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Swiss stocks fell on Monday as investors reacted to the shock 39 per cent tariff imposed on the country by US President Donald Trump at the end of last week.
The Swiss Market index, the country’s main stock index, fell as much as 1.9 per cent in early trading, before recovering some ground to trade 0.6 per cent lower on the day.
The US president announced the new tariffs late on Thursday last week, leaving Swiss goods subject to some of the highest US import taxes faced by goods from any country. The Swiss market was closed for the Alpine country’s national day on Friday, making Monday’s trade the first opportunity for investors to react to the surprise.
Swiss bank UBS dropped as much as 3.3 per cent, before recovering to trade 0.2 per cent lower on the day. Luxury company Richemont was down 1.9 per cent.
Elsewhere in Europe, stocks were higher on Monday, as they recouped some ground after Friday’s sharp declines, which followed the new tariff announcements and weak US jobs data. The Stoxx 600 gained 0.6 per cent and Germany’s Dax added 1.3 per cent.
Switzerland is home to some of the world’s biggest pharmaceutical companies, which are highly reliant on exports to the US. Also on Thursday, Trump demanded “binding commitments” from global pharmaceutical groups to lower prices for US consumers, sending share prices falling across the industry.
Swiss pharma company Roche was 1.7 per cent lower.
Analysts at Swiss private bank Lombard Odier said the 39 per cent tariff and associated uncertainties over US-Swiss trade “prompt us to adopt a more conservative assumption” on the outlook for the Swiss economy. They cut their forecast for 2025 GDP from 1.1 per cent to 0.9 per cent, adding that their forecast would decline further if the global pharmaceutical industry was hit with higher levies.
“The longer such tariffs stay in effect, the bigger the risks for the Swiss economy,” they added. “We expect Bern to intensify its negotiations with the Trump administration.”
The Swiss franc continued to slide against the euro, slipping 0.3 per cent on top another 0.5 per cent fall on Friday.
“If those tariffs stick, this will add to the disinflationary forces in Switzerland, which are keeping CPI near 0 per cent year on year,” said Chris Turner, global head of markets research at ING.
The Swiss currency has soared this year in response to the turmoil prompted by Trump’s erratic policymaking, as investors have sought alternatives to US assets. The move has prompted the Swiss central bank to cut interest rates to zero to tackle lagging inflation and the strong currency, and spurred some bets it could go even further, to negative rates.
The yield on the 2-year Swiss government bond, which tends to track interest rate expectations, fell 0.04 percentage points on Monday to minus 0.17 per cent, taking it to its most deeply negative level since mid-June.
The Swiss franc slipped against the dollar on Monday, falling 0.5 per cent. The currency had also dropped in early trading on Friday, but closed higher against the dollar after weak US jobs data sent the greenback sharply lower.
The dollar continued its decline on Monday, falling 0.4 per cent against a basket of other major currencies.
(Removes erroneous reference to Rolex share price)
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