The Swiss Market Index (SMI) concluded the trading week on a negative note, experiencing a decline of 3.59% on Friday. This downturn comes as investors carefully assess the latest consumer price data released for Switzerland, a key factor in economic sentiment. According to the Federal Statistical Office, the country’s annual inflation rate remained stable at 1.3% in July, unchanged from the previous month.
This figure aligns with market expectations. On a monthly basis, however, the consumer price index saw a decrease of 0.2%, while core inflation registered at 1.1% on a yearly basis, showing a monthly decline of 0.3%. Analysts from Deutsche Bank noted, 'The Swiss National Bank (SNB) has surprised the market this year by initiating an easing cycle significantly ahead of both the European Central Bank (ECB) and the Federal Reserve (Fed).
Currently, there is no overwhelming agreement that the SNB will proceed with further policy easing in September. The upcoming leadership transition introduces a degree of uncertainty, with growing skepticism surrounding the suitability of economic conditions for additional monetary easing.' Market sentiment has also been dampened by developments across the Atlantic.
Recent data from the U.S. Bureau of Labor Statistics indicated that the unemployment rate rose to 4.3% in July, an increase from 4.1% in June, contrary to analysts' expectations of a stable rate. ING analysts commented, 'Today's U.S. employment figures will clarify whether the softer job market will become the central factor motivating a potential cut in September, as the Federal Reserve currently navigates risks on both sides of its mandate.' They added, 'The cautious stance adopted by the Fed this week likely will prevent markets from anticipating more than the anticipated 75 basis points of cuts by year-end, spread across three meetings.' In corporate news within Switzerland, Interroll (INRN.SW), a leading materials handling company, saw its stock plunge by 7.22% following the announcement of a 3.5% decline in first-half sales, totaling 247.4 million francs.
Nonetheless, the company reported a profit increase of 8.5%, reaching 23.9 million francs. Meanwhile, Sika ($SIKA) made a strategic acquisition of Vinaldom, a Dominican Republic-based manufacturer of concrete additives aimed at the construction sector. This deal marks Sika's inaugural manufacturing facility in the Dominican Republic, significantly enhancing its market presence.
However, Sika’s shares experienced a decline of 6.90% at closing as well..