The Swiss stock market plunged more than 12% after the surprise announcement of the abolition of the central bank of the floor rate between the Swiss franc and the euro.
The stock markets do not like being taken by surprise and the announcement of the abandonment the minimum rate of the Swiss franc against the euro by the Swiss National Bank is clearly a. The result was immediate on equity markets in the wake of the surge in the Swiss franc.
After opening up 0.66%, the SMI of Zurich Stock Exchange was moving towards a fairly quiet day. But the sudden announcement of the SNB caused a drop in Swiss equities. The index rose in minutes 9252 points, it was 10.30 in 8461 point, 20 minutes later, a dip of 8.5%! More than two hours after, investors are still not able to digest the news, the SMI currently plunged 12.1%. Nervousness is palpable before the press conference the SNB expected at 13:15. “A shock, an explosive reaction” is the feeling that comes up frequently in the discourse of commentators.
Richemont, Swatch, down sharply Adecco
According to research firm Capital Economics in London Economic Analysis, told AFP, the decision of the SNB is “surprising”. “We believe that the SNB will soon be forced to intervene to prevent rapid appreciation of the Swiss franc vis-à-vis the euro”, said the Capital Economics analysts. “Switzerland’s decision can clearly understand as a preventive action just before the ECB launched its sovereign debt buyback program on January 22, which goes one step further dilute the value of the euro and its defeat monetary policy “ahead of his side Dembik Christopher, an economist at Saxo Bank.
The diving Swiss Exchange is explained in part by the risk of loss of competitiveness of multinational companies very oriented abroad. The penalty is also severe for the shares of these companies. 14 SMI values are losing more than 10% in stock, including Richemont (luxury – 16.7%), Swatch Group (watches, -16.2%), Actelion (-15.8% pharamcie) and Julius Baer ( Bank -14.9%). Nestlé loses 9.78% side.
Some rates into negative territory
The surprise was such markets, the European stock markets were, time, driven by the plunge of the Zurich Stock Exchange. In Paris, the CAC 40 Index, which opened up 0.94%, up 2.46% lost before gradually reduce its losses to 0.25% (4,212 points).
The effect is also very clear on Swiss bond markets. Bond yields for a period of 1 to 9 years, all fell into negative territory, reflecting the decision of the Swiss central bank to lower its key rates -0.75%. One benchmark 10-year bonds (maturing in July 2025) even see performance drop to -0.09%.
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