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Swiss growth outlook reduced on US tariffs

Swiss authorities downgraded their 2026 economic growth forecast on Thursday, citing US tariffs on Swiss exports as a significant headwind for the export-driven economy. Global equities remained unsettled, with US and Asian stock markets falling amid renewed concerns over regional banks, persistent US-China trade tensions, and ongoing government shutdown risks. Gold surged to a fresh record above USD 4360 per ounce as demand for safe-haven assets intensified in response to elevated geopolitical and economic uncertainty. US Treasury yields continued to fall, with the 2-year around 3.4% and the 10-year stable below 4%.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

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Swiss authorities on Thursday reduced their 2026 economic growth forecast, citing US President Donald Trump’s imposition of a 39% tariff on Swiss exports as a significant drag on the export-oriented economy. Officials now expect Swiss GDP to grow by just 0.9% next year, down from the previous projection of 1.2%, following this year’s already subdued estimate of 1.3%. The punitive tariffs, which notably target Swiss watches and pharmaceuticals, have left Swiss exporters at a disadvantage compared to other US trading partners and are amplifying existing challenges from a stronger Swiss franc, which has risen more than 12% this year. Economists warn that, with global demand softening and uncertainty persisting, the risks for Switzerland’s economy are tilted to the downside, potentially pushing the country into recession in the second half of the year. The Swiss Market Index climbed 1.3% on Thursday, outpacing most other European stock markets, with the Euro Stoxx 50 rising 0.9%.

Nestlé to cut 16,000 jobs in overhaul

Nestlé announced plans to reduce its workforce by 16,000 positions over the next two years on Thursday, representing about 6% of staff, as new chief executive Philipp Navratil accelerates efforts to boost efficiency. This move follows stronger-than-anticipated third-quarter sales, which increased by 4.3% compared to the previous year, prompting the company to raise its cost-savings target to CHF 3 billion by the end of 2027. Navratil, who took charge last month amid leadership changes, signalled continued commitment to review underperforming units and increase spending on core brands. Shares in the Swiss food producer rose 9.3% in response, the largest jump since 2008, amid cautious optimism that the strategy will help restore investor confidence.

Another record high for gold

Gold reached yet another new record and was trading around USD 4360 per ounce on Friday as increased US-China tensions and expectations of further monetary easing by the Federal Reserve fuelled demand for the yellow metal. The rally, which began in August and has pushed gold up about 8% this week, has also lifted other precious metals. Support for bullion has come from central-bank purchases, strong exchange-traded fund inflows and investor concerns over US fiscal deficits and government shutdown risks. The US-China trade war has further bolstered gold’s appeal as a safe-haven asset.

Asian stocks fall on tariff worries

Asian stock markets declined on Friday, following losses in the US after disclosures of troubled loans at major regional banks reignited concerns over lending quality. Chinese stocks led the regional downturn, falling 1.4% on the CSI 300, as investor sentiment weakened in response to the ongoing dispute about tariffs between the US and China. Hong Kong’s Hang Seng Index was trading 1.9% lower, Japan’s Nikkei 225 lost 1.4%, and Australia’s S&P/ASX 200 dropped 0.8%. Korea’s Kospi was little changed, edging up 0.1%.

US stocks drop on trade and bank concerns

Major US stock indices ended Thursday in negative territory as market volatility persisted, with the Dow Jones Industrial Average falling 0.7% to 45,952.24 points, the S&P 500 declining 0.6% to 6629.07 points, and the Nasdaq 100 down 0.4% to 24,657.24 points. Investors reacted to continued government shutdowns and intensifying trade disputes with China, alongside troubling reports from regional banks such as Zions Bancorp and Western Alliance Bancorp, which saw double-digit share price drops amid fresh concerns over loan quality. The benchmark KBW Bank index fell 3.6% on Thursday. The market reaction reflects mounting investor anxiety about the resilience of commercial credit across major financial institutions.

UK economic growth remains subdued in August

The British economy expanded by just 0.1% in August, according to figures released by the Office for National Statistics on Thursday, following a downwardly revised contraction of 0.1% in July and a 0.4% increase in June. Growth in August was driven by a 0.4% rise in production, while the services sector stagnated and construction output declined by 0.3%. The market had anticipated modest growth, citing the continuation of a slowdown seen after a stronger first half of the year, with second-quarter gross domestic product rising 0.3%, down from 0.7% in the first quarter. With the Bank of England’s next interest rate decision and the government’s Autumn Budget approaching, policymakers face mounting pressure to respond as inflation remains elevated and projections suggest further risks to growth.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from American Express.

Economic data in focus: euro-area Consumer Price Index (11:00) and US manufacturing production (15:15).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.