30 October 2015 – Weekly Swiss and global market roundup.
Brought to you by Investec Switzerland.
Swiss financial market news
Swiss stocks beat global stocks
The SMI outperformed global stocks again this week driven by earnings releases and positive market sentiment for equities after central banks from Europe and Japan indicated further potential stimulus to support economic growth. The SMI gained 1.91% on a five-day basis against the MSCI World, which remained unchanged. The SMI was held back from making even bigger gains as pharma heavyweight Novartis reported third-quarter profit that missed analysts’ estimates, pushed down by its Alcon eye-care unit.
US Fed moves global markets
Stocks surged after the US Federal Reserve kept interest rates on hold on Wednesday and toned down its concerns about global financial markets. However, on Thursday the Federal Reserve, betting that further job gains will lead to higher inflation over time, pushed markets down when it indicated that a December interest-rate increase is not off the table. In the US, a further boost came from tech company earnings releases that surprised on the positive side. Apple turned in another powerhouse quarter, meeting analyst estimates for both profit and revenue and confidently projecting that it will have a strong holiday quarter. This left investors cautiously optimistic the firm can keep growing. A report on Thursday showed that America’s economy pulled back in the third quarter as companies cleared out inventory. US GDP rose at a 1.5% annualized rate down from 3.9% growth in the previous three months.
A good month for Chinese stocks
China’s Premier highlighted the country’s minimum growth estimate of at least 6.53% in the next five years, meeting the government’s goal of establishing a “moderately prosperous society”. Chinese stocks made their first monthly gain since May as government attempts to stabilise equities bore fruit. China’s benchmark index has rebounded 16% from this year’s low at the end of August as the government took measures to end the rout and policy makers introduced stimulus to boost economic growth. This Friday, the Chinese yuan surged the most since March as China’s central bank said it would look at starting a trial program to allow domestic investors to directly buy overseas property or securities. The move marks another step in China’s effort to loosen capital controls as it seeks to make the yuan more widely used globally and gain inclusion in the International Monetary Fund’s reserve-currency basket. IMF representatives have told China that the yuan is likely to join the fund’s basket of reserve currencies soon.