04.08.25 - Swiss equities only a short hit - 72hours time window

As Swiss market was closed on Friday due to the Swiss National Day, all eyes were on the Swiss stock market this morning. How would investors react on the implications of the newly imposed 39% US import tariffs on Swiss goods, set to go into effect on 7 August.

Markets:

• Swiss Market Index (SMI): -0.35% (opened this morning at -1.6%)

• Swiss Bond Yields: Lower across the curve; 10-year yield down to 0.30%

• Swiss Franc (CHF): Initially weaker, but regaining ground — USD/CHF at 0.8084, EUR/CHF at 0.9347

My View: Swiss equities, particularly the large pharmaceutical names, continue to show notable resilience. There seems to be a growing trend among retail investors: buying dips. The recurring pattern of markets rebounding after small drawdowns has reinforced this behavior, with more investors adopting it as a short-term strategy.

However, this approach effectively assumes that a US-Swiss trade deal is within reach. A risky bet given recent signals from Washington. According to U.S. trade representative Jamieson Greer, the newly introduced tariffs by President Trump are “almost final” and not expected to be the subject of negotiations anytime soon. However, it seems that there is a time window of 72 hours.

This casts doubt on hopes for a swift resolution and introduces a structural risk for key Swiss exporters, particularly in sectors like pharma, machinery and luxury goods. While the market still holds up, the medium-term outlook hinges heavily on geopolitical developments that may not turn favorable anytime soon.

Therefore I did not buy into this dip.

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