Fair or Draconian? 

Russian stocks fell sharply Thursday, while the rouble slumped to a two-year low, after the U.S. applied fresh sanctions on the Kremlin following the poisoning attempt of a former Russian spy -- Sergei Skripal -- and his daughter with the chemical agent Novichok earlier this year in the rural English town of Salisbury.

The sanctions, which Russian officials described as "Draconian", will apply to certain sections of the tech industry but could also potentially lead to the grounding on in-bound U.S. flights from various Russia cities under a clause that could be triggered in 90 days and which sent shares in state-backed Aeroflot PJSC  (AERZY) plunging more than 12% to a two-year low in Moscow trading. 

"Making a linking to these events is for us unacceptable and such restrictions like those passed by the American side earlier ... are absolutely illegal and do not correspond to international law," Kremlin spokesman Dmitry Peskov told reporters Thursday.

Sberbank, Russia's biggest lender, was marked 1.8% lower in mid-afternoon trading in Moscow, while domestic rival Bank VTB fell 3.116%. Russia's rouble, as well as its stock and bond prices, extended declines Thursday, with the currency falling to a near two-year low of 66.73. The benchmark MOEX Russia Index fell 1.9% to 1,091.67 points, paring some of its earlier declines by mid-afternoon in Moscow.

"The United States (has) determined under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 that the government of the Russian Federation has used chemical or biological weapons in violation of international law, or has used lethal chemical or biological weapons against its own nationals," State Department spokeswoman Heather Nauert said Wednesday.

Skripal and his daughter, Yulia, were taken ill and found unconscious in the town of Salisbury earlier this year after U.K. security officials said the pair were infected with Novichok. While both ultimately recovered from the attack, a U.K. national, 44-year old Dawn Sturgess, died in June after coming in contact with the same nerve agent only hours earlier. 

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Thursday's moves followed declines yesterday after Russia's Kommersant newspaper printed the draft of Senate bill that proposed new U.S. sanctions on state-owned banks.

The draft appears to outline details of bi-partisan bill, co-sponsored by Senators Lindsey Graham and Robert Menendez, that was introduced to the Senate last last week following President Donald Trump's controversial summit in Helsinki with Russian President Vladimir Putin.

The legislation, which Graham touted as the "sanctions bill from hell", would limit new government bond sales, tighten rules on energy and oil projects and place new restrictions on Russian oligarchs.

"The current sanctions regime has failed to deter Russia from meddling in the upcoming 2018 midterm elections," Graham said at the time, referring to last year's Countering America's Adversaries Through Sanctions Act that Trump ultimately signed into law.

Stocks to Watch as U.S. Decides Which Way to Go on Russia Sanctions

The bill not only represents the most significant effort to date to punish Russia for its alleged meddling in the 2016 Presidential elections, it also comes amid a notable escalation in Special Counsel Robert Muller's investigation into those charges, and calls from the President himself to have what he calls a "witch hunt" shut down.

Russia's lawmakers vowed last month to introduce their own retaliatory sanctions against the U.S. if Congress deepens its own response to last year's bill, with Leonid Slutsky, chairman of the State Duma committee for international relations, noting that "On Capitol Hill, [U.S. lawmakers] can't make peace with the fact that even the leadership doesn't see Russia definitively as an enemy."

"Evidently, these proposals have to do with internal political struggle, which intensified after the Helsinki summit and is aimed in part to limit the actions of President Donald Trump," he added.