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Negative inflation returns to Switzerland

Inflation data out of Europe on Tuesday gave a green light to both the Swiss National Bank (SNB) and European Central Bank (ECB) to continue easing their monetary policies. European equities finished Tuesday’s session somewhat higher, while both the Swiss franc and euro lost ground versus the US dollar. US equities closed up on Tuesday and Asian stocks were trading higher, led by gains in South Korea following an opposition victory in the country’s presidential election.

  • Date
  • Author Shane Strowmatt, LGT
  • Reading time 5 minutes

Swiss francs
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Swiss consumer inflation turned negative in May for the first time since March 2021, with the headline Consumer Price Index (CPI) declining by 0.1% year-on-year, following a 0% change in April. Core inflation, which excludes volatile items like fresh food and energy, dropped to 0.5% year-on-year from 0.6% previously. Monthly figures showed both headline and core CPI increased by 0.1%. Given the SNB’s target of inflation between 0% and 2%, the negative inflation rate is likely to prompt the SNB to consider further monetary easing measures to stimulate the economy and bring inflation back within its desired range. The Swiss Market Index added 0.3%, while the Swiss franc lost 0.7% versus the US dollar on Tuesday.

Euro-area inflation falls below ECB target

Inflation in the euro area decreased to 1.9% in May from 2.2% in April, falling below the European Central Bank's (ECB) target of 2%, Eurostat reported on Tuesday. This decline, the lowest since September 2024, was sharper than the market had anticipated. The drop in energy prices and a slowdown in service price increases contributed to this decrease, bolstering market expectations for another ECB rate cut on Thursday, which would be the eighth since the summer of 2024. The Euro Stoxx 50 gained 0.3%, while Germany’s DAX rose 0.7%, and France’s CAC 40 increased by 0.3%

US stocks advance on robust labour data

US stock markets closed higher on Tuesday, with the Dow Jones Industrial up 0.5% to 42,519.64 points, supported by strong labour market data. The S&P 500 increased by 0.6% to 5970.37 points, and the Nasdaq 100 rose by 0.8% to 21,662.58 points. Investors showed resilience despite ongoing trade tensions, as comments from the White House suggested potential talks between President Trump and Chinese President Xi Jinping. Supporting sentiment was data from the US Bureau of Labor Statistics, which reported on Tuesday that job openings remained steady at 7.4 million in April. Hires and total separations also showed little change at 5.6 million and 5.3 million, respectively.

South Korean stocks surge after election win

South Korean stocks surged on Wednesday, with the Kospi index rising 2.5% after opposition leader Lee Jae-myung won the presidential election. Lee’s victory is expected to enhance the value of the Korean stock market through legal reforms aimed at protecting minority shareholders. The Kospi reached its highest level since August last year, while the small-cap Kosdaq increased by 1.4%. Other Asia-Pacific markets also posted gains. Japan’s Nikkei 225 was up 1%. Australia’s S&P/ASX 200 rose 0.8%, despite Australia's economy growing by 1.3% year-on-year in the first quarter, falling short of the market’s anticipated 1.5% growth. Hong Kong’s Hang Seng Index advanced 0.5%, while mainland China’s CSI 300 also gained 0.5%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Dollar Tree, Remy Cointreau, and Voestalpine. Annual general meetings at Airbnb.

Economic data in focus: US ADP National Employment Report (14:15), Bank of Canada interest rate decision (15:45), US ISM Services Purchasing Managers’ Index (16:00), US Fed Beige Book (20:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.