8 July 2016 – Swiss and global market roundup.
Brought to you by Investec Switzerland.
The SMI is set to post moderate losses this week as the post-Brexit relief rally faded and commodities slipped. Swiss stocks outperformed key European markets as investor’s fled to quality stocks such as Nestlé, Novartis and Roche.
After Swiss companies trailed their peers from Germany, France and Italy for most of the past year, the Swiss Market Index is finally moving upwards. The rally began on June 28 and saw the SMI climb the second most among western-European markets since the UK vote, briefly erasing losses from last week.
Volatility in global markets remained high while new concerns emerged in the UK real estate sector. Three asset managers froze withdrawals from real-estate funds following a flurry of redemptions, and the pound plunged to a 31-year low less than two weeks since the nation backed quitting the European Union. Markets turned positive in the middle of the week following promising US service sector data and dovish comments from the FOMC. Fed officials said that they are no longer resolute about raising interest rates any time soon as officials face rising uncertainty about the outlook for growth at home and abroad.
In Swiss economic news, the Swiss National Bank’s (SNB) holdings of foreign currency hit a record 608.8 billion francs in June following interventions to stabilize the safe haven currency after the Brexit vote. Swiss consumer prices rose 0.1% in May while the annual rate was remained unchanged at -0.4%. The SNB will likely remain on alert for fresh downward pressure on prices over the next few months and said that it is prepared to intervene to curb franc strength if necessary.
In company news, Credit Suisse could be removed from the Stoxx Europe 50 index by a fast exit rule that ejects stocks that drop below rankings for membership criteria for two consecutive months. Stoxx Europe 50 members must rank 74th or higher in terms of free float weighted capitalization and Credit Suisse bank ranked 68th. Fast exit is triggered if the stock doesn’t regain a top 74 position by July 30.