The Swiss Stock Exchange began Monday’s session with a slight decline, as a preamble to a busy week of macroeconomic data on both sides of the Atlantic. Investors were also closely watching developments in the Middle East, where Israel expanded its military strikes in Lebanon and Yemen.
Beijing announced on Friday the reduction in the required reserve ratio (RRR) of banks, which should make it possible to inject some 127 billion euros of liquidity into the financial markets, thus allowing banks to lend more to companies to support the economy real.
China also announced a cut from 1.7% to 1.5% in the seven-day reverse repo rate, a short-term interest rate paid by the central bank on borrowing from commercial lenders. These announcements caused the Chinese stock markets to jump. “The recent massive stimulus announcements in China will not bear fruit immediately; it will take several months to see their direct effects on the country’s economy,” however warned John Plassard of Mirabaud Banque in a comment.
In the Middle East, the Israeli army carried out dozens of new raids on Sunday against Hezbollah in Lebanon, two days after killing its leader Hassan Nasrallah along with, according to it, 20 members of the Lebanese pro-Iranian movement. Maintaining military pressure against Hezbollah, which it inflicted a devastating blow, Israel continued its raids, attacking “dozens of terrorist targets”: rocket launch sites, military installations and weapons depots.
Stars at half mast
Several important macroeconomic meetings are expected this week, notably inflation in September in the euro zone on Tuesday. Wednesday will follow in the United States the ISM manufacturing index and job creations in the private sector for the same month and Thursday the inflation rate in Switzerland for the month of September. On Friday, investors will dissect the employment figures across the Atlantic, closely followed by the American Federal Reserve (Fed).
On the Swiss Stock Exchange around 9:06 a.m., the flagship SMI index opened down 0.34% at 12,192.20 points, after closing Friday up 0.2%. The SLI fell 0.37% to 1996.19 points and the SPI dropped 0.40% to 16,258.10 points.
The majority of star stocks started the session down, in an almost empty corporate calendar.
At the bottom of the table were SGS (-1.6%), Sika (-1.1%) and Geberit (-0.7%). The stock of the inspection and certification giant seemed penalized by a lowering of the price target by Goldman Sachs. The specialty chemicals group did not benefit from the increase in its price target by the same bank, just like the manufacturer of sanitary products for which Morgan Stanley increased its share projections.
Swatch Group (+1.0%), Logitech (+1.0%) and Sonova (+0.7%) were on the other hand sought after.
Investors seemed reassured by the recovery measures in China which should support the luxury and watchmaking sector. Richemont (+0.3%), however, was progressing more slowly.
News was also sparse on the broader SPI index. Addex (+1.7%) confirmed the provisional figures articulated two weeks ago for the second quarter and first half of 2024. (AWP)
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