By Swissquote Analysts
Swiss Consumer Price Inflation Exceeds Expectations
Topic of the day
After showing signs of slowdown, Switzerland's consumer price inflation accelerated again at the start of the year, largely reflecting higher food and energy prices, figures from the Federal Statistical Office showed on Monday. Consumer prices rose 3.3 percent on a yearly basis in January after the 2.8 percent increase in December. The rate also far exceeded economists' forecast of 2.9 percent. This was the highest since August 2022. Core inflation that excludes fresh food, energy and fuel, remained unchanged at 2.2 percent. The annual increase in inflation was largely driven by the 5.6 percent rise in food and non-alcoholic beverages prices. Housing and energy prices moved up 5.1 percent and transport cost climbed 4.7 percent. The Swiss National Bank has raised its interest rates over the last three consecutive meetings to counter rising inflationary pressures. The SNB forecast inflation to slow to 2.4 percent this year and to 1.8 percent in 2024. The economy is projected to grow around 0.5 percent in 2023 amid weak global demand.
The Swiss stock market closed slightly higher on Monday. The SMI gained 0.7 per cent to 11,209 points. Among the 20 SMI stocks, there were 16 price gainers and four price losers. 44.52 (previously: 67.31) million shares were traded. Against the moderately positive market trend, Credit Suisse plunged by a further 4.9 per cent. After the dreadful figures of the previous week with little prospect of a rapid turnaround, the number of negative analysts' comments increased. The market was supported by heavyweights Nestle (+1.4%) and Novartis (+0.8%). The latter was helped by a positive commentary from Goldman Sachs. Holcim (+0.8%) entered low-carbon cement production in Europe for the first time. Among the second-line stocks, Implenia climbed 1.3 per cent. The construction group had bagged a contract for the metro construction in Toulouse. HIAG Immobilien (+1.3%) had received a building permit in Zurich-Altstetten and WiseKey (-0.2%) had announced the spin-off of its semiconductor activities. The division is to be listed on the Nasdaq in the USA.
European stocks traded in the green on Monday, as investors awaited a crucial U.S. inflation report due tomorrow which will guide the Federal Reserve's path on interest rates. The Stoxx Europe 600 index gained 0.9% to 462 points. In Paris, the CAC 40 and the SBF 120 gained 1.1% each. The DAX 40 in Frankfurt advanced 0.6% and the FTSE 100 in London added 0.8%. The European Commission on Monday increased its growth forecast for the euro zone in 2023 to 0.9%, from 0.3% previously. Orpea (-16.3%) reported a 7.7% rise in fourth-quarter sales and said that the "risk of a liquidity shortfall" had been pushed back to the end of the second quarter. The pharmaceutical company Sanofi (-1.2%) announced on Monday the departure of its global head of research and development (R&D), Dr John Reed, who "will pursue an opportunity outside Sanofi". In addition, Sanofi has invested 35 million dollars (32.7 million euros) in Provention Bio, the US biotech revealed on Monday. Chemical company Solvay (-0.2%) declared on Monday that it had been compensated 91.6 million euros by Italian energy company Edison, a subsidiary of EDF, for false declarations made during the 2002 transaction for the Italian plant at Spinetta Marengo. Air India sealed a landmark order with Airbus (+1.6%) and Boeing (+1.2% in Wall Street trading) worth around 500 aircraft and more than $100 billion (€93.6 billion) at list prices, Reuters reported on Friday evening, citing industry sources. Carmakers Renault (+1.6%) and Nissan (+0.6% at Tokyo close) plan to invest $600 million, or €562 million, to support new production and research and development (R&D) projects in India that will create up to 2,000 new jobs. Shares of Cineworld, the British movie-theater operator that owns Regal Cinemas, closed up 18% in London after a report that rival Vue International was planning to put forward a takeover bid.
U.S. stocks rose Monday as investors awaited inflation data due later this week that will help them assess where monetary policy is headed. The S&P 500 gained 46.83 points, or 1.1%, to 4137.29, and the Dow Jones Industrial Average rose 376.66 points, or 1.1%, to 34245.93. The Nasdaq Composite climbed 173.67 points, or 1.5%, to 11891.79. The Labor Department is set Tuesday to release January’s consumer-price index reading, a closely watched measure of what consumers pay for goods and services. Stocks have gained this year, with the S&P 500 up 7.8%, as investors broadly expect inflation to continue moderating, though some are wary that inflation could settle above the Federal Reserve’s 2% target. Payments giant Fidelity National Information Services was the worst performer in the S&P 500 Monday, with shares tumbling $9.43, or 13%, to $66 after it said it plans to spin off its merchant business, essentially undoing a $43 billion acquisition it made in 2019. Biotechnology company Illumina was the best performer in the broad-based index, with shares rising $19.36, or 9.9%, to $215.94. Carmaker Ford (+2.8%) announced on Monday plans to invest $3.5bn in an electric battery plant located in the US state of Michigan, along side Chinese company Contemporary Amperex Technology Ltd, or CATL. Meta Platforms (+3%) has yet to finalise the budget for some of its teams as Facebook's parent company prepares further job cuts, the Financial Times reported, citing two sources close to the matter. The group also revealed on Monday that its advertising director was leaving. Electric truck maker Nikola (+3.7%) has started building hydrogen production facilities and has signed supply contracts with hydrogen producers in the US and Canada. Air India sealed a landmark order with Airbus (up 1.6% at the Paris stock exchange) and Boeing (up 1.3%) worth around 500 aircraft and more than $100 billion at list prices, Reuters reported on Friday evening, citing industry sources.
In Asia, major indexes broadly closed with gains. South Korea’s Kospi rose 0.5% and Japan’s Nikkei 225 gained 0.7%. In Tokyo, Suntory Beverage & Food added 6.3 per cent after reporting a 20 per cent increase in 2022 net profit, while Recruit Holdings lost over 5 per cent. Its quarterly results missed analysts' expectations. On the Chinese stock exchanges, where the main indices hardly moved, property shares were sought after. Wuxi Biologics, on the other hand, edged 3 per cent lower in Hong Kong due to results not meeting market expectations despite significant growth.
U.S. government debt yields were largely mixed on Monday, though the policy-sensitive 2-year rate traded at its highest since November, as investors showed caution ahead of U.S. inflation data. The 10-year Treasury note eased by 3 basis points to 3.706% while the 2-year Treasury note gained 3 basis points to 4.541%.
Jefferies lowers target Zurich Insurance to CHF 455 (465) - Hold
Deutsche Bank cuts target Credit Suisse to CHF 2.80 (3.40) - Hold
Citi lifts target Zurich Airport to CHF 190 (180) - Buy
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