11 November 2016 – Swiss and global market roundup.
Brought to you by Investec Switzerland.
A rally in pharmaceutical and banking shares helped boost the Swiss Market Index this week as investors weighed the prospect of a Trump’ presidency in the United States.
Stocks in the healthcare sector jumped after Donald Trump’s victory as drug pricing reforms, proposed by Hillary Clinton, are now unlikely to materialize. Pharma heavyweights Roche and Novartis helped drive the SMI to outperform global stocks by a strong margin. Financials and industrials were also amongst the weeks winning sectors, as investors repositioned and unwind trades associated with the widely anticipated Clinton victory. The US Dow Jones industrial stock market index hit a new all-time high on Thursday on expectations of massive fiscal stimulus hinted at throughout Trump’s controversial campaign.
Despite the risk on sentiment in equity markets, President elect Donald Trump’s future ascendancy to the White House did push the Swiss franc, typically seen as a safe haven currency, to its strongest level since the wake of June’s Brexit vote, suggesting wider concerns around the uncertainty of Trump’s policies and administration. The Swiss National Bank has warned that the franc remains too strong, hurting export growth and is prepared to intervene to stem the franc’s rally.
In other news, the overall unemployment rate in Switzerland remained unchanged at 3.3% in October. The State Secretariat for Economic Affairs said that the number was largely in line with expectations. The youth unemployment rate, which applies to the 15 to 24 age group, eased slightly from 3.6% to 3.5%.
On the corporate side, Zurich Insurance posted strong third-quarter earnings on Thursday as cost cuts and investment returns helped eclipse disappointing performance at its core business. The Swiss insurer’s net profit rose well ahead of market expectations to $912 million. However, the company’s general insurance division missed both group and market expectations. Chief Financial Officer George Quinn said more work needed to be done to achieve improvements targeted under new management.