Swiss stocks score big

Switzerland’s blue-chip stock index has established the longest winning streak in its 33-year history, after having risen every single day so far in June, as investors loaded up on drugmakers and other defensive stocks.

The SMI index of top 20 stocks has gained 5,7 percent in the past 13 sessions and on Friday it was up 0,3 percent on the day, further extending its rally to fresh record highs.

“The SMI index is very sensitive to movement in bond yields,” said Ankit Gheedia, BNP Paribas’ head of equity and derivative strategy for Europe.

“Over the past few weeks before the FOMC, bond yields were in a downtrend which was beneficial for the defensive and bond proxy sectors or indices like SMI.”

Policymakers at the Federal Reserve surprised markets and pushed US Treasury yields higher by signalling on Wednesday that the US central bank would raise interest rates and end emergency bond buying sooner than expected.

But the surge in long-dated yields was short-lived, with yields on 10-year and 30-year US Treasuries dropping on Thursday, helping boost defensive sectors.

The European Central Bank committed last week to keeping policy ultra-loose while the economy recovers from the Covid-19 pandemic.

The Swiss index’s record-setting run comes as optimism about Europe’s economic potential and bets on continued policy support have fuelled a surge of global investor interest in the region.

A BofA survey of fund managers showed this month that 41 percent of respondents are overweight European equities, the highest rate since February 2018 and up from 35 percent in May.

This month’s top SMI gainer has been biotech company Lonza, with a rally of almost 14 percent. —  Reuters.