Switzerland's economy expanded at a faster pace in the second quarter, led by both industry and services sectors, preliminary estimates from the statistical office showed. Gross domestic product grew 0.5 percent quarter-on-quarter, flash estimates from the Federal Statistical Office showed. That followed a 0.3 percent increase in the first quarter after adjusting for sporting events. 'Industry was the main contributor to the slightly above average growth. The services sector also grew overall,' the statistical office said. Latest data may give the SNB some caution against cutting rates much further this year - but policymakers will be more interested in the development of domestic demand, which will be released in three weeks' time as part of the full GDP breakdown, Capital Economics economist Adrian Prettejohn said. GDP unadjusted for sporting events probably rose by 0.7 percent sequentially due to the Olympics and the European Football Championship being held this year, the economist reckoned, as these events normally add around 0.2 percentage points to Q2 GDP in Switzerland as their organisers are based in the country. Non-adjusted GDP grew 0.5 percent in the first quarter. 'Looking ahead, we think that real income growth will support consumption while moderate economic growth in the euro-zone should support Swiss exports,' Prettejohn said. 'Our forecast is for the Swiss economy to grow around its current rate in the second half of the year.'

The Swiss stock market continued to edge higher on Thursday. The SMI gained 0.6 per cent to 12,150 points after reaching a high for the day of 12,188 points. Of the 20 SMI stocks, there were 16 price gainers and 4 price losers. A total of 16.10 (previously: 18.3) million shares were traded. Among individual stocks, Geberit shares fell by 1.8 per cent. In particular, the sanitary product manufacturer's forecast for 2024 generated little enthusiasm. ABB shares increased by 1.7 per cent. The industrial sector in the Stoxx 600 recorded a performance of over 16 per cent in the past twelve months, outperforming the broad market by around 3.5 percentage points, according to Ulrich Stephan, CIO for Private and Corporate Clients at Deutsche Bank. UBS shares lost 1.0 per cent. Participants attributed this to profit-taking after the significant performance of 5.3 per cent the previous day. Thanks to better business, especially in the investment bank, UBS generated more revenue and earnings than expected in the second quarter. In addition, the Swiss bank is advancing faster than expected with the integration and reduction of costs following the takeover of rival Credit Suisse.

European stocks were hovering higher Thursday after markets were all but assured of the Federal Reserve cutting rates with yesterday's inflation data. The Stoxx Europe 600 index gained 1.2% to 509.9 points. In Paris, the CAC 40 and SBF 120 advanced by 1.2% each, with trading volumes limited due to a bank holiday in France. The DAX 40 in Frankfurt rose by 1.7% and the FTSE 100 in London climbed by 0.8%. L'Oréal underperformed the CAC 40, rising just 1% to 384.20 euros. JPMorgan lowered its target price for the world's leading cosmetics company from €410 to €390, while maintaining its ‘neutral’ recommendation. L'Oréal's growth could suffer in 2025 from continuing weak demand in China and lower pricing in Europe and North America, according to JPMorgan. Dutch electronic payments specialist Adyen jumped 12% in Amsterdam after reporting gross operating profit (Ebitda) of €423.1 million for the first half of the year on Thursday, compared with the consensus forecast of €418 million quoted by UBS. In the wake of Adyen, its French rival Worldline gained 2.8% in Paris.

U.S. stock indexes rallied after fresh data showed that retail spending grew last month, assuaging some investor fears about an economic slowdown. The S&P 500 climbed 1.6% Thursday, rising for a sixth consecutive session. The tech-heavy Nasdaq Composite added 2.3%, while the Dow Jones Industrial Average rose 1.4%, or about 550 points. A trio of fresh data points reassured investors that consumer spending, the backbone of the U.S. economy, is holding up. Retail sales—a measure of spending at stores, online and in restaurants—rose a seasonally adjusted 1% in July from the month before, higher than economists expected. Weekly jobless claims came in slightly below consensus forecasts, and Walmart reported strong sales for its latest quarter, with executives saying they don’t see signs of fraying demand. The retailer’s shares rose 6.6%. Investors have worried that the economy would slow after data showed job growth slowed sharply in July and U.S. retail giants, such as Home Depot, McDonald’s and Disney, sounded warnings about flagging consumer spending. The data released Thursday strengthened expectations for the Federal Reserve to lower interest rates by a quarter-percentage point at its September meeting. Traders in interest-rate futures were placing a 77% chance of a quarter-point cut next month, up from 64% Wednesday, according to CME data. Bets for a bigger half-point cut, which some investors thought might be needed to cushion the economy, fell. Among individual stocks, shares of Ulta Beauty jumped 11.2%, the best performer in the S&P 500. Warren Buffett’s Berkshire Hathaway disclosed its stake in the beauty company after the market closed Wednesday. Cisco Systems shares climbed 6.8%, after the networking-equipment company said it plans to cut its workforce by 7%, or about 6,000 people.

In Asia, major indexes broadly closed with gains on Friday, driven by positive US data. The upward movement was particularly pronounced in Tokyo, where the Nikkei-225 rose by 3.1 per cent. The Kospi in Seoul increased by 1.8 per cent after the public holiday break the previous day. The Shanghai Composite added 0.1 per cent. The Hang Seng Index in Hong Kong climbed 1.7 per cent, driven by significant increases in JD.com and Alibaba. Alibaba is up 4.1 per cent, although the results for the first quarter fell short of analysts' expectations. JD.com rose by 8.9 per cent. The e-commerce group almost doubled its profit in the second quarter. Among individual stocks in Seoul, Hyundai Motor gained 5.8 per cent. The company presented a safe battery system for electric vehicles.

U.S. government debt sold off Thursday after a stronger-than-expected retail-sales report for July and a decline in weekly jobless benefit claims. Yields and prices move inversely. The 10-year Treasury note yield rose by 8 basis points to 3.919%. The 2-year Treasury note yield jumped by 14 basis points to 4.103%. The resilience of the US economy and inflation remaining above the Fed's 2% target are leading a growing number of investors to anticipate a rate cut limited to a quarter-point in September. According to FedWatch, the probability of a sharper cut of half a point now amounts to only 25% on the futures markets, compared with 36% on Wednesday evening and 55% last week.

Swisscom price target: Barclays downgrades to CHF 450 (500) - Underweight
Target price Tecan: Berenberg lowers to CHF 328 (400) - Buy
Straumann: Barclays upgrades target price to CHF 135 (134) – Overweight

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