Uncertainty on Wall Street, SMI sharply in the red

After the bitter losses of the previous day, Wall Street closed again in negative territory on Thursday. The uncertainty also had a firm grip on the European stock exchanges.

Retailers find it difficult to keep track of things in the current situation.

Seth Little/AP

(sda)/(dpa)/nel./koe.

After the mid-week sell-off on the New York stock market, the indices struggled to stabilize on Thursday. Ultimately, the pressure on prices continued. Concerns that the strong price increases and rising interest rates will increasingly burden companies and consumers seem to be gaining ground in the market. Economic data from Thursday fit into this picture. The business climate in the Philadelphia region, for example, clouded over surprisingly significantly in May. In addition, home sales in April fell more than expected.

In early trading, the Dow Jones Industrial fell to its lowest level since March 2021. At the end of the day, the leading index lost 0.75 percent to 31,253.13 points. The market-wide S&P 500 fell 0.58 percent to 3900.79 points. For the technology-heavy Nasdaq 100, after losing a good five percent the previous day, things looked a little better at times, but at the end of trading it was also down 0.44 percent to 11,875.63 points. The lowest level since November 2020, reached the previous week, is not too far away.

The strong slide in prices on Wednesday in the USA had previously also put pressure on the stock exchanges in Europe during the course of Thursday. The Swiss stock market ended trading in deep red on Thursday. Fears of inflation and recession have sent stock markets all over the world plummeting, including the leading Swiss index SMI. At least the SMI was able to break away from the daily lows towards the end of trading. The significant sales of the heavyweight Nestlé were noticeable after the American retailers Walmart and Target had shocked investors with inflation warnings the day before.

The descent continues

Swiss Market Index (SMI)

In the end, the SMI lost 2.33 percent and closed the day at 11,309.49 points. During trading, the index even dropped to around 11,230 points, its lowest level since early March. At that time, the outbreak of war in Ukraine had the stock market firmly in its grip. On the reporting day, however, it was primarily interest rate concerns that also caused the SLI, which includes the 30 most important stocks, to drop by 2.17 percent to 1759.01 digits. The broad SPI meanwhile lost 2.37 percent to 14,507.66 points. In the end, only three titles were up in the SLI and the rest fell.

Nestlé and Julius Baer shares fell sharply

Nestlé (-5.0%) had a particularly heavy impact. A negative comment from Bank Bernstein on the prospects of the food company and the weak data from Walmart and Target had heralded the collapse in prices. Market participants feared that persistently high inflation and bottlenecks in the supply chains would not leave Nestlé unscathed either.

However, Julius Baer (-5.9%) carried the red lantern among the blue chips until the end. The private bank felt the nasty market situation in the first four months of the year and had to accept outflows of customer funds. In the next few years, CEO Philipp Rickenbacher wants to significantly reduce costs and thus secure margins.

Other financial institutions, above all insurance companies, were caught in the downward spiral on the stock market: Zurich Insurance fell by 4.1 percent, Swiss Life and Swiss Re each fell by 3.5 percent. The big banks Credit Suisse and UBS closed trading at -1.7 and -1.4 percent respectively.

With the vacuum specialist VAT (share: -3.1 percent), the logistics company Kühne+Nagel (-4.1 percent) and the recruitment agency Adecco (-3.4 percent), growth stocks were once again among the biggest losers. A few cyclicals had already been on the stock marketers’ sales slips the day before.

Losses at Roche and Novartis within limits

In contrast, the pharmaceutical heavyweights Novartis (-1.5 percent) and Roche (-1.4 percent) kept their sales within limits. And stocks such as those of the banking software manufacturer Temenos (+2.4 percent) or the hearing aid specialist Sonova (+1.3 percent) ended trading with a clear plus. At Temenos, traders suspected further orders and possibly an impending rating upgrade as a price boost.

On the broader market, Sulzer lost 5.4 percent. The industrial group is closing the two plants in Poland in view of the sanctions imposed by the Polish government. The reason for the sanctions is Sulzer’s relationship with the Russian investor Viktor Vekselberg.

The shares of the rice retailer Dufry (-5.8 percent) also went down significantly from trading. Business in the duty-free shops has continued to recover from the consequences of the corona crisis. Looking to the future, however, the Dufry management expressed caution in view of the lockdowns in China and the war in Ukraine.

After the presentation of definitive annual figures for 2021, Clariant went from trading down 1.3 percent, while SoftwareOne (+5.2 percent) was able to convince investors with quarterly figures. And the biotech company Evolva (+11 percent) bucked the general trend even more clearly with a positive business update.

Losses also on Asian stock exchanges

The heavy losses on the American stock exchanges also depressed the mood and prices in Asia’s largest stock market, Japan, on Thursday. The Nikkei 225 index, which collects Japan’s 225 largest stocks, fell 2.8 percent at the start of trading and was trading at 26,402.84 points in the afternoon, 1.89 percent below the previous day’s closing price. The broader Topix of the Tokyo Stock Exchange also lost more than 2 percent.

Sharp price declines in the US and fears of recession

In the US, investors fear that the US Federal Reserve could push the domestic economy into recession with its rigorous tightening of monetary policy. In addition, the disappointing business figures and outlook of several large American retail companies over the past few days have made it clear that inflation is already noticeably dampening private consumption, one of the most important pillars of the American economy.

On Wednesday, American companies saw their sharpest fall since the first months of the corona pandemic after disappointing quarterly results from major retailers raised concerns about the economic consequences of high inflation and disruption to supply chains. Above all, the prospect of rising interest rates and consumers who will have to tighten their belts noticeably in the face of inflation in the future caused selling pressure.

In the American after-hours business, Cisco also shocked investors on Wednesday by warning that the corona lockdowns in China and other supply disruptions would roughly halve the American network equipment supplier’s sales growth in the current quarter. Cisco shares fell about 13 percent after the market closed. Technology stocks in particular suffered from this on the following day.

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