Swiss stock market under heavy pressure due to interest rate concerns
Published: Friday, Apr 5th 2024, 18:30
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The Swiss stock market suffered a severe setback on Friday and closed sharply in the red. The balance sheet is also deep red for the week. In particular, renewed interest rate fears in the USA led many investors to realize the gains they had made this year.
The change in sentiment on the markets began after Easter and intensified again on Friday. The main trigger for the declines at the end of the week were comments made by a member of the US Federal Reserve. Neel Kashkari from the Fed in Minneapolis had signaled on Thursday evening that there was no guarantee of interest rate cuts this year in view of the robust US economy and only a slow decline in inflation.
Accordingly, the US equity markets fell sharply on Thursday, which then had an impact on the European markets on Friday morning. The US labor market data for March published on Friday afternoon was once again better than expected, which could also point to later than previously expected interest rate cuts in the US. This put additional pressure on the stock markets in the second half of the day. Equity markets usually react positively to interest rate cuts and vice versa.
The leading Swiss index SMI fell below the 11,500 mark in the afternoon (daily low 11,481) and thus to its lowest level since the beginning of March. At the close, the most important Swiss stock barometer was down 1.67 percent at 11,495.79 points. In percentage terms, this was the biggest daily loss since October 19 last year. In the shortened post-Easter week, this resulted in a drop of 2.0 percent. This was also the biggest weekly drop since last October.
The defensive index heavyweights Novartis (-2.5%), Roche GS (-2.4%) and Nestlé (-2.0%) were responsible for most of the losses in the SMI. Traders spoke primarily of futures-related or index-based selling and less of specific company news, which was responsible for the losses.
Not only the Swiss market, but also the most important European indices such as the German DAX (-1.2%), the British FTSE 100 (-0.8%) and the French CAC 40 (-1.1%) fell more or less significantly. The most important US index, the Dow Jones Industrial, fell on Thursday in particular (-1.4%), but recovered again on Friday (+1.0% at the close of Swiss trading).
©Keystone/SDA
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