Business is going so well at Novartis that management has once again raised its full-year forecast. The transformation into a focussed pharmaceutical company is increasingly paying off. As the Group announced on Thursday, sales in the second quarter totalled USD 12.5 billion. This corresponds to an increase of 9 per cent compared to the same period last year. At constant exchange rates (CER), growth was 11 per cent. On the profit side, Novartis generated an operating profit of USD 4.0 billion (+43%) in the second quarter. The bottom line was net income of USD 3.2 billion, compared with USD 2.3 billion in the prior-year period. Core operating profit, which is important for analysts and adjusted for various factors, totalled just under USD 5 billion. Given another strong quarter, Novartis management has raised its profit forecast again and now expects core operating profit to increase in the mid to high teens.

The Swiss stock market ended trading on a positive note on Wednesday. The SMI gained 0.6 per cent to 12,334 points. Of the 20 SMI stocks, there were 15 losers and five winners. A total of 18.62 (previously: 13.87) million shares were traded. The market received a tailwind from pharmaceutical heavyweight Roche. A drug candidate for the treatment of type 2 diabetes and morbid obesity has shown encouraging success in an early stage trial. The Roche share price rose by 5.8 per cent. Otherwise, negative signs predominated, especially among cyclicals. Defensive stocks such as Nestle (+1.1%), Novartis (+0.2%) and Swisscom (+0.4%) recorded more or less strong gains. Logitech (-2.4%) was affected by the generally gloomy mood in the technology sector after Dutch company ASML issued a disappointing forecast. Among the small caps, Ams-Osram was also unable to escape the selling pressure losing 4.4 per cent. Following a profit warning, the shares of automotive supplier Feintool plummeted by 7.7 per cent.

Europe
European stocks traded lower again on Wednesday as investors worried that companies will face rising economic headwinds in China. The Stoxx Europe 600 index lost 0.5% to 514.8 points. In Paris, the CAC 40 and the SBF 120 each shed 0.1%. In Frankfurt, the DAX 40 dropped 0.4%. On the other hand, the FTSE 100 gained 0.3% in London, following the announcement that UK inflation had stabilised in June at 2% year-on-year. Call centre operator Teleperformance was the biggest underperformer among the CAC 40, plunging 7.5%, while US company Salesforce on Wednesday unveiled a fully autonomous artificial intelligence (AI) agent aimed at making conventional chatbots obsolete. Frame and corrective lens manufacturer EssilorLuxottica (-4.5%) announced on Wednesday that it had signed an agreement to acquire New York-based brand Supreme from clothing group VF for $1.5 billion (around €1.4 billion) in cash. Pernod Ricard (+3.4%) confirmed on Wednesday that it had signed an agreement with Australian Wine Holdco Limited (AWL) to sell its strategic wine brands to this consortium of international institutional investors. Dutch semiconductor equipment manufacturer ASML Holding (-10.9% in Amsterdam) delivered lower-than-expected forecasts for the current quarter, although its orders exceeded expectations in the second quarter. Moreover, according to Bloomberg, the United States is considering imposing even tighter restrictions on the group's exports to China.

United States
Shares of Nvidia, Meta Platforms and other highflying technology shares plunged Wednesday, sending the Nasdaq Composite to its worst day in more than a year. A drop in Magnificent Seven shares helped send the tech-heavy gauge down 2.8%, its biggest one-day decline since December 2022. The S&P 500 fell 1.4%. The Dow Jones Industrial Average, meanwhile, added 0.6%, clinching a fresh high. Wednesday’s moves show the big stock-market rotation that has gripped investors for much of the past week is still cresting through markets. It was the first time since 1999 that the blue-chip Dow notched a gain while the S&P 500 fell more than 1%, according to Dow Jones Market Data. Now, some investors are grappling with how much further tech giants will fall after a stellar run that has sent the Nasdaq up almost 20% for the year. Traders have been rapidly rejiggering their bets on the stock market’s winners and losers over the past week. Many have trimmed this year’s biggest gainers and piled into beaten-down smaller companies, which are expected to benefit from lower interest rates. An encouraging inflation report has rekindled hopes of a rate cut as soon as September. Investors also fear that shares of chip makers will face more U.S. trade restrictions regardless of who wins the November presidential election. On Wednesday, Taiwan’s TSMC, the world’s biggest contract chip maker, dropped after Donald Trump took aim at the country’s chip dominance, saying the American ally should pay for U.S. defence, in a Bloomberg Businessweek interview. The iShares Semiconductor ETF dropped 7.1%, its biggest percentage decrease since March 2020. Some of the chip stocks that have benefited most from the investor frenzy over artificial intelligence got also knocked. Nvidia shares lost 6.6%, while Qualcomm shed 8.6%. Meanwhile, investors flocked to corners of the market that seem undervalued. The SPDR Portfolio S&P 500 Value ETF rose for the ninth consecutive session to a record. Shares of energy companies, financials and real-estate companies notched gains.

Asia
Stocks in Asia mostly fell on Thursday. The drop was particularly pronounced in Tokyo, where the Nikkei-225 fell by 2.1 per cent. Here, the Tokyo Electron share plunged by a further 9.1 per cent. The Kospi in Seoul also dropped by 1.3 per cent. Shares in index heavyweight Samsung Electronics declined by 2.1 per cent and SK Hynix shed 4.3 per cent. In Taiwan, the shares of chip manufacturer TSMC lost 3.1 per cent in the run-up to the quarterly results due on Thursday. In China, the Shanghai Composite slipped by 0.1 per cent, while the Hang Seng Index in Hong Kong bucked the trend and edged up by 0.3 per cent.

Bonds
On Wednesday, Federal Reserve officials suggested an interest-rate cut could be warranted in the coming months - though not at the central bank’s meeting in two weeks - if a recent inflation slowdown continues. The 10-year Treasury note yield fell by 1 basis point to 4.155%. The 2-year Treasury note yield stalled at around 4.448%.

Analysis
UBS lowers Richemont target to CHF 158 (160 - Buy
Price target Partners Group: JPMorgan downgrades to CHF 1305 (1313) - Neutral
Target price Swatch: CFRA reduces to CHF 184 (221) - Hold

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