Zurich (awp) – The Swiss stock market closed lower on Tuesday. The SMI opened sharply lower, below 12,000 points, and traded in a narrow range of about fifty points until mid-afternoon. It reduced its losses toward the end, even recovering, and closed slightly above this level.
In New York, Wall Street was hovering near equilibrium in the morning, following a new record for the Nasdaq and ahead of American employment statistics, including data on private-sector job creation on Wednesday and official statistics on Friday.
Investors were also paying attention to remarks from Jerome Powell, the chair of the Federal Reserve (Fed), who was participating with Christine Lagarde, the president of the European Central Bank, in the annual ECB forum in Sintra, Portugal.
The Fed chair reiterated that while inflation had made “progress,” the monetary institution was “waiting to have more confidence” in the slowdown in price increases “before starting to ease monetary policy.”
On the macroeconomic front, inflation in the eurozone had certainly started to fall slightly again in June (2.5% over one year after 2.6% in May). However, the decline seemed insufficient to convince the European Central Bank (ECB) to accelerate the reduction of its interest rates in the face of sluggish growth.
“Christine Lagarde warned that the bank does not have enough evidence that it has regained control over the inflation threat, suggesting that it could skip a second rate cut in July,” Ipek Ozkardeskaya recalled for Swissquote before the report was published.
The SMI closed down 0.32% at 12,011.02 points, with a low of 11,920.09 and a high of 12,015.14. The SLI fell 0.32% to 1,945.31 points and the SPI 0.21% to 15,955.51 points. Of the 30 leading stocks, 15 fell, 13 advanced and UBS and the carrier Roche ended stable.
The three-key bank will repay early a €1.5 billion loan issued by Credit Suisse, which had an initial maturity until 2025. The debt security will be redeemed on the optional date of July 17.
The good Roche (-0.6%) weighed, Novartis (-0.3%) resisted somewhat better and Nestlé (+0.7%) supported the index.
Partners Group (+2.0%), SIG Group (+1.3%) and Straumann (+1.2%) finished on the podium for the day.
Kühne+Nagel (+1.0% to 264 Swiss francs) benefited from an upgrade of its recommendation to “equal weight” from “underweight” by Barclays, which also significantly increased the price target to 255 from 210 Swiss francs. The analyst believes that the group should benefit from disruptions in the Red Sea due to its strong pricing power in contract negotiations with shipping companies.
Geneva-based luxury giant Richemont (+0.4%) has announced the appointment of a new CEO and a new director, taking over the leadership of its luxury jewelry brands Cartier and Van Cleef & Arpels respectively from September 1. This announcement follows the appointment last May of a new boss of the group, Nicolas Bos.
Its Biel-based competitor Swatch Group (+0.3%) also gained ground.
Reinsurer Swiss Re (-4.0%) finished last, while a major hurricane is lurking in the Caribbean Sea. Logitech (-2.5%) and Holcim (-1.8%) complete the trio of biggest losers.
Other insurers Zurich (-1.2%) and Swiss Life (-1.3%) did not escape the trend.
In the broader market, hospital communications solutions specialist Ascom (+1.6%) has entered into a partnership south of the Alps for the deployment of its Digistat platform.
DKSH (+0.3%) has signed an agreement with American hygiene products giant Kimberly-Clark to distribute its Huggies diaper and wipes brand in Cambodia.
Liechtensteinische Landesbank (-0.3%) acquired the Austrian business of Zurich Cantonal Bank (ZKB, unlisted) for an undisclosed amount.
Real estate developer and hotel operator Orascom DH (+6.3%) has announced the sale of land in El Gouna, eastern Egypt, for 28.8 million Swiss francs, almost 16 times its current book value.
Geneva-based banking software publisher Temenos (+0.2%) has signed an agreement with Indian company Tech Mahindra. The digital solutions specialist will provide it with a banking platform designed for electronic money institutions (EMIs) in the United Kingdom and Europe.
vj/rp
Swiss Stock Market Closes Lower, Following Fed’s Cautious Stance on Rate Cuts
Zurich (awp) – The Swiss stock market closed on a negative note on Tuesday, with the SMI ending down 0.32% at 12,011.02 points. The market opened sharply lower, below 12,000 points, and traded in a narrow range of around fifty points until mid-afternoon, reducing losses towards the end and even recovering to close slightly above this level.
