The Swiss franc continued to decline against the dollar today after a report showed that retail sales increased at the slowest pace in eight months. The currency was also pushed lower by continued risk aversion as credit crunch setoff a worldwide rush for dollars as investors try to payback loans used to buy risky mortgage securities.
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Nestle’s First-Half Net Income Rises 18%
Nestle SA Wednesday posted an 18% rise in first-half net income and said it will launch its largest-ever share buyback amid surging profits and sales. The world’s largest food company by sales also increased its full-year growth guidance. The 25 billion Swiss francs ($20.64 billion) share buyback will be spread over three years, Nestle said, adding that the buyback reflects its strong financial position and the favorable outlook for its food business.
Source: The Wall Street Journal
Swiss Dairy Farmers Milk High Global Demand
Price increases for dairy products in Europe and a worldwide shortage of milk powder and butter are giving an unexpected boost to some Swiss farmers. It has also prompted calls for higher milk prices for dairy farmers producing mainly for the domestic market and renewed pressure on the agriculture sector amid moves towards liberalizing global trade.
Source: Swissinfo.org
[B]Central Banks Step Aside as Turmoil Continues
[/B]Central banks on Wednesday progressively withdrew the cash they recently injected into money markets as the focus of the global credit storm rolled into emerging markets and currencies. For the first time since last Thursday the European Central Bank, like the U.S. Federal Reserve a day earlier, gave no extra short-term money to keep the financial system operating smoothly and central banks in Japan and Switzerland actively drained cash from their local markets.
Source: Reuters.com
Currency Market:
The Swiss franc continued to decline against the dollar today after a report showed that retail sales increased at the slowest pace in eight months. The currency was also pushed lower by continued risk aversion as credit crunch setoff a worldwide rush for dollars as investors try to payback loans used to buy risky mortgage securities. Investors speculate that problems in the credit market in Europe may limit the scope of further rate hikes. There are fears that credit problems might spillover to Switzerland and significantly hurt Swiss Banks. Against the Euro, however; Franc rallied nearing a four month high as carry trades further declined. The Franc has risen almost 1 percent against the Euro this month. As of 13:00 EST the pair was trading at 1.2180.
Equity Markets:
Swiss equities surged as Nestle?s earnings beat forecasts. Nestle jumped 9.5 percent, its biggest one day gain ever. Swisscom also took part in the rally, rising 1.5 percent. The banking sector on the other hand continued to decline as Credit Suisse cut its expectation about UBS saying that Europe?s largest bank?s future earnings will decline due to subprime-mortgage losses. UBS was down 0.4 percent and Credit Suisse down 1.4 percent. The Swiss Market Index closed 1.32 percent higher at 8661.59.
Bond Market:
Bond prices rose despite a strong rally in the equities markets indicating the prevailing fear of volatility in minds of the investors. The yield on the benchmark 10-year bond was down 1.2 basis points closing at 3.054.
