Swiss Stocks Recover as ECB Delivers Another Rate Cut

Swiss stocks recovered on Thursday, with the Swiss Market Index closing 0.91% in the green, as markets cheered the European Central Bank's delivery of its third interest rate cut of the year.

As expected, the ECB further cut its key interest rates by 25 basis points, lowering the deposit facility to 3.25%, the main refinancing operations to 3.40% and the marginal lending facility to 3.65%.

"The statement pins this on a disinflationary process that is well on track, and recent downside surprises to activity indicators. The cut is still significant in the sense that the ECB has accelerated the easing cycle with the back-to-back cut," said Deutsche Bank Chief European Economist Mark Wall. "At the same time, the ECB continues to avoid guidance and is not committing to a particular path for policy. This is sensible given the uncertainties that lie ahead. But chances are that today's decision represents a pivot point into a faster normalisation of monetary policy."

In Switzerland, the country's trade surplus fell to 11.27 billion francs in the third quarter from 12.65 billion francs in the previous three months, according to government data. Seasonally adjusted exports declined 4.3% on a quarterly basis to, while imports decreased 2.9%.

On the corporate front, Swiss electrification and automation company ABB ABBN, food and beverage giant Nestlé NESN and escalators and elevators manufacturer Schindler SCHN were among the big companies that posted earnings results.

ABB saw its shares rise 2.42% as it booked a 7% year-over-year rise in third-quarter net attributable income to $947 million from $882 million. Its revenue also rose over the period to $8.15 billion from $7.97 billion.

Meanwhile, Nestlé updated its full-year 2024 outlook, saying it now expects organic sales growth of 2%, in line with the first nine months. The company reported a decline in total reported sales for the nine months to 67.15 billion francs from the year-ago 68.83 billion francs. The stock added 2.53% at closing.

"Well, this isn't ideal, but we think has little relevance to the longer-term Nestlé investment case: our own forecasts for 2025 already assume significant margin decline and subdued sales growth. Indeed, a more prudent/realistic approach to guidance (only for 2024 so far - medium term is coming at the CMD) is one of the things we have been looking for," analysts at RBC said about Nestlé's poor-but-not-surprising results.