The Federal Reserve continued a sprint to reverse its easy-money policies by approving another unusually large interest rate increase and signaling more rises were likely coming to combat inflation that is running at a 40-year high. The U.S. central bank lifted its federal-funds rate by 0.75 percentage point, to a range between 2.25% and 2.5%, and said it is “strongly committed to returning inflation to its 2% objective.” The rate increase won unanimous backing from the 12-member rate-setting committee. In a policy statement after the conclusion of their two-day meeting, officials acknowledged signs of slower economic activity since they met last month. “Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months,” the statement said. “The Fed is prepared to continue until they have price stability in lowering inflationary expectations,” said Quincy Krosby, chief equity strategist at LPL Financial. “That’s what the market wants. Inflation remains, and the question now is how fast is it pulling back.” Fed Chairman Jerome Powell told reporters he doesn’t think the U.S. is in a recession. “Two-point-seven million people hired in the first half of the year—it doesn’t make sense that the economy would be in recession,” Mr. Powell said.

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Wednesday, the SMI lost 0.4 per cent to 11,057 points. There were ten price losers and ten price winners among the 20 SMI stocks. 46.8 (previously: 48.02) million shares were traded. Swiss companies with quarterly figures included Credit Suisse (CS) and Holcim. The half-year figures of building materials group Holcim were perceived as very strong. Sales rose by almost 17 percent compared to the same period last year. With the growth forecast of "at least 10 percent" on a comparable basis for the full year 2022, optimistic stock market expectations were also exceeded. A new record was set for turnover, as well as for recurring EBIT. Profitability was high, with cost inflation cited as a challenge only in the Asia-Pacific region. The share price rose by 4.5 per cent. Credit Suisse shares were highly volatile and closed up 1 per cent after interim losses. A trader commented that the significance of the figures was difficult to assess because the bank was seen as being in the process of a turnaround. More important, therefore, were reports on the restructuring of the bank and future strategic priorities as well as the reduction of the cost base. In addition, the resignation of CEO Thomas Gottstein was announced. Zehnder's figures for the first half of the year were viewed positively. Both sales and EBIT were 5 and 7 per cent above market expectations, respectively, according to an analysis by Stifel. The share price rose by 7.4 per cent.

Banks and technology stocks lifted European shares in early action on Wednesday, ahead of a Federal Reserve decision. The Stoxx Europe 600 index ended 0.5% higher at 428.1 points. In Paris, the CAC 40 and the SBF 120 gained 0.8% each. The DAX 40 in Frankfurt advanced 0.5%, while the FTSE 100 in London added 0.6%. The biggest riser on the SBF 120, Elior, soared 31.4% after reporting better-than-expected revenues in the third quarter of its 2021-2022 financial year, which ends in September. Atos (+16.2%) announced an agreement on new bank financing that should allow it to complete its transformation plan, which involves splitting the company into two separate entities. Worldline (+13.7%) reported significantly better than expected first half results, including organic growth of 13.5% in the second quarter. M6 (-7%) and TF1 (-1.3%) received a preliminary unfavourable opinion from the French Competition Authority on their merger project. Michelin (-6.1%) reported a decline in net profit in the first half of the year and lowered its outlook for its main markets due to the consequences of the war in Ukraine and health restrictions in China. UniCredit (+9.1% in Milan) raised its projections for fiscal 2022. Deutsche Bank (-1.6% in Frankfurt) warned that business conditions were deteriorating and that it would miss a key cost target this year.

U.S. stocks rallied Wednesday afternoon, extending earlier gains, after the Federal Reserve signalled it would move aggressively to tame inflation and the central bank’s chairman argued that the nation’s economy hadn’t yet slipped into a recession. The S&P 500 rose 102.56, or 2.6%, to 4023.61. The Dow Jones Industrial Average advanced 436.05, or 1.4%, to 32197.59. The Nasdaq Composite had its biggest one-day percentage gain in more than two years, surging 469.85 points, or 4.1%, to 12032.42. Stocks rallied earlier on Wednesday after megacap technology companies Microsoft and Google parent Alphabet reported earnings that were better than investors had feared. Investors are monitoring earnings results this week, the busiest of the earnings season, for clues about how companies are navigating decades-high inflation. In earnings Wednesday, Shopify warned it expects higher inflation and rising rates to pressure consumers’ wallets, and noted that the strength of the U.S. dollar weighed on results. The company reported a loss in the second quarter. The Wall Street Journal reported this week that the company is cutting 10% of its global workforce. Shopify rose $3.69, or 12%, to $35.24, a day after falling 14%. Sherwin-Williams fell $22.32, or 8.8%, to $231.97 after it reported a profit decline amid lower-than-expected sales, as the paint-and-coating manufacturer contended with high raw-material costs. Spotify shares climbed $12.64, or 12%, to $116.61 after the music-streaming giant reported accelerated user growth and a rise in advertising revenue for the second quarter.

In Asia, major indexes broadly closed with gains, with a maximum of 0.8 per cent in Seoul. In Tokyo, the Nikkei index climbed 0.2 per cent to 27,779 points. Further losses in real estate companies slow down the index in Hong Kong (-0.6%) . Country Garden shed another 2 per cent, China Vanke 2.3 and Longfor 4.4 per cent. The shares of the industrial robot manufacturer Fanuc added around 3.3 per cent in Tokyo after a better-than-expected net result in the first financial quarter.

U.S. Treasury yields turned broadly lower after the Federal Reserve delivered a widely expected 75 basis point interest rate hike on Wednesday, while the spread between the 2- and 10-year yields remained deeply negative in a worrisome sign for the economic outlook. The 10-year Treasury note was yielding 2.779%, down less than 1 basis point, with the 2-year Treasury note remaining almost stable at 3.057%.

Jefferies increases Unilever to 4,600 (4,130) p - Buy

BoA lifts Esasyjet target to 560 (550) p - Buy

Jefferies cuts Veolia to EUR 25 (27) - Hold

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