In a significant turn of events, Swiss equities have concluded the trading week on a high note, buoyed by the latest inflation data from the United States that has sparked optimistic expectations for an interest rate cut ahead of the Federal Reserve's imminent monetary policy decision. At the close of trading on Friday, the Swiss Market Index (SMI) showed an increase of 1.12%.
The US annual Personal Consumption Expenditures (PCE) inflation rate recorded a figure of 2.5% in June, aligning with market expectations, and marking a slight decrease from 2.6% in May. Notably, the core PCE price index remained steady at 2.6% for June, exceeding market forecasts set at 2.5%. Analysts at ING commented on the situation, stating, "US data should give officials more confidence that inflation is heading to 2%, and we suspect attention will start focusing on achieving a 'soft landing' for the economy." This statement reflects the growing optimism regarding the Federal Reserve's monetary approach.
Next week’s Federal Open Market Committee (FOMC) meeting is anticipated to establish the groundwork for a rate cut potentially scheduled for September, indicating a shift from a restrictive monetary policy environment to a more neutral stance. In Switzerland, the trading day was notably active for a Friday, especially in the earnings reports segment.
Holcim, a leading company in the building materials sector, stood out as the major player that reported on this busy day. The company’s stock price ended the trading session up by 0.36%, propelled by an impressive record of recurring EBIT achieved in the first half of the year. Contrasting this, LEM, the Swiss company specializing in electrical measurement, experienced a substantial decline in its stock, plummeting 14.68%.
This downturn followed the release of its financial results for the first fiscal quarter, which revealed a net profit of 4.8 million francs and total sales of 81.0 million francs, both figures falling short of expectations. Overall, these financial movements highlight an evolving landscape for Swiss equities, with the influence of US economic indicators playing a crucial role in market sentiments and pricing dynamics..