On Thursday, Swiss stocks continued their upward trajectory, registering gains in an environment characterized by light trading volumes, attributed in part to the closure of US markets observing a national day of mourning. The Swiss Market Index concluded the trading session with an increase of 0.43%, demonstrating resilience in investor sentiment despite broader external influences.
A notable statistic came from the Swiss National Bank, which reported a rise in the country's foreign currency reserves, reaching an impressive 730.96 billion francs as of December 2024, compared to 724.69 billion francs from the month prior. This increase is seen as a positive indicator of Switzerland's economic stability and ability to maintain solid foreign asset positions.
In the European context, the euro area experienced a slight uptick in retail trade volume, which adjusted seasonally, saw a modest rise of 0.1% month over month in November 2024, counteracting a previous decline of 0.3% in October. Compared to the same month the previous year, total retail sales recorded an increase of 1.2%, highlighting a gradual recovery and potential growth in consumer spending.
Turning to corporate performance, shares of the Swiss National Bank surged by 5.97% after the institution expressed positive expectations, forecasting a remarkable profit of 80 billion francs for the full year of 2024. This news has certainly infused optimism amongst investors regarding the bank's financial health and operational success going forward.
Conversely, The Swatch Group faced a decline, shedding 2.99% following a downgrade from RBC Capital Markets. The firm adjusted its rating from ‘sector perform’ to ‘underperform’, simultaneously lowering its price target from 150 francs to 140 francs. This downgrade came in the wake of ongoing structural challenges troubling the company, which is famous for its watches and jewelry.
Analysts cite critical headwinds, including increased competition from smartwatches and a less favorable resale market for high-end brands which may adversely affect consumer interest and brand valuations. As RBC analysts articulated, "We see further downside in 2025, partly driven by ongoing structural headwinds and optimistic consensus expectations shorter term." This reflects a broader concern regarding the Swiss watch and jewelry sector as it grapples with evolving market dynamics and consumer preferences.
Overall, the current environment presents a mixed bag of performance as the market assesses the implications of foreign currency reserves, retail performance, and corporate outlooks. Investors remain vigilant as they navigate this landscape, weighing potential risks and opportunities ahead..