Switzerland's main stock index opened lower on Tuesday, with the SMI down 0.55% after trading began. Pre-open indications had been mixed: IG Bank placed the index 0.26% lower, Julius Baer positioned it 0.1% higher, and all 20 SMI shares were slightly positive. The index had gained 0.75% on Monday.
Investors were cautious ahead of the Federal Reserve's rate decision on Wednesday, while renewed Middle East tensions, higher oil prices and fresh concerns about the artificial-intelligence sector weighed on sentiment. Iranian Revolutionary Guards said an oil tanker hit a sea mine and caught fire in the Strait of Hormuz, a claim the US military disputed. New attacks on Saudi Arabia and the closure of a major east-west pipeline raised energy-supply concerns. Brent crude rose 1.6% to $107.40 per barrel (159 liters), above $107, while WTI gained 1.7% to $103.15. Gold eased to $4,291.59 per troy ounce.
Bond markets also added pressure: the 10-year US Treasury yield rose to 5.025%, the highest level since 2007. A market comment said it increased pressure on highly valued growth stocks and companies with high financing needs. Traders largely expected the Fed to raise rates by 25 basis points on Wednesday, although a market observer said current inflation pressure was driven mainly by higher energy, freight and refinery costs, which higher rates could only partly dampen.
Among SMI heavyweights, Roche fell 0.7% and Nestlé dropped 0.8%, while Novartis was little changed; all three had posted clear gains on Monday. Partners Group lost 1.9% and UBS fell 4% after Bank of America warned on Monday of stagnant trading revenues in the current quarter.
SMG shares fell 8% on ownership changes. Mobiliar reduced its stake in the online advertising platform, with its holding reported at 11.8%, while TX Group increased its share to 34.9% from 31.4%. No pre-market prices were available for SMG. Centiel rose 7% after the utility said it would continue expansion and acquire a production plant in Ticino.
On the broader Swiss market, semiconductor stocks appeared set for a rebound. AMS Osram, which lost 11% on Monday, was 2% higher in pre-market trading.
Asia's markets were also affected by Middle East tensions and oil prices. A new attack by Yemen's Iran-backed Houthi rebels on Saudi Arabia raised concerns about crude supply, while investors waited for rate decisions in the US and Japan and debated a slower pace of AI development. The MSCI index of Asian stocks excluding Japan slipped slightly, while Tokyo's benchmark rose 0.9% and Shanghai gained modestly. Yokoo Akihiko of Mitsubishi UFJ Bank said markets were likely to remain focused on the risk that higher oil prices increase inflation pressure and push rates higher.
In Asian currency markets, the dollar rose 0.3% to 154.87 yen, gained to 6.7097 yuan and was 0.15% higher at 0.8190 Swiss francs. The euro was little changed at 1.1536 dollars and edged up to 0.9437 francs.
US equities on Monday were supported by a moderate easing in oil prices. The Nasdaq 100 fell 0.82% to 29,127.16, pressured by AI-security concerns that hit semiconductor stocks. The S&P 500 narrowed its loss to 0.48% at 7,619.98, and the Dow Jones Industrial Average fell 0.29% to 52,421.20 after interim gains.
AI concerns intensified after prominent industry figures raised safety and regulation issues. Dario Amodei, chief executive of Anthropic, said that after the shock of autonomous AI hacking attacks, he was concerned 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. Growing calls for AI regulation had already weighed on Asian technology stocks, including South Korea's Kospi, while European investors also avoided technology shares.
Timothy Arcuri of UBS described the AI debate as a new, significant risk factor clouding the chip industry. He did not believe it would cause a massive fundamental slowdown, noting that leading AI labs had recently launched far-reaching infrastructure investments. Meeting expectations, he said, would require assuming an exceptionally positive scenario for infrastructure expansion.
Cybersecurity stocks benefited from the AI-security debate. Shares of CrowdStrike, Palo Alto and Okta rose between 12% and 14%.
