22 April 2016 – Swiss and global market roundup.
Brought to you by Investec Switzerland.
The SMI continued its struggling upward trend this week and is expected to finish slightly higher on Friday, in-line with global equity markets. Stocks held on to early gains despite concerns that the European Central Bank (ECB) and People’s Bank of China may roll back stimulus measures as the global recovery continues.
The increase in oil prices, signs of a stabilizing economy in China and brighter corporate earnings all appear to be supporting investor sentiment of late. Global stock markets have now rallied more than 16% since the three year equity market low seen in February.
Oil prices did wobble on Monday this week after talks between the world’s biggest producers in Doha over the weekend ended without an agreement on limiting supplies. However, the price of Brent and Crude oil quickly recovered to trade above $40 a barrel and held steady through the rest of the week.
China’s stock market recovery remains volatile as investors begin to expect less state support. On Wednesday, Mainland Chinese stocks sank the most in almost two months on concerns that the government may roll back stimulus after recent economic data pointed to a more robust economic recovery. On Thursday, European stocks also lost ground after ECB President Mario Draghi announced that interest rates would remain unchanged and asset purchases would stay at the current 80 billion euros a month.
In Switzerland, The ZEW-CS-Indicator for the economic sentiment rose by 9.0 points to a reading of 11.5 points in April 2016 indicating a brighter short-term outlook. The current economic situation was also assessed as being slightly more positive. In other economic news, Swiss exports declined 16% in March to 1.5 billion francs which is the lowest level for a month since 2011. Swiss watch exports posted the biggest quarterly drop (-8.9%) since 2009 as the industry faces declining demand across all its main markets.
In company news, Novartis AG earnings results beat analysts estimates despite its first-quarter earnings falling 12% after the company’s best-selling cancer medicine Gleevec faced generic competition from US drug makers. On Tuesday, Roche published sales data and reported a 5% increase in first-quarter sales as demand for three breast-cancer medicines climbed. In other news, Syngenta said that regulatory approvals are running according to plan for ChemChina deal to be completed by year-end.