Despite the punitive decision taken by the EU not to grant equivalence of Swiss stock market, countermeasures undertaken by Swiss authorities to safeguard Swiss equities have paid off. Since the change of regime, trading on Swiss stocks has gone smoothly, with both SMI and SPI indices gaining 1.60%, in line with European peers. CPI remained stable in June while the drop in industry PMI to 47.7 in June, its lowest range since October 2012, is becoming more of an issue.
Swiss inflation came in line with expectations at 0.60% as consumer prices underlying components have been evolving in opposing directions. The EU harmonised and core gauges came both at 0.70%, suggesting a slight acceleration and close to Swiss National Bank inflation June forecast of 0.60% for 2019. The situation on the front of the Swiss industry is yet more worrying, as the industry PMI points for the third consecutive time in contraction territory while production declines for the fourth time in a row at 48.2. Similar trends are shown by Raiffeisen’s SME PMI which fell to 52 (prior: 54.2) due to lower production, an increase in inventory and a drop in backlogs (from 56.8 to 50.7), its sharpest drop since March 2018, the inception date of the sentiment indicator.
EUR/CHF is maintained within the 1.11 range, bouncing back from 1.10795 (24/06/2019 low) and expected to trade sideways along 1.11300. June publication of the SNB's foreign exchange reserves on Friday could signal an intervention in the foreign exchange market if significant changes occur.
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