The Swiss stock market moved into positive territory on Tuesday morning, after opening slightly down. Investors were awaiting the ISM manufacturing index in the United States, while a dock workers’ strike on the East Coast threatens the country’s economy.
In the euro zone, inflation slowed significantly in September to 1.8% year-on-year, its lowest level in three and a half years thanks to the decline in energy prices. The increase in consumer prices thus falls below the 2% mark, the objective set by the European Central Bank (ECB), for the first time since June 2021. This decline could encourage the monetary institution to reduce once again its interest rates from October.
In the United States, Wall Street closed Monday with record figures after comments from Fed President Jerome Powell who once again suggested that interest rates should continue to fall in the coming months.
In a speech to the National Association for Business Economics, Jerome Powell stressed that the Fed is not following a predetermined path, but suggested that two quarter-point rate cuts could still happen this year if the economy is moving as expected. “The chances of a 50 basis point rate reduction in November are currently 35%, well below the levels above 50% of the previous week,” notes analyst John Plassard of Mirabaud Banque.
Other important macroeconomic meetings are scheduled for the end of the week. Job creation in the private sector in September is expected in the United States on Wednesday and the inflation rate in Switzerland for the same month is expected on Thursday. On Friday, investors will dissect the employment figures across the Atlantic, closely followed by the American Federal Reserve (Fed).
The strike by dockworkers at 14 major US ports on the East Coast and Gulf of Mexico, who began walkouts early Tuesday after last-minute negotiations between their union and the Maritime Alliance failed, could cost up to $5 billion dollars a day to the U.S. economy, prompting businesses to take urgent action to mitigate disruption, says John Plassard. Swissquote analyst Ipek Ozkardeskaya points out that this type of pressure on supply chains is also inflationary.
She also notes that American markets “barely” reacted to Chinese stimulus measures. “The message is that investors think that what happens in China has less and less impact on the health of the global economy,” she says. For expert Cesar Perez Ruiz, head of investments at Pictet, the recovery plan “favors short-term actions, but other measures will be necessary to stabilize the real estate sector and restore consumer confidence”.
In the Middle East, fighting broke out on Tuesday in southern Lebanon, where the Israeli army launched a ground offensive against Hezbollah, after a week of intense bombings against the Islamist movement, supported by Iran, which caused hundreds of deaths.
Lonza still in the lead
At 11:00 a.m., the flagship SMI index rose 0.44% to 12,222.91 points. The SLI also rose by 0.52% to 2003.39 points and the SPI by 0.41% to 16,208.95 points.
A large majority of star stocks were in the green.
Leading the pack were Lonza (+2%), ABB (+1.4%) and Partners Group (+1.2%).
At the bottom of the table were Roche (-0.8%), whose Stifel bank lowered the price target, Swiss Re (-0.6%) and Kühne +Nagel (-0.2%).
In the camp of the other two heavyweights, Nestlé took 0.8% and Novartis 0.2%.
On the broader market, Leclanché gained 4.3% after obtaining another publication deadline for its half-year results. (AWP)
