4 November 2016 – Swiss and global market roundup.
Brought to you by Investec Switzerland.
The SMI is set to finish the week notably lower as investors continue to dump equities amid worries about the implications of next week’s US election, the trajectory of interest rates and mixed corporate earnings.
Until a week ago the market had confidently calculated a Clinton win but new FBI investigations appear to have put Trump firmly back in the race. The MSCI All Country World Index sank to its lowest level since July as shares slumped in the US, Europe and Asia after the FBI announced that new evidence may have been uncovered relating to Democratic nominee Hillary Clinton’s use of a private email server during her tenure as Secretary of State.
Investors remain nervous that Trump may still manage a “Brexit” style victory next week. Demand for safe haven assets ahead of the 8 November election has increased, driving the Swiss franc to a four-month high against the euro. In other news out of the United States, the Federal Reserve left interest rates unchanged on Wednesday but hinted again that it would likely raise rates soon.
In Switzerland, UBS released its Swiss Real Estate Bubble Index this week. The index, which measures the risk of a real estate bubble forming on the Swiss housing market, stayed in the risk zone in the 3rd quarter of 2016 although remained unchanged compared to the previous quarter. UBS said that the buy-rent price ratio has now reached an all-time high due to a further increase in the price of owner-occupied homes and lower rentals. In other Swiss economic news, retail sales increased for the first time in nine months in September marking the first increase since December last year. However, the report noted that on a year-on-year basis, retail sales are still down by nearly 2.3%.
In company news, Credit Suisse Group AG dropped despite reporting a third-quarter profit. Chief Executive Officer Tidjane Thiam said that the results were sparked primarily by one-time gains and signaled that the outlook for the Bank remains challenging. The Zurich-based lender posted a surprise profit of 41 million Swiss francs ($42 million) this week driven largely by capital gains on a single property sale.