Swiss Stocks Extend Four-Year High on U.S. Jobs Data
Swiss stocks rose for a second day, extending a four-year high, after U.S. data showing increased employment and service-industry growth indicated a sustained recovery in the world’s biggest economy.
Transocean Ltd. climbed 5.9 percent after the world’s largest offshore rig contractor confirmed it will settle federal claims arising from the Gulf of Mexico oil spill in 2010. Julius Baer Group Ltd., Switzerland’s third-biggest wealth manager, advanced 2.6 percent.
The Swiss Market Index (SMI) added 0.6 percent to 7,058.92 at the close in Zurich, the highest since September 2008. The gauge rallied 3.5 percent this week, the biggest jump in 13 months, as U.S. lawmakers approved a budget deal that avoided tax increases and spending cuts which may have pushed the economy into a recession. The broader Swiss Performance Index also increased 0.6 percent today.
“A number in line with estimates is the perfect scenario that would suggest a continuation of the current monetary policy,” Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, said in a phone interview before the release of the U.S. payrolls data. “There is a lot of liquidity, so we should see higher markets in the next two to three weeks.”
The SMI gained 15 percent in 2012, its first annual rally in three years, as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve expanded asset purchases. U.S. policy makers said their third round of so-called quantitative easing will continue until the unemployment rate makes a major improvement.
The SMI erased an earlier drop of as much as 0.2 percent today as a Labor Department report showed U.S. payrolls rose by 155,000 workers last month following a revised 161,000 advance in November that was more than initially estimated. The median estimate of 82 economists surveyed by Bloomberg called for a increase of 152,000. The unemployment rate held at 7.8 percent after the November figure was revised up from a previously reported 7.7 percent.
Separate U.S. data showed service industries expanded in December at the fastest pace in 10 months. The Institute for Supply Management’s non-manufacturing index climbed to 56.1 last month from 54.7 in November, the Tempe, Arizona-based group said. Readings above 50 signal expansion.
Minutes released yesterday showed Federal Open Market Committee participants were divided on how long bond buying should last. Policy makers were “approximately evenly divided” between those who said purchases should end in mid-2013 and those who said they should continue.
“The Fed’s comments were a bit of a surprise, but ultimately investors still think the ‘Bernanke put’ is in place,” Galliker said. He was referring to Fed Chairman Ben S. Bernake’s policy of supporting financial markets through monetary policy, which some investors liken to the insurance against losses offered by owning a put option.
Transocean rose 5.9 percent to 47.27 Swiss francs. The company will pay more than $1.4 billion, including a $400 million criminal penalty, to settle claims stemming from the world’s worst accidental oil spill, it said yesterday after the Swiss market closed.
The offshore drilling contractor will plead guilty to violating the Clean Water Act and agree to five years probation, the U.S. said in a filing in a federal court in New Orleans yesterday. The stock jumped 11 percent yesterday after a person familiar with the situation said the company and the government had agreed on a settlement.
Citigroup Inc. analysts referred to the settlement as “a turning point” for Transocean in a report today. The bank reiterated a buy recommendation on the shares, with a price estimate of $62, compared with yesterday’s closing price of $49.20 in New York trading.
Julius Baer climbed 2.6 percent to 33.85 francs for the second-largest gain in the SMI.
Straumann Holding AG (STMN) advanced 3.2 percent to 117.80 francs. The world’s biggest maker of dental implants named former finance chief Marco Gadola as chief executive officer, replacing Beat Spalinger after sales and earnings declined.
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