Construction chemicals and adhesives manufacturer Sika suffered a decline in profits in the 2025 financial year. Negative currency effects, the weak Chinese construction market, and the US government shutdown at the end of the year all contributed to slower growth. As already announced on a provisional basis in January, sales in local currencies shrank by 4.8 percent to CHF 11.20 billion, the company confirmed on Friday. The strong Swiss franc was the main contributor to a negative currency effect, which Sika quantifies at 5.4 percent. Sika also had to make concessions in terms of profitability. Operating profit at EBITDA level slumped by 9.0 percent to CHF 2.06 billion. The corresponding margin reached 18.4 percent, down from 19.3 percent in the previous year. This includes CHF 108 million spent on the “Fast Forward” efficiency program in the reporting year, reducing operating profit by CHF 86 million. If this were excluded, the margin would have amounted to 19.2 percent. Overall, the construction supplier recorded a significant downturn. Net profit sank by 16.2 percent to CHF 1.05 billion. Nevertheless, the dividend is set to rise by 10 centimes to CHF 3.70 per share. This narrowly met analysts' expectations but exceeded the dividend payout. Sika expects market conditions to remain subdued in 2026, with the underlying market contracting by a low single-digit percentage.

After reaching a record high the previous day, the SMI barely held its ground on Thursday. Heavyweight Nestlé proved to be a major source of support, ending the day up 3.9 percent after losses in previous days. The SMI slipped 0.1 percent to 13,800 points. Food giant Nestlé not only presented quarterly figures that were well received but also announced that it would be divesting itself of its ice cream business. Nestlé also plans to sell its water and premium beverages division by 2027. In the future, it will only have four business areas: coffee, pet food, nutrition, and food. Zurich Insurance also presented its business figures. The insurer achieved record annual results in all business areas and reported, among other things, a 17 percent increase in net profit to $6.80 billion for 2025. The consensus estimate had been $6.53 billion. Having gained ground over the previous four trading days, the share price dropped by 1.6 percent. Some players may have taken advantage of the strong financial results to take profits. Richemont gave up 1 percent and Swatch 2 percent. The latter was weighed down by a decline in Swiss watch exports in January amid US tariffs, headwinds from the currency side, and a general decline in demand for luxury goods. The clear weakest performer in the SMI was Partners Group, down 5.1 percent without any news. Other stocks from the financial sector were also on the losing side, including UBS (-2.0%) and Julius Bär (-0.8%). Amrize declined 1.6 percent after the previous day's rally, due to profit-taking.

Europe
European stock markets fell on Thursday. The Stoxx Europe 600 index dropped 0.5% to 625.3 points. In Paris, the CAC 40 and SBF 120 fell by 0.4% and 0.3% respectively. In Frankfurt, the DAX 40 dipped 0.9% and the FTSE 100 retreated 0.6% in London. AIRBUS (-6.8%): The aerospace and defense group lowered its production targets for the A320, while aiming for a record number of deliveries in 2026. AIR FRANCE-KLM (+11.8%): On Thursday, the airline reported slightly better-than-expected results for the fourth quarter and the full year, buoyed by strong demand for long-haul travel and lower oil prices. NEXANS (-7.3%): The cable manufacturer unveiled 2025 results that fell short of analysts' expectations and forecasts that were deemed disappointing. ORANGE (+7.5%): The telecommunications operator presented its new strategic plan, “Trust the Future,” which is expected to usher in a new phase of growth by 2028. Orange intends to gradually increase its dividend. PERNOD RICARD (+2.7%): The wine and spirits specialist on Thursday posted a sharp decline in results for the first half of its fiscal year, as the group continues to be weighed down by weak demand in China and continued destocking in the United States. Pernod Ricard nevertheless anticipates an improvement in organic growth in the second half of the year. RENAULT (-3.1%): The car manufacturer took a hit after setting cautious financial targets for 2026 on Thursday.

United States
On Thursday, the Dow fell 0.5%, the S&P 500 slipped 0.3% and the Nasdaq composite also lost 0.3%, with investors monitoring the U.S. military buildup in the Middle East ahead of a possible strike on Iran. The regional deployment of U.S. aircraft and naval ships raises the risk the U.S. could attack Iran’s nuclear program or missile stockpile or try to topple its regime. Analysts say Iran could close the world’s busiest oil thoroughfare, the Strait of Hormuz, which sees roughly 20 million barrels of petroleum running through it daily, equivalent to almost a fifth of global oil demand. Brent crude futures, the international benchmark, rose 1.9% to settle at $71.66 a barrel Thursday, its highest closing level since late July. A slide in financial stocks weighed on the S&P 500, with the sector losing 0.9%, the most among the index’s 11 groups. Private-credit firms extended recent declines after Blue Owl rattled the industry by restricting withdrawals from a fund aimed at ordinary investors. Blue Owl shares slid 5.9%, Apollo Global Management fell 5.2% and Blackstone lost 5.4%. At the same time, tech stocks continued to fall after a brief reprieve earlier this week. Investors have begun to grow concerned this year that tech shares are trading at sky-high prices following a dizzying artificial-intelligence rally, leading some to shift into less-loved corners of the market. Shares of Apple declined 1.4%, Alphabet fell 0.2% and Palantir Technologies shed 0.4%. Shares of Occidental Petroleum gained 9.4% after the energy producers adjusted per-share earnings surged past expectations. Deere’s stock jumped 11.6% after the manufacturer raised its fiscal year outlook. Carvana shares declined around 8% despite reporting record car sales and Klarna slumped 27% after the buy now, pay later firm swung to a quarterly loss.

Asia
Asian indexes diverged for the Friday trading session. The mainland Chinese stock exchanges are still closed on Friday and Monday due to the Chinese New Year holidays. In Hong Kong, the Hang Seng Index is down 0.7 percent on the first trading day after the holiday break. Among individual stocks, Alibaba drops 3.7 percent. The hedge fund Appaloosa has reduced its stake in Alibaba. In Tokyo, the Nikkei 225 index slipped 1.1 percent to 56,811 points. Meanwhile, in Seoul, the Kospi jumped 2.3 percent to a new record high. With uncertainty surrounding developments in Iran, defense stocks such as Hanwha Systems are in demand, with their share price jumping nearly 11 percent. Hyundai Rotem gained 3.8 percent. Shares in chip manufacturer SK Hynix climbed 6 percent.

Bonds
U.S. government debt yields held mostly steady on Thursday with the 10-year Treasury note yield hovering at 4.08 percent. Today, the PCE index of personal consumption expenditures will be published, a preferred gauge used by the US Federal Reserve in governing its interest rate policy.

Analysis
Swisscom target price: Goldman Sachs raises to CHF 470 (450) – Sell
Straumann target price: Barclays lowers to CHF 114 (120) – Overweight
Amrize target price: Berenberg increases to USD 70 (64) – Buy
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