Nearly all Fed officials expect additional rate increases this year, according to the minutes, reinforcing market expectations. Fed staff said a recession remains likely, though its potential starting point has been pushed back. Thus, the minutes of officials’ June meeting, released Wednesday, offered little that would alter recent market expectations of another increase at their July 25-26 meeting to combat inflation. The Fed last month held its benchmark federal-funds rate steady in a range between 5% and 5.25%, its first pause after 10 consecutive increases since March 2022, when officials lifted it from near zero. Officials at the June meeting penciled in two more increases this year, and the minutes said that projection would be a valuable tool in shaping public expectations about the need to raise rates further to bring inflation down to the Fed’s 2% target. The Fed’s rate increases aim to slow the economy by raising the cost of borrowing, and reducing asset values. Inflation and economic activity didn’t ease as much during the first half of 2023 as Fed officials and many private-sector economists expected. Layoffs retreated last week, adding to evidence of a solid labor market, and the government said economic growth was stronger than previously estimated in the first quarter.

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On Wednesday, the SMI lost 0.2 per cent to 11,194 points. Among the 20 SMI stocks, there were 16 price losers and 4 price winners. 16.07 (Tuesday: 11.51) million shares were traded. The top performers were the heavyweights Roche (+0.7%), Novartis (+0.2%) and Nestle (-0.1%), which are considered defensive and less sensitive to the global economy. Swisscom shares, also considered defensive, rose 0.3 per cent. At the bottom, insurers' shares were among those that were also conspicuously weak across Europe, without traders having a concrete explanation at hand. Swiss Re lost 1.1 per cent, as did Zurich Insurance. Geberit was the day's laggard, down 1.7 per cent. Following disappointing economic data from China, Richemont tumbled 0.9 per cent and, in the second tier, Swatch dropped 1.5 per cent. The luxury goods company and the watch manufacturer generate a large part of their sales in China.

The European stock markets closed in negative territory on Wednesday, with investors expressing concern about the slowdown of the world economy. The Stoxx Europe 600 index lost 0.7% to 457.9 points. In Paris, the CAC 40 and SBF 120 were each down 0.8%. The DAX 40 in Frankfurt shed 0.6%, and the FTSE 100 in London gave up 1%. Casino's share price fell by 32.9%, after the retail group presented the content of the restructuring offers it had received, confirming their massively dilutive effect on existing shareholders. European aerospace and defence group Airbus (+1.2%) announced on Wednesday that it had signed a memorandum of understanding with Mexican low-cost airline Viva Aerobus for the supply of 90 A321neo single-aisle aircraft. The technology and defence group Thales (+0.7%) signed a contract on Wednesday with the Swedish Armed Forces Materiel Administration for the supply and installation of SMART-L Multi Mission long-range radars. Stellantis (-0.6%) on Wednesday unveiled its new "STLA medium" production platform, on which some of its electric vehicles will be produced over the next few years. In Vienna, Kapsch Traffic advanced by 19.2 per cent. Autoticket anticipates 243 million euros from the arbitration proceedings against the Federal Republic of Germany due to the termination of the operating agreement for the collection of the passenger car toll. Autoticket is an equally owned joint venture of CTS Eventim and Kapsch Traffic. The much larger CTS Eventim hardly reacted to the outcome of the arbitration proceedings. Evotec shares jumped by 2.7 per cent reflecting the news that its Seattle-based subsidiary Just-Evotec Biologics had won a contract worth up to $74 million from the US Department of Defense.

Major stock indexes edged lower in a quiet trading session Wednesday after the release of the Federal Reserve’s June meeting minutes and weak economic data out of China. The S&P 500 and Nasdaq Composite both slipped 0.2%, while the Dow Jones Industrial Average dropped 0.4%. Meta Platforms was among the S&P 500’s best performers. The social media giant’s shares rose 2.9% ahead of the expected Thursday release of its Twitter competitor, named Threads. Meta shares closed at the highest level since early 2022. Shares of Moderna advanced 1.5% after reports that it had signed a deal to work toward researching, developing and manufacturing medication in China. Snap rose for a ninth consecutive session, bringing gains over that period above 18%. United Parcel Service shares fell 2.1% after the union representing more than 300,000 of its workers said labor talks had collapsed. Shares of Las Vegas Sands and Wynn Resorts also declined. Both were among the worst S&P 500 performers. The largest technology companies are still responsible for the bulk of the S&P 500’s 16% gain this year, however the index’s summer rally has so far provided some positive signs for investors concerned with the index’s recent lack of breadth. Rivian (+4.5%) continued to climb on Wednesday, following Amazon's announcement on Monday evening that the brand's first electric vans would be launched in Germany. The stock had jumped by 17.4% on Monday, following the announcement of higher-than-expected sales for the last quarter and an acceleration in its production rates. Electric vehicle manufacturer Tesla gained 1%, having already jumped on Monday on the back of higher-than-expected sales. General Motors (+1.2%) announced on Wednesday that it delivered 691,978 vehicles in the second quarter in the United States, up 19% year-on-year. Total sales included more than 15,000 electric vehicles, the group specified. Goldman Sachs raised its recommendation on Netflix (+1%) from "sell" to "neutral" as the subscription video service publishes its quarterly results on 19 July. The bank also raised its price target from $230 to $400.

Stocks in Asia mostly fell on Thursday. In Shanghai, the Composite Index drops by 0.5 per cent. The Hang Seng Index in Hong Kong loses 3.1 per cent. Among individual stocks in Hong Kong, Huabao International slumps nearly 12 per cent on suspicion of corruption after an executive director of the company was arrested and his offices were searched. Huabao is a manufacturer of - among other things - fragrances and flavours. The Nikkei 225 index falls by 1.8 per cent in Tokyo. Fear of rising interest rates weighs particularly on shares of the electronics and mechanical engineering sectors. The Kospi in Seoul sheds 0.9 per cent.

U.S. Treasury yields finished higher on Wednesday, after minutes of the Federal Reserve’s June meeting showed nearly every policy maker agreed on the need for more interest rate hikes this year. The 10- and 30-year yields ended at their highest levels since the March to May period. U.S. financial markets were closed on Tuesday for the Fourth of July holiday. The 10-year Treasury note yield rose by 7 basis points to 3.932%, compared with 3.858% on Monday evening. The 2-year Treasury note yield remained virtually unchanged at 4.945%.

Target price Schindler: JPMorgan upgrades to CHF 230 (205) - Neutral

ABB target price: Barclays lifts to CHF 32 (30) - Equal Weight

Target price Clariant: JPMorgan cuts to CHF 14.50 (17) - Neutral

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