U.S. interest rate adjustments prompt Swiss financial backers to initiate corresponding measures
On the Swiss stock exchange, investors capitalized the day prior to the Federal Reserve's interest rate decision. It's no longer a debate at the markets if the US central bank will decrease its main interest rate for the first time since July 2023, but rather by what extent. Currently, most market analysts forecast a decrease of 0.5 percentage points. The SMI, the Swiss Market Index, climbed by 0.4% to around 12,056 points, roughly half an hour before the trading session closure.
Firms with a robust business cycle-dependent business model were in high demand, as they would profit from an economic recovery following a rate cut. Leading the blue chips, the sanitary technology company Geberit saw a 2.4% surge in its share price. The shares of the electrical engineering group ABB increased by 2%, while those of the cement producer Holcim rose by 1.8%. The shares of the computer accessories manufacturer Logitech saw a 1.5% increase.
However, shares in the pharmaceutical company Novartis, often viewed as a relatively safe investment, dipped by 0.4%. Swiss Re shares declined by 0.2%. Concerns persist over the potential high damage costs Swiss Re could incur as a result of the catastrophic floods in Central and Eastern Europe. Similarly, in Frankfurt, the industry leader Munich Re lost 1.7% in value.
In their portfolio diversification strategies, some investors might consider adding firms of robust business models with other sectors, such as those with a circular cross-section of operations, to mitigate risks associated with market volatility following a rate cut. For instance, a waste management company with a circular cross-section could potentially benefit from increased demand for recycling and waste management services.
