The Swiss Market Index experienced a significant decline, dropping by as much as 1.9% on Monday, marking its lowest point since April 22. This downturn followed an unexpected move by US President Donald Trump, who implemented a 39% tariff on Swiss exports—substantially higher than the 31% tariff indicated earlier in April. This decision had a notable impact on luxury companies like Richemont and Swatch, which saw their shares fall by up to 3% at the market's opening. In contrast, pharmaceutical companies such as Roche and Novartis fared better, as their exports were exempt from the newly announced tariffs last Friday.
Economically, Switzerland's annual inflation rate rose to 0.2% in July, marginally exceeding predictions of 0.1%, but it remained near the zero mark. This low inflation figure bolsters the expectation that the Swiss National Bank might opt to reduce interest rates into negative territory later this year. Additionally, the Swiss Purchasing Managers' Index (PMI) dropped to 48.8 in July, down from 49.6 in June, indicating a more pronounced contraction in the manufacturing sector.
