The Federal Reserve approved an interest-rate increase of 0.5 percentage but also signalled rates may have to move even higher than previously thought to rein in inflation. Investors had widely anticipated the Fed would announce it would raise its key policy rate by half a percentage point. What they weren’t as sure of ahead of Wednesday’s meeting was how much higher Fed officials see interest rates having to go next year. Those who had been hoping the Fed might be done raising rates relatively soon may have been left disappointed. Fed officials signaled they see interest rates rising to around 5.1% by the end of next year, up from previous estimates in September of around 4.6%. Officials also said they see unemployment rising and economic growth being tepid in 2023. The decision Wednesday marked a step down after four consecutive larger increases of 0.75 point and raised the benchmark federal-funds rate to a range between 4.25% and 4.5%, a 15-year high. Most officials expect making somewhat less progress on inflation next year than they had anticipated in September. They project core inflation, which excludes volatile food and energy categories, to fall from 5% on an annual basis in October to 3.5% at the end of next year. That is up from a projection of 3% in September. Fed officials say they combat inflation primarily by slowing the economy through tighter financial conditions - such as higher borrowing costs, lower stock prices and a stronger dollar - that curb demand. The fed-funds rate influences other borrowing costs throughout the economy, including rates on credit cards, mortgages and car loans.

Wednesday, the SMI added 0.2 per cent to 11,161 points. Among the 20 SMI stocks, there were eleven price losers and seven price winners with two stocks closing unchanged. A total of 50.37 (previously: 46.98) million shares were traded. Nestle, which is considered defensive, was sought after and gained 1.4 per cent. In the pharmaceutical sector, Novartis improved by 1.6 per cent and Roche by 0.1 per cent. Credit Suisse shares (-5.7 per cent) were sold again. UBS fell by 1.7 per cent. Cyclicals such as ABB (-0.3%) and Geberit (-1.2%) saw profit-taking. The same applied to technology stocks Logitech (-1.1%) and Ams-Osram (-1.6%). In the second tier, Stadler Rail gained 0.5 per cent after announcing a substantial new order.

European stock markets closed near the water mark on Wednesday as investors opted for a cautious wait-and-see approach ahead of the US Federal Reserve's (Fed) monetary policy announcements. The Stoxx Europe 600 index was almost flat at 442.5 points. In Paris, the CAC 40 and the SBF 120 were both down 0.2%. In Frankfurt, the DAX 40 edged 0.3% lower, while the FTSE 100 in London fell 0.1%. S&P Global Ratings announced on Wednesday the end of the "watch with negative implications" on the "BBB" long-term credit rating of energy producer EDF (stable). The outlook is stable. The financial rating agency justifies this decision by the prospects of a recovery in nuclear production and profits even if risks remain. The Spanish clothing group Inditex (+3.1% in Madrid) confirmed on Wednesday its outlook for the whole of the current financial year, after a sharp rise in its operating profit for the nine months to the end of October. The sector loser of the day on Wednesday was the index of commodity companies, which has been comparatively robust since the beginning of the year, with minus 1.7 per cent. ArcelorMittal fell by almost four and a half per cent. The US bank JPMorgan had given the shares the "Negative Catalyst Watch" seal.

U.S. stocks fell after the Federal Reserve raised interest rates as expected, but also signalled rates may have to move even higher than previously thought to rein in inflation. The S&P 500 fell 24.33 points, or 0.6%, to 3995.32 after trading higher during the early part of the day. The tech-heavy Nasdaq Composite Index dropped 85.93 points, or 0.8%, to 11170.89. The Dow Jones Industrial Average lost 142.29 points, or 0.4%, to 33966.35. Losses were broad. All but one of the S&P 500’s 11 sectors ended the day lower. Tesla (-2.5% to $156.80) closed at a new low for the year after Goldman Sachs lowered its price target, which is concerned about a possible slowdown in demand for the brand's vehicles due to the deteriorating economic situation. The analyst is retaining a price target of $235, down from $305, but is maintaining his "buy" recommendation. The stock is at its lowest level in two years. Delta Air Lines (+2.8%) raised its earnings forecast for this year, saying it has met its three-year plan targets a year early. Delta is targeting earnings per share of $3.07 to $3.12 in 2022, compared with a consensus of $2.88. The group expects earnings of more than $7 per share in 2023, the target originally set for 2024. Several banks, including Morgan Stanley (-2.5%), which lent $13 billion to Elon Musk to buy Twitter, are preparing to take impairment charges on their debt because of the difficulty of reselling the debt in an uncertain economic environment, Reuters reported.

Stocks in Asia mostly fell, with Japan’s Nikkei 225 down 0.4% and the Hang Seng in Hong Kong down 1.3%. China’s Shanghai Composite slipped by 0.4%. CIFI Ever Sunshine Services plunges about 12% in Hong Kong after a major shareholder announced the sale of a large stake in the investment holding company. The Kospi in Seoul declined by 1.1 %.

U.S. government debt yields logged their fourth day of declines in the past five sessions on Wednesday, after the Federal Reserve delivered a widely expected half-percentage-point increase in interest rates and signalled that borrowing costs could go above 5% in 2023. The spread between 3-month and 10-year rates shrank to minus 83 basis points, remaining at one of its most inverted levels in 21 years. The 10-year Treasury note fell 2 basis points to 3.479%. The 2-year Treasury note lost 5 basis points to 4.224%.

UBS lifts Roche target to CHF 329 (328) - Neutral
Warburg cuts Peach Property target to CHF 70.40 (74.80) - Buy
UBS raises Novartis target to CHF 84 (82) - Neutral

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