Switzerland’s consumer sentiment changed little in July, standing at -32.8, just down from -32.2 in June. The forecast for the third quarter is -28, which is better than the -39 recorded in the second quarter. Recent events, including a decision on tariffs for Swiss gold, have raised concerns. This could also affect the pharmaceutical industry in the future.

The Impact On Consumer Sentiment

The July consumer sentiment figure of -32.8 shows Swiss households are quite pessimistic. Although the change from last month is small, it confirms a trend of weak confidence that has been ongoing. This consistent negativity is likely to dampen retail spending in the weeks ahead. This weak data suggests that the Swiss National Bank is unlikely to raise interest rates. With Swiss inflation at 1.3% as of July 2025, the central bank is more concerned about economic weakness rather than rising prices. This is a shift from the aggressive rate hikes we saw in 2023 when inflation was a major worry. This economic situation will likely put pressure on the Swiss Franc. The EUR/CHF exchange rate has already risen from 0.96 early in the year to around 0.9850 recently. Traders might want to consider strategies that benefit from a weaker Franc, such as buying call options on the EUR/CHF pair. In terms of stocks, the Swiss Market Index (SMI) has struggled, dropping nearly 4% since early June 2025. This decline reflects the poor consumer mood and the new worries about trade. The market is anxious that the gold tariffs may influence other key industries.

Concerns Over The Pharmaceutical Sector

The potential impact on the pharmaceutical sector is particularly concerning for the Swiss market. It’s important to note that just two companies, Novartis and Roche, make up over 30% of the SMI. If their big export business is affected, it could pose a serious threat to the entire index. Given this risk, traders might consider buying protective put options on the SMI as a hedge against a market downturn if the tariff situation worsens. Purchasing puts on individual pharmaceutical stocks could also offer a targeted response to this uncertainty. Despite the current challenges, the official forecast for consumer sentiment is expected to improve to -28. This marks a significant recovery from the -39 seen in the second quarter of 2025. While the situation appears bleak right now, there may be hope for better news later this year. Create your live VT Markets account and start trading now.

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