BRUSSELS (dpa-AFX) - The Switzerland stock market ended on a high note on Tuesday, in line with markets across Europe, amid hopes the Federal Reserve's move to expand its bond-buying program and a likely $1 trillion infrastructure package by the Trump administration will significantly boost the U.S. economy and help fuel global growth.
Investors were also reacting positively to news about a potential new drug to cure seriously ill coronavirus infected patients. A report from the Federal Government's expert group that said the Swiss economy is set for its worst slump since 1975 this year failed to deter traders from picking up stocks.
The benchmark SMI ended with a gain of 191.73 points or 1.95% at 10,034.29, after rising to a high of 10,098.50 in the final hour.
Among the top movers, Sika gained 4.3%, while Alcon, Credit Suisse, LafargeHolcim, Geberit and UBS Group climbed up 3 to 3.7%.
Lonza Group ended nearly 3% up. Swisscom, ABB, Novartis and Adecco ended stronger by 2 to 2.5%. Swiss Life Holding, Zurich Insurance Group, Swiss Re, Swatch Group and SGS also ended sharply higher.
In the midcap section, Dorma Kaba Holding, OC Oerlikon Corp, Straumann Holding, Dufry, Logitech and Vifor Pharma moved up 3.6 to 5%.
AMS, Helvetia, Lindt & Spruengli, Sonova, Partners Group, Georg Fischer, BB Biotech, Kuehne & Nagel and Temenos also rose sharply.
According to a report released by the Federal Government's Expert Group, Swiss economy is set for its worst slump since 1975 this year due to the impact from the coronavirus, or Covid-19, and a revival is likely in the second half of the year, if there is no second wave of the pandemic.
Gross domestic product adjusted for sporting events is forecast to fall by 6.2% this year, which is slightly better than the 6.7% decline predicted in April, the State Secretariat for Economic Affairs, or SECO, said. The unemployment rate is expected to average 3.8%.
Experts expect private consumption to remain subdued for the rest of the year due to the high uncertainty surrounding the pandemic and also projected a significant reduction in investment in machinery amid the underutilized production capacity and deterioration in businesses' financial situation.
The Swiss economy is likely to grow 4.9% in 2021, which is smaller than the 5.2% expansion predicted in April. This projection is based on the assumption that no renewed intensification of the health policy measures becomes necessary, that the second-round economic effects in the form of lay-offs and corporate bankruptcies remain limited and that demand from abroad returns to normal levels gradually.
The report says the labor market will improve only very slowly and the unemployment rate is forecast to climb further to 4.1% next year. Employment is expected to log only a minimal rise.
'The course the economy will take hinges on the progression of the pandemic,' the SECO said. 'Forecast uncertainty therefore remains extraordinarily high.'
Further, the risk of upheaval on the financial markets and further upward pressure on the Swiss franc is high amid rising debt levels and the risk of defaults and insolvencies, globally, the report added.
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