On Friday, the Swiss Market Index experienced a 1.13% decline, marking the end of a recent rally as it joined other European markets in a widespread retreat. This downturn comes as investors digest fresh labor market data both domestically and from the United States. Recent government figures indicate that Switzerland's unemployment rate edged up to 2.8% in December 2024, increasing from 2.6% the previous month.
Additionally, the number of individuals registering as unemployed rose by 9,179, bringing the total to 130,293. For the year 2024, the country's average unemployment rate was reported at 2.4%, a slight increase from 2% in the previous year. In the United States, total nonfarm payroll employment saw an increase of 256,000 jobs in December 2024, a notable jump from the revised figure of 212,000 from the prior month, and surpassing analysts' expectations, which were set at 160,000.
Meanwhile, the unemployment rate in the U.S. edged down to 4.1% from 4.2%, suggesting a resilient labor market despite economic uncertainties. According to analysts at Berenberg, market sentiment has shifted regarding the Federal Reserve's future interest rate decisions. They noted, "Markets now do not price in another Fed interest rate cut until September.
Just minutes before the release, they were still looking for a cut by June. The odds that the Fed will keep rates on hold in the January meeting are close to 100%. The U.S. labour market, like consumer spending, continues to defy expectations. Recent comments from the Fed and strong macro data suit our call that the Fed will hold rates at the current target range of 4.25-4.50% for the foreseeable future." In terms of economic indicators, the KOF Swiss Economic Institute has reported a decline in its global economic barometers for January 2025, signifying a potential slowdown in global economic activity.
The coincident barometer decreased by 2.1 points to 94.3, while the leading barometer fell by 2.3 points to 102.8, indicating a shift after a period of positive growth. Turning to the corporate landscape, the Swiss government is now facing an expanded lawsuit related to the staggering 17 billion-euro loss linked to Credit Suisse's debt during its troubled emergency takeover by UBS Group.
Reports from London's Financial Times highlighted that a new complaint includes 39 additional plaintiffs. As a result, UBS shares fell by 1.94% at the close of trading. The evolving landscape of Switzerland's economy and labor market reflects broader trends that are impacting investors and policymakers alike, with ongoing developments warranting close attention as 2025 unfolds..