European Equity Strategy: Simply Switzerland: Hot Signal, On Thin Ice

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European Equity Strategy: Simply Switzerland: Hot Signal, On Thin Ice

ctivity resilient and services selling prices

improving even as input-cost pressure remains elevated. This is no longer simply a

defensive market hiding from macro risk. The SPI is close to evenly split between cyclical

and defensive sectors, Consumer Discretionary led returns last month, and Switzerland

has outperformed ACWI defensives since April as well as Europe over the most recent

month. That is a meaningful change in market character.

The caveat is that the macro handover is not clean. KOF remains below 100, our

economists expect growth to run somewhat below trend after the strong Q1 boost, and REVS

consumer and labour-market signals are stabilising rather than accelerating. The market

internals also argue against passive comfort: the relative effective number of stocks has Equities move based on:

fallen from peak levels, and recent returns have relied heavily on the top ten names. The

Regime,

regime supports exposure, but leadership, pricing power and stock-specific delivery

matter more than Switzerland’s defensive label. Earnings,

Earnings: Better relative, still narrow Valuations, and

Earnings are improving at the margin, but not enough to call a broad upgrade cycle.

Sentiment.

FY26 and FY27 estimates have nudged higher month on month, and Swiss revision

breadth is better than Europe’s, but the absolute signal remains modest: FY26 is still Our REVS framework combines

lower year to date, FY27 is flat and headline revision breadth is still slightly negative. The regime, earnings, valuation and

cleaner positive signal sits below the index, where SMID revisions have turned positive sentiment to give a 2–6 month

while large-cap breadth remains weak. tactical signal.