On Wednesday, Swiss stocks demonstrated resilience, recovering amid a day filled with earnings announcements, geopolitical developments, and the release of significant economic data. The Swiss Market Index experienced a robust 1.39% increase, aligning with a broader regional rally across European blue-chip indices, showcasing the market's positive sentiment despite the external challenges. In a significant move impacting global trade, US President Donald Trump imposed a 25% tariff on all steel and aluminum imports from various trading partners.
This action incited a swift reaction from the European Union, which proposed 'swift and proportionate' countermeasures, targeting 26 billion euros worth of US goods. Alongside this, Canada unveiled its own set of retaliatory tariffs, amounting to CA$29.8 billion on US products, while the UK government emphasized that it would keep all options on the table in response to the situation. On the economic front, new data revealed that the annual inflation rate in the US decreased to 2.8% in February, down from 3% in January, which was better than market expectations that had forecasted an inflation rate of 2.9%.
Furthermore, the core inflation rate experienced a slight decline, slipping to 3.1% from 3.3%, also falling short of the consensus estimate of 3.2%. Commenting on these developments, ING noted, 'Good news on inflation, but the fact it was overwhelmingly driven by falling airfares has somewhat muted the market reaction.
Concerns surrounding tariffs are prompting companies to increase prices, raising the risk of higher inflation readings this summer. However, the economy continues to grow, adding jobs, and the likelihood of elevated inflation leads us to believe that the Federal Reserve will refrain from cutting rates again before September.' Turning our attention to the corporate sector, several prominent Swiss companies disclosed their financial results.
Notable mentions include travel retailer Avolta ($AVOL), laboratory automation firm Tecan ($TECN), and bourse operator SIX Group. Tecan's shares dropped by 3.67% as the company reported a concerning 13% decrease in year-over-year sales, which amounted to 934.3 million francs. This decline was primarily attributed to weakened demand in its instrument business with biopharmaceutical clients worldwide, alongside broader market challenges in China.
Additionally, profits fell sharply during this period, decreasing to 67.7 million francs from 132.1 million francs. In contrast, Swiss pharmaceutical powerhouse Roche ($ROG) saw its shares rise by 3.64% following news of a substantial $5.3 billion agreement with biotechnology firm Zealand Pharma. This partnership is aimed at the joint development and commercialization of Zealand’s petrelintide, which is being targeted as a foundational therapy for obesity.
The deal is anticipated to finalize in the second quarter of the year, positioning Roche strategically within the growing obesity treatment market..