Swiss stocks fell for an 11th straight day, extending the longest stretch of losses since at least 1988, after Standard & Poor’s cut the U.S. debt rating.
Transocean Ltd. (RIG), the world’s largest offshore driller, lost 5.1 percent. Swatch Group AG (UHR), the world’s largest watch maker, declined 7.6 percent. Logitech International SA (LOGN), the world’s biggest maker of computer mice, dropped the most in more than 11 years.
The Swiss Market Index (SMI), a measure of the biggest and most actively traded companies, declined 4 percent to 4,967.99 at the 5:30 p.m. close in Zurich. The gauge entered a bear market on Aug. 4 after plummeting more than 20 percent from this year’s record close on Feb. 18 as Europe’s debt crisis and the slowing global economy prompted investors to buy the Swiss franc, reducing the value of exporters’ revenue. The broader Swiss Performance Index fell 4.1 percent today.
Swiss stocks earlier rallied as much as 1.8 percent after the European Central Bank was said to be purchasing Italian and Spanish government bonds, according to five people with knowledge of the transactions.
“Any relief rallies based on further ECB buying of peripheral debt should be very short-lived,” said Nils Rosendahl, an analyst at Nordea Markets in Stockholm. “This just makes us wonder even more: If the U.S. loses its AAA rating, why not France or the U.K.? The somewhat muted market reaction following Friday’s downgrade shows we are not alone in questioning this -- our focus remains on the cyclical slowdown, where we expect risk appetite to fall even more.”
Standard & Poor’s cut the U.S.’s AAA credit rating on Aug. 5 for the first time, trimming it one level to AA+ and criticizing lawmakers for failing to reduce spending or raise revenue enough to lower record budget deficits. The rating company kept the outlook at “negative,” saying it was becoming less confident in lawmakers’ ability to tackle the deficit.
The Group of Seven nations, including the U.S., said yesterday in a joint statement that they would take any steps needed to stabilize financial markets. Members agreed to inject liquidity and act against disorderly currency moves should such measures become necessary.
Policy makers held emergency conference calls over the weekend as they sought to stave off a collapse in investor confidence that has wiped out $5.4 trillion in global equity values since July 26.
Billionaire Warren Buffett said S&P erred when it lowered the U.S. credit rating and reiterated his view that the economy will avoid its second recession in three years. The U.S. merits a “quadruple A” rating, Buffett said on Aug. 6 in an interview with Betty Liu on Bloomberg Television.
Transocean fell 5.1 percent to 39.08 Swiss francs as oil declined to the lowest price in more than eight months. Weatherford International Ltd. (WFT), a Geneva-based oil-rig owner, dropped 7.5 percent to 12.76 francs.
Swatch, Richemont Drop
Swatch declined 7.6 percent to 334.80 francs and Cie. Financiere Richemont, the maker of Jaeger-LeCoultre watches, decreased 7.8 percent to 39.02 francs.
Logitech International dropped 8.6 percent to 6.14 francs, its lowest price since January 2000, as a gauge of European technology companies was among the worst performers in the Stoxx Europe 600 Index, retreating 5.9 percent.
Clariant AG (CLN), the world’s No. 1 maker of printing-ink chemicals, retreated 8.1 percent to 9.32 francs after UBS analysts including Joe Dewhurst said the S&P downgrade of U.S. debt may raise currency pressure on Swiss chemical stocks. Syngenta AG (SYNN), the world’s biggest producer of crop-protection chemicals, dropped 2.4 percent to 224 francs.
Altdorf, Switzerland-based Daetwyler Holding AG (DAE) slumped 5.5 percent to 56.50 francs as Stefan Gaechter, an analyst at Helvea Ltd., downgraded the stock to “neutral” from “accumulate,” citing the “latest foreign-exchange turmoil and increased cyclical risks.”
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