Key Factors Influencing the Market
The market’s decline can be attributed to a combination of factors, including:
- Cautious Fed stance on rate cuts: Jerome Powell, the head of the American Federal Reserve (Fed), reiterated that while inflation had made “progress”, the monetary institution was “waiting to have more confidence” in the slowdown in price increases “before starting to ease monetary policy”. This cautious stance dampened investor sentiment and led to some profit-taking in the market.
- Sluggish growth concerns: The European Central Bank (ECB) is also facing challenges in controlling inflation, as the decline in eurozone inflation seems insufficient to convince it to accelerate interest rate cuts. Christine Lagarde, the ECB president, warned that the bank doesn’t have enough evidence that it has regained control over the inflation threat, suggesting that it could skip a second rate cut in July. This uncertainty surrounding monetary policy further weighed on market sentiment.
- Macroeconomic data: While inflation in the eurozone has started to fall again slightly in June (2.5% over one year after 2.6% in May), the decline seems insufficient to offset sluggish growth concerns.
Performance of Key Indices and Stocks
The SMI, the main Swiss stock index, ended down 0.32% at 12,011.02 points, with a low of 11,920.09 and a high of 12,015.14. The SLI dropped 0.32% to 1,945.31 points and the SPI 0.21% to 15,955.51 points.
Of the 30 leading stocks, 15 fell, 13 advanced, and UBS and Roche ended stable. Nestlé (+0.7%) supported the index, while the good Roche (-0.6%) weighed, and Novartis (-0.3%) resisted a little better.
Key Movers and Notable News
Here are some of the key movers and notable news events that impacted the Swiss stock market on Tuesday:
Financials
- The three-key bank will repay early a €1.5 billion loan issued by Credit Suisse, which had an initial maturity until 2025. The debt security will be honored on the optional date of July 17.
- Liechtensteinische Landesbank (-0.3%) acquired the Austrian business of Zurich Cantonal Bank (ZKB, unlisted) for an undisclosed amount.
- Geneva-based banking software publisher Temenos (+0.2%) has signed an agreement with Indian company Tech Mahindra. The digital solutions specialist will provide it with a banking platform designed for electronic money institutions (EMIs) in the United Kingdom and Europe.
Industrials
- Kühne+Nagel (+1.0% to 264 Swiss francs) benefited from an upgrade of its recommendation to “equal weight” from “underweight” by Barclays, which also significantly increased the price target to 255 from 210 Swiss francs. The analyst believes that the group should benefit from the disruptions in the Red Sea due to its strong pricing power in contract negotiations with shipping companies.
- Reinsurer Swiss Re (-4.0%) finished last, while a major hurricane is lurking in the Caribbean Sea.
- Logitech (-2.5%) and Holcim (-1.8%) complete the trio of biggest losers.
Consumer Goods
- Geneva-based luxury giant Richemont (+0.4%) has announced the appointment of a new CEO and a new director, taking over the leadership of its luxury jewelry brands Cartier and Van Cleef & Arpels respectively from September 1. This announcement follows the appointment last May of a new boss of the group, Nicolas Bos.
- Its Biel-based competitor Swatch Group (+0.3%) also gained ground.
- DKSH (+0.3%) has signed an agreement with American hygiene products giant Kimberly-Clark to distribute its Huggies diaper and wipes brand in Cambodia.
Healthcare
- Other insurers Zurich (-1.2%) and Swiss Life (-1.3%) did not escape the trend.
- In the broader market, hospital communications solutions specialist Ascom (+1.6%) has entered into a partnership south of the Alps for the deployment of its Digistat platform.
Real Estate
- Real estate developer and hotel operator Orascom DH (+6.3%) has announced the sale of land in El Gouna, eastern Egypt, for 28.8 million Swiss francs, almost 16 times its current book value.
Looking Ahead
The Swiss stock market is expected to remain volatile in the coming days, with investors closely watching developments related to inflation, interest rates, and economic growth. The market will also be following the upcoming American employment statistics, including job creations in the private sector on Wednesday and official statistics on Friday.