Switzerland saw significant volatility in all the markets mainly due to the producer and import prices report which was diverged considerably from economists? expectations. The equity market was up initially but later in the day was pulled down as yields advanced. However, it closed only few points higher than yesterday. The Swiss franc increased significantly on increased speculations of rate hikes by the Swiss National Bank.
Headlines:
UBS predicts strong economic growth:
UBS recently raised its 2007 growth forecast for the Swiss economy to 2.6 per cent from 1.8 per cent, indicating strong business activity. Even the Swiss National Bank upped its forecast for 2007 and announced an interest rate increase. Other leading indicators, such as the BAK Basel Economics and the Swiss Economic Institute (KOF) share the same outlook. Swiss industrial production excluding the construction sector grew by 7.3 per cent compared with the first quarter of 2006. Growth was seen in almost all sectors, especially mining, vehicle manufacturing, the leather industry, electronics and the timber industry.
Source: Swissinfo
Swiss trial opens for two Muslims accused of supporting terror on Internet:
Switzerland’s first Internet terrorism trial took place on Wednesday with the prosecution accusing two Muslims of running Web sites that supported Al-Qaida linked groups and showed terror executions. Web sites contained images of hostages being murdered and explaining details of how to make bombs and carry out attacks.
Source: International Herald Tribune
Swiss join KPMG’s European merger:
Partners of KPMG Switzerland voted to merge with the accounting firm?s UK and German units to create Europe?s largest accounting company. This will increase the combined firm?s revenue size of $4.7 billion.
Source: Financial Director
http://www.financialdirector.co.uk/accountancyage/news/2192445/swiss-join-kpmg-european-merger
Currency Market:
Today, the franc rose by the most in two weeks against its major counter parts after a report showed that producer and import prices increased more than expected. This boosted already padded predictions for a rate hike not only in next meeting but also in December. As of 12:00pm New York USD/CHF was trading at 1.2376 down 28 pips from the morning session. In the past 12 months, the franc has fallen against all 16 of the most actively traded currencies; and over that same period, the overnight lending rate has been the second-lowest after Japan.
[B][U]Equity Market:
[/U][/B]Swiss markets had massive gains in the intraday period but were only able to close 13.88 points higher at 9,347.28. The intraday rally was due to greater speculation of continued takeovers in the chemical industry with Ciba adding 2.40 sfr and Clariant up 1.7 percent. Among financials stocks, UBS was up 0.25 sfr and Peer Credit Suisse rose 1.35 sfr. Pharmaceuticals were broadly mixed following yesterday?s volatile session. The lead decliner of the day was Nobel Biocare, down 1.75 sfr mainly due to profit-taking. A Sharp decline in the index near the end of the day was mainly due to increased speculation for further rate hikes by the central bank.
Fixed-Income Market:
The Swiss government bond market fell alongside the other European debt markets. The yield on the 10-year bond increased approximately 2 basis points to 3.186%
