Zurich (awp) – After a sluggish start to the session, in the wake of Wall Street closing down sharply the day before, the Swiss stock market recovered on Thursday as midday approached. Made nervous after the new rate hike announced on Wednesday by the US Federal Reserve (Fed) to curb inflation, investors visibly welcomed the shift made by the Swiss National Bank (SNB), which abandoned the negative rates in effect for over seven years old.
Also determined to counter inflation, the issuing institution tightened its monetary policy and indicated that it would continue to intervene “if necessary” on the foreign exchange market. The Swiss central bank raised its key rate by 0.75 percentage points, from -0.25% to +0.5%. The SNB warned that it was not “excluded that further rate hikes are necessary”.
The increase in the SNB’s key rate comes in a global context of monetary tightening in order to counter the surge in inflation. On Wednesday evening, the Fed tightened its monetary policy again and warned that it would have to tighten further, which will be painful for households. The American central bank thus raised its main key rate by three-quarters of a percentage point, which now stands in a range of 3.00 to 3.25%.
The Fed also delivered a more hawkish message (hawk) than expected by the consensus, observes John Plassard, of Mirabaud Banque. Still on the monetary policy front, the Bank of Japan (BoJ) maintained its ultra-accommodating course on Thursday, contrary to other global issuing institutes, propelling the dollar to a new record against the Japanese currency.
The Bank of Norway for the third consecutive time raised its key rate by 0.5 points Thursday, to 2.25%, its highest level since the end of 2011, in order to curb inflation. The Bank of England (BoE) should also raise its rate by at least 75 basis points.
On the occasion of its periodic review of monetary policy, the Swiss issuing institution also revised upwards its inflation projections for the current year and the next two. Inflation should reach 3.0% in 2022, against 2.8% at the June point, 2.4% (1.9%) in 2023 and 1.7% (1.6%) in 2024. The forecast for Growth in 2022, on the other hand, is moderate at 2.0%, compared to 2.5% previously, reflecting the significant slowdown in the global economy.
After starting the session in sharp decline, the SMI continued to fall to reach a low of the year at 10,266.70 points, before quickly turning green after the decision of the SNB. Shortly before 11:00 am, the flagship index of the Swiss market noted at 10,430.43 points, remaining narrowly in the green (+0.01%). The SLI, however, lost 0.24% to 1,585.01 points, while the broader SPI indicator gained 0.09% to 13,392.59 points.
Of the thirty constituent stocks of the SLI, only five, including the heavyweight Nestlé (+1.7%), gained ground, while 24 others lost ground, ABB treading water after announcing a stake acquisition of 10% in Dutch Samotics. At the top of the table Swatch Group (+2.0%) escaped alone in the lead, with 3rd place going to Givaudan (+1.3%). Zurich Insurance (+0.4%) and Lonza (+0.3%) completed the list of winners.
The other two largest capitalizations on the market were on the other hand struggling, pharmas Roche (-0.4%) and Novartis (-0.8%), letting themselves be carried away in the current of losers. Novartis is holding its Investor Day this Thursday. On the verge of disposing of its Sandoz generics and biosimilars unit, the Rhine laboratory has presented its new roadmap for the medium or even long term. By 2027, average annual growth should be 4%. The adjusted operating margin should oscillate around 40% over the medium to long term.
Still on the losing side, the red lantern went to Partners Group (-3.4%), behind Temenos (-3.0%) and Straumnann (-2.3%). The number two Swiss bank Credit Suisse (-0.7%) would consider dividing its investment banking division into three separate units. This operation would allow the sale of profitable activities with a view to avoiding a capital increase, reports the Financial Times (FT). The other big bank UBS (-0.4%) was not leading the way.
Among the major moves in the broader market, Spexis was off 6.1% as the lab resulting from the reverse merger of Polyphor and Enbiotix saw positive results in a phase I clinical trial with balixafortide against the ‘renal failure. One Swiss Bank soared 7.3%. Newron (-9.7%) posted the most marked decline.
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