RSS Swiss Market Ends Modestly Higher After SNB Lowers Rate By 50 Bps

Currently reading:
 RSS Swiss Market Ends Modestly Higher After SNB Lowers Rate By 50 Bps

Status
Not open for further replies.

Crax Bot

Staff member
Administrator
Amateur
LV
0
Joined
Nov 5, 2021
Threads
6,205
Likes
1,915
Credits
32,754©
Cash
0$
The Swiss market showed some initial weakness during Thursday's session. Despite a significant rebound, it struggled to maintain momentum, yet closed on a positive note, buoyed by strong buying in select key stocks.

The Swiss National Bank unexpectedly reduced the interest rate by 50 basis points, larger than anticipated. Under the leadership of new chairman Martin Schlegel, the policy rate was decreased from 1% to 0.5%, effective December 13.

The primary index, the SMI, which surged to 11,783.78 later in the morning after hitting an early low of 11,652.49, finished with a gain of 33.98 points, or 0.29%, at 11,715.95.

Lonza Group saw a nearly 5% rally following the announcement of its new strategic direction and organizational restructuring at the investor update. The pharmaceutical company plans to enhance its emphasis on its primary contract development and manufacturing operations, reorganizing into three new platforms, and will exit the capsules and health ingredients sector.

Richemont increased by approximately 1.5%, while UBS Group and Holcim each closed up by 1.13% and 1.08%, respectively. Modest gains were also seen in Lindt & Sprüngli, Alcon, and Swatch Group.

Conversely, Adecco dropped 3.4%, Kuehne + Nagel fell by 2.8%, and VAT Group ended with a 1.42% loss. Partners Group closed with a nearly 1% decline, with Swiss Life Insurance, Schindler Ps, Sika, Sandoz Group, and Julius Baer losing between 0.5% and 0.9%.

With inflationary pressures easing, the Swiss National Bank aimed to temper the Swiss franc's strength by implementing a more aggressive-than-expected 50 basis point rate cut. This marks the fourth rate reduction by the bank this year. The bank reported a continued decrease in underlying inflationary pressures and stated it would adjust its policy as needed to ensure medium-term price stability.

Additionally, the bank expressed its readiness to intervene in the foreign exchange market if necessary, though it made no specific comments regarding the franc's valuation.

The SNB downgraded its inflation forecasts for 2024 and 2025, predicting 1.1% for 2024, down from the previous estimate of 1.2%, and reduced the 2025 projection to 0.3% from 0.6%. Conversely, it slightly raised the 2026 outlook to 0.8% from 0.7%.

SNB anticipated the economy to expand by about 1% this year, with slight growth expected the following year, hindered by moderate global economic activity. Current expectations are for growth between 1% and 1.5% next year, revised down from the previous 1.5% projection.

In its policy statement, the SNB signaled this would likely be the last rate cut of the cycle by omitting any reference to further reductions. However, according to economist Adrian Prettejohn from Capital Economics, another rate cut is expected next year as policymakers revise their inflation forecasts downwards.

The material has been provided by InstaForex Company - www.instaforex.com
 
Status
Not open for further replies.
Tips
Top Bottom