Stock market US Federal Reserve ensures opening gains on the Swiss stock market

The financial markets in Asia and Europe are reacting with price gains to the interest rate turnaround initiated by the US Federal Reserve the previous evening with a major first step. This is also giving the Swiss stock market a tailwind.

In early trading on Thursday, the leading Swiss index SMI is trading well above the 12,000 mark. Futures for Wall Street are also pointing to a friendly opening for today's trading, even though the indices there initially closed slightly lower after the decision.

The US Federal Reserve (Fed) cut its key interest rate by 50 basis points to between 4.75 and 5.00 percent on Wednesday. A smaller move of 25 basis points was also discussed beforehand. "In the past 20 years, such a large interest rate cut has only been seen during the global financial crisis and the coronavirus pandemic," according to a trader commentary.

Market participants agree that the fact that the markets are nevertheless reacting so calmly is mainly due to the statements on the way forward. After all, Fed Chairman Jerome Powell made it clear at the media conference that this major initial step should not be seen as a pacemaker for the future interest rate path.

European stock markets up

The Swiss benchmark index SMI gained 0.53 percent to 12,046 points at around 9.40 am. Of the 30 most important stocks (SLI), 27 are up and only three are down.

Other European indices such as the DAX in Frankfurt (+0.8%) and the FTSE100 in London (+0.6%) are also well up. Price gains were more pronounced in Asia, where the Japanese Nikkei225 even rose by 2.1%.

The Swiss franc is less in demand in this new monetary policy environment. The US dollar is trading at CHF 0.8460, up on the CHF 0.8456 recorded late Wednesday afternoon. The Swiss currency has also weakened against the euro. The euro costs 0.9425 francs after 0.9400 francs.

SDA