Switzerland’s ZEW survey showed that expectations rose to -30.3 in April, from -35 in the previous reading.
The latest Swiss ZEW survey shows economic expectations improved to -30.3 for April, which is a notable step up from the previous reading of -35. While the figure remains deeply pessimistic, the positive direction suggests the worst of the negative sentiment might be passing. We see this as a sign that a potential bottoming process could be starting for Swiss assets.
For the Swiss franc, this data could reduce pressure on the Swiss National Bank to pursue further aggressive rate cuts. We’ve seen the franc weaken against the euro throughout late 2025 and early 2026, with the EUR/CHF cross recently trading around 0.9850 as the SNB adopted a more dovish stance. Traders might consider selling out-of-the-money call options on EUR/CHF, betting that this lessening economic pessimism will put a cap on further franc weakness.
This slightly improved outlook may offer some support for the Swiss Market Index (SMI), which has underperformed its European peers this year. We note that implied volatility on SMI options has recently declined to a 3-month low of 14%, suggesting some complacency despite the underlying negative sentiment. A cautious strategy could be to buy long-dated call spreads on the SMI, which limits risk while positioning for a gradual recovery.
We must remember the difficult economic environment that led to this point, particularly the sharp downturn we saw in manufacturing orders during the second half of 2025. That period saw the ZEW indicator fall below -40, a level historically associated with recessionary conditions. Therefore, while today’s reading is an improvement, it confirms we are still operating in a fragile economic climate.
