EUROPE MARKETS / Very weak – Soaring interest rates in Switzerland | News

FRANKFURT (Dow Jones) – Contrary to pre-launch indications, European exchanges started trading at a discount. They rose sharply early on after the Swiss Central Bank (SNB) raised its key interest rate, and also surprisingly sharply by 0.5 percentage points. One rate hike it was considered possible in advance, but not for granted, especially as inflation in Switzerland had risen recently, but by no means as much as in other regions of the world.

Frank increased by 1.8 percent. against the euro, the Swiss stock exchange index SMI collapsed by 2.6 percent. DAX lost 1.9 percent. to 13,233 points, and Euro-Stoxx-50 fell by 1.8%. up to 3470 points.

From the outset, the relief from the Federal Reserve’s (Fed) monetary policy decision only lasted for a short time after US stock markets rose sharply the night before. Meanwhile, US index futures point to sharp declines early in the afternoon as fears of slipping into recession regain ground in the face of sharp increases in interest rates.

Tough months are ahead for the equity markets, characterized by rising key interest rates and a lack of liquidity coupled with rising risks of a recession. Interest rate-sensitive tech equities drop 2.4 percent and retail equities, which depend on consumer sentiment and shrinking consumer budgets due to inflation, lose 4 percent and come last. Actions in the telecommunications, food and pharmaceutical sectors, which are considered defensive and less cyclical, are not doing very well.

Fed without a real surprise

As widely expected, the Fed raised the main interest rate yesterday evening by 75 basis points to the level from 1.50 to 1.75 percent. It was the largest interest rate hike since 1994. Markets reacted initially to the decision and were somewhat relieved. This happened not only because the huge step was expected after the unexpectedly high inflation in the US in May, but also because the determined fight against inflation is seen as the most important market theme on the stock markets in the meantime.

Fed chairman Powell hinted that another rate hike by 75bp in July is possible, but at the same time stressed that such steps should not become the norm. The leading US central banker calmed the stock market down a bit. Also because he stressed that he was aware of the hardships of fighting inflation.

“There is almost no doubt that fighting high inflation is the Fed’s top priority,” Commerzbank said and continued, “The Fed – like many other observers – has made an error in its assessment of the inflation trend.” Now he has to make up for lost time quickly. Meanwhile, DWS said the risk of a recession has clearly increased.

In addition to the Fed, the Brazilian central bank also raised its main interest rate as expected. It was the eleventh consecutive increase there. And the next one is on the horizon. The Bank of England should move at noon. Interest rates are expected to be raised to 1.25 from 1.00%. It tightened for the fourth time in a row in May, rising by 25 basis points.

Nordex shares depart from SDAX and TecDAX

Nordex (-1.2%) only slightly felt the unplanned removal from TecDAX and SDAX. The quote from the Qontigo index provider is unusual. He justifies this step by “violating basic criteria”, such as the timely publication of quarterly reports or quarterly statements. The changes will take effect on June 20, 2022. Medios (+ 2.0%) is listed on SDAX and SMA Solar (+ 3.5%) on TecDAX. Nordex has meanwhile announced that it has received new 369 MW orders from Colombia.

According to Citi analysts, good traffic data came from Vinci (-0.8%) the previous evening. Citi believes that the increase in truck traffic is encouraging for the concession and the construction group given the higher tariffs that will apply in this case. In the airport segment, the total number of passengers improved compared to the previous months.

Stock index last + / -% absolute + / -% YTD

Euro Stoxx 50 3 469.53 -1.8% -62.79 -19.3%

Stoxx 50 3 401.28 -1.2% -42.09 -10.9%

DAX 13,215.83 -2.0% -269.46 -16.8%

MDAX 27 174.99 -2.2% -609.28 -22.6%

TecDAX 2 828.07 -1.7% -50.04 -27.9%

SDAX 12 291.70 -1.7% -210.01 -25.1%

FTSE 7 152.45 -1.7% -120.96 -1.5%

CAC 5932.53 -1.6% -97.60 -17.1%

Fixed Income Market Latest Absolute +/- YTD

Ten-year turnaround from Germany 1.73 +0.09 +1.91

10-year profitability in the USA 3.37 +0.08 +1.86

FOREX last +/-% Thu 8:20 Wed 17:20% YTD

EUR / USD 1.0386 -0.6% 1.0444 1.0399 -8.7%

EUR / JPY 139.52 -0.2% 140.03 139.93 + 6.6%

EUR / CHF 1.0196 -1.8% 1.0379 1.0413 -1.7%

EUR / GBP 0.8604 + 0.3% 0.8587 0.8629 + 2.4%

USD / JPY 134.26 + 0.3% 134.32 134.58 + 16.6%

GBP / USD 1.2072 -0.8% 1.2147 1.2050 -10.8%

USD / CNH (offshore) 6.7237 + 0.7% 6.7097 6.7217 + 5.8%

Bitcoin

BTC / USD 21 710.82 -2.2% 22 119.18 21 216.85 -53.0%

ROHOEL the last VT-Settl. +/-% +/- USD% YTD

WTI / Nymex 115.69 115.31 + 0.3% 0.38 + 59.0%

Brent / ICE 118.90 118.51 + 0.3% 0.39 + 57.6%

METALS last day before +/-% +/- USD% YTD

Gold (spot) 1,828.67 1,834.30 -0.3% -5.64 -0.1%

Silver (Spot) 21.55 21.69 -0.7% -0.14 -7.6%

Platinum (Spot) 934.19 943.95 -1.0% -9.76 -3.7%

The future of copper 4.12 4.16 -0.9% -0.04 -7.2%

Contact to the author: manuel.priego-thimmel@wsj.com

DJG / mpt / voice

(END) Dow Jones Newswires

June 16, 2022 03:55 ET (7:55 GMT)

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