Swiss stocks displayed a robust recovery on Thursday, with the Swiss Market Index closing up by 0.91%, driven by a favorable market reaction to the European Central Bank's (ECB) announcement of its third interest rate cut of the year. This cut further emphasizes the central bank's commitment to combatting economic challenges across the eurozone. The ECB has taken decisive action, reducing key interest rates by 25 basis points.
The deposit facility now stands at 3.25%, the main refinancing operations have been lowered to 3.40%, and the marginal lending facility has been adjusted to 3.65%. This strategic move is seen as a necessary response to recent disinflationary pressures that have emerged in the economy. Mark Wall, Deutsche Bank's Chief European Economist, remarked, 'The statement pins this on a disinflationary process that is well on track, and recent downside surprises to activity indicators.
The cut is still significant in the sense that the ECB has accelerated the easing cycle with the back-to-back cut.' He further noted that the ECB is wisely refraining from providing explicit guidance, which is prudent in light of the prevailing uncertainty in the economic landscape. Wall concluded that today’s decision could indicate a pivotal moment leading to a swifter normalization of monetary policy. On the domestic front, Switzerland's trade surplus saw a decline, falling to 11.27 billion francs in the third quarter, a decrease from the previous quarter's surplus of 12.65 billion francs, as reported by government statistics.
When adjusted for seasonal fluctuations, exports dipped by 4.3% quarter-over-quarter, while imports fell by 2.9%. In the corporate sphere, significant developments were highlighted by major Swiss firms including ABB, Nestlé, and Schindler, all of which announced their earnings results. ABB, the electrification and automation powerhouse, experienced a share increase of 2.42% following a noteworthy 7% year-over-year rise in its third-quarter net attributable income, totaling $947 million, up from $882 million.
Furthermore, ABB's revenue surged to $8.15 billion from $7.97 billion during the same period. Nestlé, renowned for its extensive portfolio in the food and beverage sector, provided updates for its full-year outlook for 2024. The company anticipates organic sales growth of 2%, consistent with its performance in the first nine months.
However, Nestlé reported a decline in total reported sales, which fell to 67.15 billion francs compared to 68.83 billion francs for the same period last year. The stock responded positively, rising by 2.53% by market close. Analysts from RBC observed, 'Well, this isn't ideal, but we think has little relevance to the longer-term Nestlé investment case: our own forecasts for 2025 already assume significant margin decline and subdued sales growth.
Indeed, a more prudent/realistic approach to guidance (only for 2024 so far - medium term is coming at the CMD) is one of the things we have been looking for,' reflecting the sentiment surrounding Nestlé’s latest performance. On the trading front, symbols such as $SWISS20, $NESN, and $ABBN remain prominent as investors continue to navigate these developments..