SMI closes down 0.5% amid Fed hawkishness, oil price rises

The Swiss Market Index (SMI) closed on Tuesday with a loss of 0.5%, dropping to 13,809 points after a volatile session that saw it briefly hit its lowest level since mid-June. Rising oil prices and higher US Treasury yields contributed to the decline, alongside growing concerns over a potential Federal Reserve rate hike on Wednesday. Anxieties about a Zinserhöhung (rate hike) by the Fed dampened investor sentiment, pushing the SMI down by 0.5% at close. Out of 20 constituents, 10 underperformed, with UBS (-3.4%) and Partners Group (-2.6%) among the worst performers. UBS faced challenges from Bank of America’s downgrades to its earnings outlook and political risks tied to a Ständeratsabstimmung (parliamentary vote) on capital regulation. Richemont (-1.9%) was weighed down by weaker-than-expected retail sales data from China, while Partners Group’s stock decline reflected rising borrowing costs. Defensive sectors like telecommunications and industrial manufacturing saw gains, with Swisscom (+2.1%) and ABB (+1.6%) leading the charge. Pharma firms Nestlé (-1.7%) and Roche (-0.2%) also underperformed, though insurance companies Zurich (+1.1%) and Swiss Re (+1.1%) benefited from sector-specific shifts and positive branch trends. In broader market segments, SMG (-2.9%) lost ground due to a restructuring in its shareholder base, while Medacta (-4.2%) and Temenos (-5.2%) faced downgrades and general market pressure. On the upside, biotech firm Bioversys (+4.4%) surged after Citigroup raised its price target, and Tecan (+6.8%) outperformed. Sunrise (+3.2%) also rose, mirroring Swisscom’s gains, while Centiel (-1.1%) and Dottikon ES (+1.2%) showed mixed recovery after a 15-month low. Industrials (+0.8%) and technology (+0.7%) sectors outperformed, while consumer goods—both cyclical and non-cyclical—declined by 1.4% and 1.2%, respectively. In New York, the Dow Jones Industrial Average (-0.96%) and S&P 500 (-0.47%) also fell, while the Nasdaq 100 (-0.42%) lagged behind due to lingering concerns over AI security and semiconductor demand. The Fed’s third meeting under new Chair Kevin Warsh is expected to raise rates by 0.25 percentage points to a 3.75–4.00% range, though market volatility persists. Rising US Treasury yields—now above 5%—and Brent crude prices above $100/barrel reflect persistent geopolitical tensions in the Middle East, fueling inflation fears. Chiptitan Qualcomm (+2.8%) and Arm Holdings (+3.4%) led Nasdaq gains, while Steel Dynamics (+2.1%) benefited from stricter Chinese steel production controls aimed at reducing overcapacity. However, crypto-related stocks like Coinbase (-7.5%) and Strategy (-5.4%) underperformed amid regulatory uncertainty over a potential US crypto law. BlackRock reiterated its