Novartis’ Bumper Q1 Earnings Nudge Swiss Stocks Higher

Swiss equities surged on Tuesday, with investor sentiment boosted by better-than-expected earnings from top companies such as Novartis NOVN.

Amid a quiet trading day for local economic news, the Swiss Market Index was up 1.25% at closing.

Pharmaceutical giant Novartis was a standout stock at 1.81% in the green after it upgraded its full-year guidance on the back of its strong first-quarter performance. The company now expects net sales growth in high-single to low-double-digit from the previous forecast of a mid-single-digit increase, citing momentum in its business and pipeline.

On the flip side, Kuehne+Nagel International KNIN logged declines in its attributable earnings and net turnover during the three months ended March 31 as the group seeks to further reduce costs amid a challenging business environment. The logistics company’s stock slumped 4.87% at closing.

“We understand there are more cost reductions still to implement, which should improve margins here - together with a still-to-come restoration of volumes in higher-GP verticals. Net net, reassuring stabilization,” Bernstein analysts said.

Closer to home, the eurozone’s private sector economy continued to recover in April, thanks to the region’s buoyant service sector growth and a slowing manufacturing downturn. “The PMI figures are poised to test the ECB's willingness to cut interest rates in June,” Hamburg Commercial Bank Chief Economist Cyrus de la Rubia remarked.

“However, we doubt that the central bank will adopt a "pragmatic speed", as suggested by François Villeroy de Galhau from the ECB. Instead, we expect a more cautious approach,” de la Rubia added.