Corporate earnings and inflation will be decisive for the SMI this week
The Swiss stock market continued its rebound last week to climb to a nearly one-month high above 11,000 points. The SMI has been supported by a renewed risk appetite among market participants since late June, as evidenced by the outperformance of cyclical and growth sectors relative to defensive sectors.
The SMI may continue to rebound in the near term as market sentiment continues to normalize. Indeed, the sentiment is still negative, with the Fear & Greed index indicating a state of “fear”, and could therefore return to a “neutral” level before the risk/reward ratio favors the sellers.
Nonetheless, the underlying outlook remains bearish due to the economic slowdown combined with monetary policy tightening, including in Switzerland, where the SNB unexpectedly raised its key rate last month and is expected to do so again in September.
The next key catalysts to watch will be corporate earnings, with US banks leading at the end of the week, as well as US and Eurozone inflation numbers on Wednesday.
SMI daily price chart – key levels