The Swiss market closed moderately lower on Thursday, plagued by uncertainty over the potential change in Federal interest rates. This uncertainty was heightened by data that indicated a larger-than-anticipated increase in U.S. producer prices for February, further clouding the future of interest rates in the globe's leading economy.
The benchmark Swiss Market Index (SMI) dropped 69.76 points, or 0.59%, ending the trading session at 11,720.70. The index fluctuated within the day, reaching a low of 11,688.35 and high of 11,779.76. Several notable corporations observed a decline: Swiss Life Holding fell by 5.32%, Roche Holding dropped 3.57%, Kuehne & Nagel fell 2%, and the Partners Group reduced by 1.03%.
Despite this, the Lonza Group enjoyed a 2.57% increase, while Logitech International, Sonova, and Swiss RE also noted gains of 1.71%, 1.58%, and 1.21% respectively. Not to be left out, ABB and Richemont also recorded modest profits.
In the Mid Price Index category, Meyer Burger Tech saw a significant reduction of 14.5%, followed closely by ams OSRAM AG also dropping 10.1%. Others in decline include SGS, down 3.3%, BKW, a loss of about 2.2%, Straumann Holding, off by 1.88%, and Avolta, reduced by 1.52%.
From an economic perspective, the Federal Statistical Office data shows Switzerland's producer and import prices declining for a tenth consecutive month, reducing by 2% year-on-year in February. Other figures of interest include the producer price index dropping 0.3% annually in February, and import prices decreasing sharply by 5.4%.
A slight increase of 0.1% in producer and import prices was noted for February, compared to a 0.5% fall in January. This is the first increase noticed in the last 8 months, primarily attributed to higher petroleum and natural gas costs, and the rise in petroleum product prices. Conversely, the cost of chemical products fell during this period.
Furthermore, the Organization for Economic Co-operation and Development (OECD) predicts an uptick in Swiss economic growth but cautions that geopolitical tensions, change in trade patterns, and limited financing conditions could potentially derail this growth. In its economic survey, the OECD forecasts modest economic growth of 0.9% this year, improving to 1.4% in 2025. It also predicts a temporary rise in inflation, exceeding 2% in the course of 2024, driven by rent and electricity price hikes, and alterations to value-added tax rates.
