The Federal Reserve held interest rates steady at their highest level in two decades and acknowledged recent inflation setbacks, extending a wait-and-see posture that could last well into the year if the economy doesn’t weaken. In their policy statement released Wednesday, officials highlighted a “lack of further progress” toward bringing inflation down in recent months. Earlier this year, officials said the risks to achieving their goals of low inflation with a healthy labor market were “moving into better balance,” but officials tweaked their statement to suggest that such improvement had stalled. Separately, the central bank approved plans to slow the ongoing reduction of its $7.4 trillion asset portfolio in a bid to extend the wind-down of emergency pandemic stimulus efforts it launched four years ago.

On Tuesday, the SMI lost 0.6 per cent to 11,261 points. Among the 20 SMI stocks, there were 17 losers and only 3 winners - Novartis, Givaudan and Nestle. A total of 25.2 million shares were traded (Monday: 16.96 million). Logitech shares were very volatile. Substantial profits at the start of trading crumbled more and more over the course of the day. At the end of the day, the share price actually closed 1.0 per cent lower than on Monday. In its fourth quarter, the manufacturer of peripheral devices increased profits at a significantly higher rate than sales, and Logitech expects the current year to develop at the previous year's level. UBS (-3.3%) ranked at the bottom of the SMI. However, the share was traded ex-dividend. Holcim (-2.2%) and Lonza (-2.3%) were also particularly weak, both without news. The fact that S&P Global Ratings confirmed Swiss Life's ‘A+’ credit rating - with a stable outlook - did not move the share. Swiss Life shares fell by 0.3 per cent.

Europe
The European stock markets closed lower on Tuesday, after a flurry of quarterly results and several major economic indicators in the eurozone. The Stoxx Europe 600 index lost 0.7% to 504.9 points. In Paris, the CAC 40 and SBF 120 were each down 1%, as was the DAX 40 in Frankfurt. While trading was closed on almost all European stock exchanges on 1 May, share prices declined slightly on those trading on Wednesday. In London, the leading FTSE-100 index fell by 0.3 per cent, while the OMX-20 in Copenhagen lost 0.6 per cent. The European Stoxx 50 index fell by 0.1 per cent, especially as only a small proportion of the securities included in it were actually traded. Electronic labels specialist VusionGroup (+15.5%) announced on Tuesday that it had signed an amendment to its framework agreement with US retailer Walmart. Satellite operator SES (-7.8%) reached an agreement to acquire its US competitor Intelsat for €2.8 billion in cash. Air France-KLM (-4.3%) extended its losses in the first quarter, as the airline suffered operational disruptions linked in particular to a shortage of spare parts and a decline in its cargo business. The automotive group Stellantis (-10%) reported a sharper-than-expected first-quarter revenue decline and forecast a fall in its operating margin for the first half of the year. Its German rivals Mercedes-Benz (-5.2% in Frankfurt) and Volkswagen (-4.9% in Frankfurt) reported lower first-quarter results, also hit by lower sales volumes. Electrical supplies distributor Rexel (-4.9%) reported a drop in first-quarter sales, while confirming its targets for the full 2024 financial year. British bank HSBC (+4.1% in London) published its first-quarter results, unveiled a new $3 billion share buyback programme and paid a special dividend linked to the sale of its Canadian operations.

United States
The S&P 500 extended its recent slide Wednesday after the Federal Reserve kept rates at their highest level in more than 20 years. The broad index fell 0.3%, deepening its losses from Tuesday, when it registered its largest drop since late January. The tech-heavy Nasdaq Composite fell 0.3%. The Dow Jones Industrial Average rose 0.2%, or roughly 87 points. Investors had widely expected the central bank to keep rates unchanged but were on edge for clues about how they might move in 2024 and beyond after a string of firmer-than-expected inflation data. During his post meeting press conference, Fed Chair Jerome Powell said it would likely take longer than expected for the central bank to have confidence inflation is moving toward its 2% target. But he also tamped down speculation that the Fed might need to raise rates again to fully control inflation. Stocks had been mixed heading into Powell’s comments. They jumped briefly during his remarks, only to later give up those gains. On the positive side of the ledger, pharmaceutical giant Pfizer gained 6.1% after its first-quarter earnings topped analysts’ estimates, thanks in part to signs of resilience in sales of Covid-19 treatment Paxlovid. Amazon.com gained 2.3% after the artificial-intelligence boom powered growth in its cloud-computing businesses. Among laggards, Starbucks fell 16% after the coffee seller reported a sharp slowdown in visits. Weak earnings also drove down CVS Health shares by 17%.

Asia
Asian stocks were mixed on Thursday. Many stock exchanges were closed on Wednesday for the May Day holiday. There will be no trading on the Shanghai stock exchange until the end of the week. In Tokyo, the Nikkei index fell slightly by 0.1 per cent, while in Hong Kong the Hang Seng index rose sharply by 2.0 per cent. In South Korea, meanwhile, the Kospi lost 0.2 per cent.

Bonds
U.S. government debt yields finished at their lowest levels in a week or more on Wednesday, after Federal Reserve Chair Jerome Powell delivered comments seen as more dovish comments than what was implied by the central bank’s own policy statement. The 10-year Treasury note yield fell by 5 basis points to 4.632%, while the 2-year Treasury note yield dropped by 9 basis points to 4.96%.

Analysis
BoA downgrades Logitech target to CHF 85 (96) - Buy
UBS raises Clariant target to CHF 16 (15) - Buy
UBS upgrades Adidas target to EUR 276 (231) - Buy

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