The Swiss stock market widened its losses on Tuesday, with the SMI down 1.3% after opening 0.55% lower and trading slightly above the previous close in premarket indications. The index had gained 0.75% on Monday. Premarket notes at the IG Bank put the SMI 0.26% lower before the open, while Julius Bär was set 0.1% higher and all 20 index shares were described as slightly positive.
UBS and Partners Group were the main drags among financials. UBS fell 4%, while Partners Group was down 1.9%; earlier market notes had both shares losing 4%. Bank of America had warned on Monday about stagnating trading revenue in the current quarter. SMG fell 8% after ownership changes, with Mobiliar reducing its stake in the online classifieds platform to 11.8% and TX Group raising its holding to 34.9% from 31.4% as part of the transaction. No premarket prices were available for SMG. The power utility Centiel rose 7% after saying it would continue expansion and take over a production facility in Ticino.
Index heavyweights Roche and Nestlé were down 0.7% and 0.8%, respectively, after clear gains on Monday; Novartis was little changed. Broader-market semiconductor shares looked set to recover, with AMS Osram, which lost 11% on Monday, quoted 2% higher in premarket.
Renewed Middle East escalation, higher oil prices and AI-sector worries weighed on sentiment, while investors were cautious ahead of the Federal Reserve decision on Wednesday. Iran's Revolutionary Guards said an oil tanker had hit a sea mine and caught fire, a description disputed by the US military. New attacks on Saudi Arabia and the closure of an important east-west pipeline raised energy-supply concerns. Brent rose above $107 per barrel and was later quoted up 1.6% at $107.40. WTI was 1.7% higher at $103.15. Gold eased slightly to $4,291.59 per troy ounce.
The yield on 10-year US Treasuries rose to 5.025%, the highest since 2007, increasing pressure on richly valued growth stocks and companies with high financing needs, according to a market comment. Traders mostly expected a 25 basis point rate increase from the Federal Reserve on Wednesday. A market observer said current inflation pressure was driven mainly by higher energy, freight and refining costs, which higher rates could only partially dampen.
Middle East tensions and higher oil prices also weighed on Asian markets on Tuesday, with a new attack by Yemen's Houthi rebels on Saudi Arabia raising supply concerns. Investors were also waiting for rate decisions in the United States and Japan, while debate over slower AI development added unease. The MSCI index for Asian stocks excluding Japan eased slightly, while Tokyo rose 0.9% and Shanghai gained slightly. Mitsubishi UFJ Bank analyst Yokoo Akihiko said markets were likely to remain focused on the risk that higher oil prices would increase inflation pressure and push rates higher.
In Asian currency trading, the dollar gained 0.3% to 154.87 yen, rose slightly to 6.7097 yuan and was 0.15% higher at 0.8190 Swiss francs. The euro was nearly unchanged at 1.1536 dollars and slightly higher at 0.9437 francs.
In the United States on Monday, a moderate easing in oil prices provided some support. The Nasdaq 100 fell 0.82% to 29,127.16, weighed by the AI security debate and chip stocks. The S&P 500 narrowed its loss to 0.48% at 7,619.98, while the Dow Jones Industrial Average fell 0.29% to 52,421.20.
AI concerns were reinforced by comments from prominent industry figures. Dario Amodei, chief of Anthropic, said that after the shock of autonomous AI hacking attacks, he was concerned that an AI swarm could within six to 12 months take over the entire internet and potentially cause hundreds of billions of dollars in damage. He called on the industry to slow the development of its most powerful models. Emerging calls for AI regulation had already affected technology shares in Asia, including a decline in South Korea's Kospi, while European investors also avoided technology titles.
UBS expert Timothy Arcuri described the issue as a new, significant risk factor for the chip industry, but did not expect a massive fundamental slowdown, citing recent infrastructure investments by leading AI labs. He said expectations would require a positive scenario for infrastructure buildout. Cybersecurity stocks benefited from the concerns, with Crowdstrike, Palo Alto and Okta gaining between 12% and 14%.
