The Swiss Market Index (SMI) slipped 0.1% to 14,323 points at the Wednesday open as geopolitical risks and surging oil prices dampened investor sentiment. Brent crude futures rose above $95 per barrel, extending Tuesday’s gains of 5.2% for WTI and 4.6% for Brent, amid renewed U.S.-Iran hostilities and concerns over disruptions to oil flows through the Strait of Hormuz, a key transit route for roughly one-fifth of global oil and gas shipments.
The escalation followed U.S. strikes on Iranian positions and Tehran’s retaliatory attacks on regional U.S. military bases, fueling inflation concerns. Rising energy prices pushed sovereign bond yields to multi-year highs, with 10-year U.S. Treasury yields approaching levels last seen in 2008. Asian equities followed suit, with Japan’s Nikkei 225 down 2.6% and South Korea’s Kospi falling 3.8%.
In corporate news, Nestlé shares fell 0.7% after the food giant agreed to sell its mainstream vitamins, minerals and supplements business to U.S. private-equity firm Yellow Wood Partners for $1 billion. The transaction marks the latest step in Nestlé’s portfolio restructuring, which now focuses on premium segments. The deal follows Dell’s strong quarterly results, which provided a tailwind to Swiss tech stocks despite broader losses in U.S. tech on inflation jitters.
Swiss tech names led advancers: VAT Group rose 2.8%, Comet Holding gained 4.5% and Inficon climbed 3.8%. UBS upgraded all three, citing improved sector outlooks. Montana Aerospace, a supplier to the aerospace and defense industries, also attracted attention after UBS initiated coverage with a “Buy” rating. The company appointed Michael Tojner as Executive Chairman following the surprise departure of CEO Kai Arndt in April.
On the downside, Amrize dropped 2.8% in pre-market trading, extending its recent decline after Bank of America downgraded the stock to “Underperform.” Partners Group, another laggard, fell 0.5% as the broader SMI slipped 0.3% to 14,290 points in pre-market trading at Julius Bär.
Currency markets reflected the risk-off tone, with the Swiss franc weakening against the euro and U.S. dollar. The EUR/CHF pair traded at 0.9411, above the 0.94 threshold breached earlier, while USD/CHF fell to 0.8127 from 0.8117 the prior session. The euro slipped 0.1% against the dollar to 1.1580.
Central bank policy remained a key focus, with the Reserve Bank of New Zealand raising rates by 25 basis points to 2.75% on Wednesday. Markets are pricing a near-certain ECB hike next week and a roughly 60% chance of a Federal Reserve increase in September, following hawkish remarks from Fed Chair Kevin Warsh. Canada’s central bank is also set to announce its decision later in the day.
Economic data and corporate events added to the day’s agenda. ADP nonfarm employment figures for August, expected to show a gain of 47,000 jobs, were due midday. Bayer held a capital markets day for its Crop Science division, while Vaudoise’s results were in focus among Swiss insurers. In the U.S., factory orders and the Beige Book report were also on tap, with investors eyeing wage growth and employment trends for signs of persistent inflationary pressure.
