Panic on the stock markets SMI falls to a new low for the year amid the tariff maelstrom

The sell-off on the financial markets took on a new dimension at the end of the week. The leading SMI index fell by 5.1 percent at the close of trading.

Keystone-SDA

04.04.2025, 19:08

SDA

Following US President Donald Trump's "Liberation Day", there was now a "Liquidation Day", one market participant noted. The reason for this was the first tit-for-tat response from China following the new tariffs announced by the US government on Wednesday.

The People's Republic announced counter-tariffs on US imports of 34 percent on April 10. Beijing also blacklisted eleven American companies, making it de facto impossible for the companies concerned to continue trading in China.

As a result, there was an actual wave of selling on the international stock markets over the course of the day - on a scale last seen at the start of the coronavirus pandemic. At times, the leading local SMI index even fell slightly below the previous year's close.

Experts warn of global economic crisis

Experts warned of a threat to the international division of labor and a global economic crisis like in the 1930s. Investors therefore fled risky securities and sought refuge in safe havens such as gold, cash or bonds.

The leading SMI index fell by 5.1 percent to 11,648.83 points at the close of trading, dropping to a new low for the year of 11,543 points in the course of trading. The panic on the markets was also reflected in the VSMI volatility index, which rose by almost 23% on Friday alone.

Over the course of the week, the SMI lost 9.3 percent. Since its high for the year of just under 13,200 points at the beginning of March, the leading index in Switzerland has lost around 12 percent or 1,600 points.

European indices also slump

The SLI, which includes the 30 most important shares, lost 5.1 percent to 1,866.22 points on Friday, while the broad SPI fell by 5.0 percent to 15,547.81 points. All 30 blue chips closed in the red.

However, Switzerland was not alone in this. The German Dax Index, the French CAC 40 and the British FTSE all lost in the region of 5 percent. The US indices also fell further.

The Dow Jones Industrial was down 3.5 percent at the close of trading here and the Nasdaq technology exchange was 4.3 percent lower. The shocks were also evident in the currencies, where the Swiss franc has risen sharply against the US dollar and the euro in the last two days.

All sectors affected

All sectors of the Swiss stock market suffered from the escalating trade conflict. At the forefront, financial stocks continued their downward trend from the previous day. Julius Baer lost 8.2% on Friday, while Partners Group (-7.7%), UBS (-5.3%) and, in the broad market, Vontobel (-10.4%) also sold off massively.

It was said that the fall in interest rates since the introduction of punitive tariffs could lead to lower income from the interest rate differential business. But above all, the falling stock markets are likely to result in significantly lower income.

In addition, the insurers Swiss Re (-7.5%), Zurich (-7.0%) and Swiss Life (-5.6%) suffered massive losses after having been relatively stable so far. On the one hand, profit-taking is likely to be the reason for the heavy losses, while on the other hand the falling stock markets will also have a negative impact on the insurers' financial results.

However, the shares of luxury goods group Richemont (-6.0%) and those of industry peer Swatch (-4.8%) also fell significantly. These are particularly hard hit by the new tariffs.

Possible tariffs on pharmaceuticals a burden

Healthcare stocks also closed lower across the board. Sandoz (-7.2%), Alcon (-7.1%), Roche (-6.0%), Straumann (-5.2%), Lonza (-4.8%), Novartis (-5.4%) and Sonova (-2.6%) lost ground. Traders pointed to reports that Trump is now considering tariffs on pharmaceuticals after all.

Technology stocks were not spared from Trump's tariff mania either, as was shown by Logitech (-4.8%) and Comet (-7.2%) in the broad market.

Finally, with Adecco (-5.8%) and Kühne+Nagel (-2.7%), stocks that are generally regarded as indicators of the health of the economy also continued their downward trend.