The blue-chip Swiss Market Index remained in the red on Thursday, closing 0.47% lower, as investors turned their attention to the European Central Bank's latest monetary policy decision amid yet another day of local economic news.
The ECB raised its three key interest rates by 25 basis points, as widely expected, citing higher inflationary risks amid higher energy prices as the war in the Middle East drags on. The deposit facility rate will increase to 2.50%, while the interest rates on main refinancing operations and the marginal lending facility will stand at 2.65% and 2.90%, respectively, effective Sept. 16. Baseline inflation projections for 2027 and 2028 were also upwardly revised.
"With the latest developments, today's rate hike was almost a no-brainer and not controversial. In light of higher actual and projected headline inflation, bringing the policy rate to the upper end of the range that the ECB itself calls 'neutral' did not pose any risk of being too activist or too restrictive. The harm of doing nothing, at least for the ECB's credibility, is clearly larger. However, looking beyond today's hike paints a very different picture and is much more complicated," ING said in a quick take note. "Going further would mean that the ECB sees restrictive monetary policy as necessary. But there is a big difference between an economy that has shown resilience, and an overheating economy that needs restrictive monetary policy."
The KOF Swiss Economic Institute's global economic barometers both improved in September, with the coincident barometer rising 1.4 points to 104.6 points, recovering from the previous month's decline, and the leading barometer increasing 1.4 points to 105.9 points.
"Not only are all regions distinguished in the coincident barometer above average this month, but so are all sectors. The last time this occurred was in March 2022, during the post-pandemic boom. A similar situation prevails for the leading indicator. To find a comparable, consistently positive outlook, we have to go back 4.5 years. The difference is that, at that time, the indicators were coming down from a high," according to KOF director Jan-Egbert Sturm. "Today, however, despite ongoing geopolitical turmoil, they indicate that the world economy has been improving cyclically for six months now."
Back home and on the corporate front, UBS Group (UBSG.SW) will cease its Shenzhen-based funds sales business in China by the end of September, Reuters reported, citing a company statement. Sources told the news outlet that the Swiss banking group's WE.UBS unit struggled in the domestic mutual fund distribution market as it faced competition from nearly 400 rivals and weak investor demand. The stock closed the trading session 1.39% lower.
Meanwhile, the US Food and Drug Administration granted priority review status to Roche's (RO.SW) supplemental biologics license application for Enspryng for treating myelin oligodendrocyte glycoprotein antibody-associated disease, or MOGAD, following positive results from the late-stage Meteoroid study. The Swiss drugmaker expects the regulator to decide on the approval by Jan. 10, 2027. At closing, Roche's shares were 1.01% in the red.