What about this year-end rally? Investors are still waiting in vain for a final push in the stock markets this year. Over the past few decades, SMI has increased four-fifths in December. But this year, the leading Swiss index has dropped two percent since the beginning of December.
Investors do not have to give up hope completely yet. The stock market is expecting this week. The Federal Reserve will announce its next rate hike on Wednesday. The Swiss National Bank (SNB) will follow the interest rate decision on Thursday.
Sensitive for SNB Chairman Thomas Jordan (59): He should announce rate hike with the European Central Bank (ECB). The ECB will also announce its interest rate decision on Thursday – but later in the day than the SNB.
This is what central banks expect.
Fed Chairman Jerome Powell (69) signaled lower rate hikes in a speech he delivered at the end of November. In light of strong economic data, concerns have emerged recently that the US Federal Reserve will not be able to curb interest rates. The voltage increases. Overall, the Fed and ECB are expected to increase interest rates by 0.5 percentage points each.
The SNB is likely to slow down. Credit Suisse economist Maxime Botteron expects the key interest rate to be increased by between 0.25 percent and 0.75 percent after the last big steps. “Inflation fell faster than the SNB expected in September,” writes Botteron’s management report. “The inflation outlook continues to improve as global supply chains revert, leading to significant reductions in shipping costs and normalization of delivery times.” These improvements should contribute to lowering inflation in 2023.
Good inflation figures from the USA and Germany
An important first indicator is inflation data released Tuesday from Germany and the United States. Inflation in Germany remained high as expected in November, but remained at 10 percent. Inflation rate in America fell to 7.1 percent from 7.7 percent in November. The trend is moving in the right direction.
In other words, everything is ready for the year-end rally in the stock markets. Now all eyes are on central banks, who can lay the groundwork for this on Wednesday and Thursday.