Swiss Equities Advance Ahead of US Fed Rate Move

The Swiss Market Index was 0.35% higher on Wednesday's close, reflecting upbeat investor sentiment hours before the US Federal Reserve makes its much-awaited monetary policy decision.

The Fed is widely expected to keep the fed funds rate unchanged at 5.25% to 5.50%, with economists more focused on possible hints regarding the timing of rate cuts. "While there is little prospect of an imminent policy change, the Federal Reserve thinks it will likely be appropriate to cut rates and move its stance towards a more neutral footing later this year, assuming the data cooperates," ING said.

"Monetary policy is in restrictive territory and we see scope for the Fed to cut rates by 125bp this year, starting in June," according to the Dutch lender.

Back at home, the Swiss National Bank SNBN is due to deliver its first interest rate decision for the year on Thursday. The SNB is widely expected to hold rates steady at 1.75%. However, some economists from Barclays, Citigroup and Julius Baer BAER, among others, believe that the Swiss central bank will initiate a surprise rate cut.

"Combined with a resilient economy, we expect the SNB will consider it can still afford to wait until its June meeting before it starts cutting rates," Bloomberg senior economist Maeva Cousin said.

In company news, Swiss financial market regulator FINMA will conduct two in-depth stress tests and 40 on-site reviews at UBS Group UBSG in 2024. The plan is part of a move to increase supervision of the bank following its merger with Credit Suisse. The Swiss lender was 0.94% down at closing.