Swiss stocks hit by diverging central bank policy

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Swiss stocks followed global equity markets lower this week after oil tumbled to a seven year low, hitting commodity producing emerging markets, while uncertainty around next week’s anticipated US rate hike weighed further on investor sentiment.

U.S. and European monetary policy is expected to officially diverge next week when the Federal Reserve announces its first rate hike in a decade. The Swiss National Bank warned this week that diverging monetary policy between Europe and the US created “huge challenges” for the Swiss economy.

Despite the concerns, Switzerland’s central bank decided against pushing interest rates deeper into negative territory on Wednesday. The Swiss National Bank maintained official borrowing costs at minus 0.75 per cent on banks’ “sight” deposits but said it would continue to intervene to weaken the currency if necessary. The Swiss economy has been hit this year by the Swiss franc’s sharp appreciation against the euro, which has damped tourist numbers and demand for Swiss exports.

Unemployment in Switzerland rose for the second consecutive month in November to 3.4 percent from 3.3 percent in October and 3.2 percent a year earlier, according to figures issued from Bern on Wednesday. The canton of Geneva registered the highest jobless level of 5.6 percent, while Appenzell Innerrhoden had the lowest rate (0.9 percent, down from one percent).

Syngenta’s potential future with Monsanto Co. was back in the headlines this week after US rival Dow Chemical Co. announced that it is in late-stage talks to merge with DuPont Co. According to analysts, a Dow and DuPont mega-merger would push Monsanto to re-approach Syngenta as the pesticide and seed maker scrambles to face the emergence of a U.S. giant. In company news, SGS AG continued their spending spree with the purchase of Canadian firm, Quality Compliance Laboratories Inc.

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