Swiss Blue-chip Index in Green as ECB Rate Decision Takes Center Stage
The Swiss Market Index remained in the green on Thursday, closing 0.49% higher, amid a quiet day of local economic news, with investors turning their attention to the European Central Bank's latest rate move.The ECB increased its three key interest rates by 25 basis points, as widely expected, citing inflationary pressures due to higher energy prices as the Middle East war continues. The deposit facility rate will stand at 2.25%, while the interest rates on main refinancing operations and marginal lending facility will be 2.40% and 2.65%, respectively, effective June 17. Baseline inflation projections for 2026 and 2027 were also upwardly revised."Upon delivering the expected 25bp rate hike today, the European Central Bank (ECB) did not answer the key question: will it make a follow-up mistake by tightening the monetary screws again in July or September?" Berenberg Chief Economist Holger Schmieding said in a note. "However, the significant upward revision to the call for core inflation in 2027 from 2.2% to 2.5% relative to very modest cuts to its staff projections for growth by 0.1ppt each for 2026 (to 0.8%) and 2027 (to 1.2%) sends a hawkish message. That today's decision to raise rates today was unanimous, as ECB president Christine Lagarde explained at the press conference, also indicates a clear risk that the ECB will tighten policy again in coming months."Over to corporates, BofA Global Research raised its price objective for Compagnie Financière Richemont (CFR.SW) to 185 francs from 175 francs while retaining the stock's buy rating, expecting the company to see a resumption in earnings growth in fiscal 2027 following three years of "broadly stable" and a "strong" finish to fiscal 2026. The Swiss luxury goods group's stock gained 2.72% at closing."This is driven by 10% cFX revenue growth, with 5% contribution from pricing already announced, 2% network expansion and 3% volume/mix. More importantly, the single biggest headwind on group profit (gold & FX) has swung from a headwind to a tailwind," according to the research firm. "We estimate GM to be +20bps YoY at current gold and FX rates (albeit we note it is highly sensitive to spot moves). Therefore, for the first time in a few years, our FY27E EBIT is 5% above consensus."Novartis (NOVN.SW) also saw its shares rise 2.10% as it announced that the biomarker cohort for its Fortitude phase 1/2 study evaluating its investigational delpacibart braxlosiran therapy met its primary and key secondary endpoints of reduction in KHDC1L (cDUX) and creatine kinase levels in facioscapulohumeral muscular dystrophy patients. The Swiss pharmaceutical major plans to discuss the results with global regulatory agencies, adding that it is currently enrolling patients for the phase 3 trial.