21 October 2016 – Swiss and global market roundup.
Brought to you by Investec Switzerland.
The Swiss Market Index is set to finish the week largely unchanged while global stocks gain on positive US third quarter earnings results, favourable central bank statements and a rallying oil price.
The S&P 500 saw its biggest advance since September on Wednesday after US banking giants Citigroup, JP Morgan, Morgan Stanley and Wells Fargo all posted better-than-expected quarterly results. Stocks also received a boost after a gage of core US inflation rose less than forecasted in September suggesting that the pace of interest-rate increases by the Federal Reserve will be gradual. Crude oil prices hit a 15-month high after the Energy Information Administration (EIA) reported a surprisingly large drop in domestic inventories for the sixth week out of seven.
Another key event this week was the European Central Bank policy meeting on Thursday. Mario Draghi signaled that the central banks quantitative easing won’t come to an “abrupt” end but left the current policy unchanged. The euro fell to its lowest level since March, giving European stocks a boost.
In other economic news, China released GDP data this week. Economic growth in the world’s second largest economy remained stable in the third quarter opening a window for policy makers to deliver on vows to rein in excessive credit and dampen surging property prices. China’s gross domestic product rose 6.7% in the third quarter from a year earlier, matching forecasts by economists.
In Switzerland, the downturn in Swiss watch exports entered its 15th month, a longer slide than even after the 2008 financial crisis. The Swiss watch industry is grappling with some of its toughest times since the quartz crisis of the 1970s and 1980s when battery-powered watches threatened to make mechanical timepieces obsolete. A drop in Asian tourism to Europe has added to a list of challenges for the industry including the strong franc and slowing global demand.
In company news, Nestle disappointed investors after the company forecast the slowest full-year sales growth in more than a decade as food companies worldwide struggle against consumer resistance to price increases. Roche also released results this week saying that sales climbed in the third quarter thanks to strong sales of several of its cancer and immunotherapy drugs.