Swiss stocks continued to experience a downturn on Wednesday, with the Swiss Market Index closing down by 1.10% as investors absorbed a wave of economic data and earnings reports. The KOF Economic Barometer, an important indicator of economic sentiment in Switzerland, fell to 99.5 points in October, down from a revised 104.5 points in September.
This decline suggests that the Swiss economy's recovery is 'very hesitant,' marking the first time the barometer has dipped below the 100 threshold since January, with production-related sectors showing signs of contraction. On a slightly more positive note, the UBS & CFA Society Switzerland economic sentiment index improved to -7.7 points in October, compared to -8.8 points in September.
In the realm of corporate performance, UBS Group reported a net profit of $1.43 billion for the third quarter, a significant recovery from a loss of $711 million the previous year. This rebound was accompanied by an increase in total revenue. However, UBS anticipates a mid-single-digit drop in net interest income in its global wealth management segment and a low single-digit decline in its personal and corporate banking division for the fourth quarter, prompting its stock to fall by 4.53% by the close of trading. Analysts from RBC Capital Markets stated, 'UBS reported a strong set of results capitalising on market trends.
Momentum is continuing into Q4 but UBS points to macro and election uncertainty. The CET 1 ratio came in lower than expected largely due to a timing effect which is also partially offset by a reduced impact from B4 in 2025.' They also noted, 'Uncertainty on the implications of the TBTF report remain but good earnings momentum and execution of the merger synergies provide support.' In other earnings updates, Sandoz experienced a 3.70% increase in its stock price after reporting a year-over-year rise in third-quarter net sales to $2.60 billion, compared to $2.34 billion.
Sandoz also raised its full-year 2024 net sales growth forecast to high-single-digit growth in constant currencies, up from a previous estimate of mid- to high-single-digit growth. Shifting focus to the euro area, GDP growth reached 0.4% in the third quarter, a modest increase from the 0.2% growth seen in the previous quarter.
Meanwhile, in the UK, Chancellor of the Exchequer Rachel Reeves delivered her inaugural budget address, unveiling plans to cap corporation tax at 25% as part of the government's Corporate Tax Roadmap, which includes several significant measures aimed at strengthening the economy..