special counsel Robert Mueller's investigation regarding Russia's involvement in the 2016 U.S. presidential election.
"The new US sanctions against Russia are a negative game-changer for three reasons: they directly affect portfolio investments; they are de-linked from clear conditionality; and they will be applied 'extra-territorially,'" said Christopher Granville, a managing director at TS Lombard, in a note to clients. The sanctions "justify a higher risk premium in Russian asset valuations."
The sanctions against Rusal sent aluminum prices surging on Monday for their potential to remove a large portion of global supply. Benchmark aluminum on the London Metal Exchange hit its highest level in more than a month before trading nearly 4 percent higher at $2,122.50 per ton. It has gained around 7 percent since the sanctions were announced on Friday.
The sanctions freeze all of Rusal's assets that are under U.S. jurisdiction. Rusal is one of the largest aluminum producers in the world.
The spike in aluminum prices and U.S. sanctions on Russia come more than a month after President Donald Trump implemented a 10 percent charge on aluminum imports. Key trade allies Canada and Mexico, as well as the European Union, were exempt from the tariffs, but Russia was not.
"This is a further hit to Russian aluminum exports to the U.S.," Julius Baer analyst Carsten Menke told Reuters. "There is uncertainty about how this might affect other countries which are using Russian-produced aluminum."
— CNBC's Gina Francolla and Chris Hayes contributed to this report.
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