Stocks in Switzerland fell to a four-month low as investors considered the outlook for monetary stimulus from the Federal Reserve and Greek Prime Minister Antonis Samaras lost one of his coalition partners.
Swatch Group AG (UHR), the largest maker of Swiss watches, sank 3 percent for the biggest decline in the benchmark Swiss Market Index. (SMI) UBS AG (UBSN), the nation’s biggest bank, retreated 1.9 percent. ABB (ABBN) Ltd., the world’s largest supplier of power grids, slipped 1.5 percent.
The SMI lost 1 percent to 7,421.06 at the close in Zurich, the lowest level since Feb. 11. The gauge has tumbled 2.8 percent this week, the most since November, after Fed Chairman Ben S. Bernanke said the U.S. central bank may cut bond purchases this year if the world’s largest economy strengthens in line with its forecasts. The broader Swiss Performance Index (SPI) dropped 0.9 percent today.
“It feels like everyone is packing up everything they can,” said Luis Benguerel, a trader at Interbrokers in Barcelona. “Everything has been hit, currencies, bonds, equities, currencies. People just want out.”
Ten-year U.S. Treasuries dropped, pushing the yield to 2.5 percent for the first time since August 2011. The yen weakened against the dollar and the Standard & Poor’s GSCI Index (SPGSCI) of commodities fell 1.3 percent.
China’s benchmark money-market rates tumbled from record highs after the central bank injected funds to alleviate the worst cash crunch in at least a decade. In Greece, the Democratic Left party’s ministers quit Samaras’s coalition over his closure of state broadcaster ERT, sparking concern about the government’s stability.
The SMI has retreated 12 percent from this year’s high on May 22, entering a so-called correction. The declines have dragged the index’s valuation to 14.1 times its members’ estimated earnings, the cheapest since January, according to data compiled by Bloomberg.
“What you have is a change in environment towards normalization,” Virginie Maisonneuve, who helps oversee $359 billion as head of global equities at Schroder Investment Management Ltd. in London, said in a phone interview. “The market needs to adjust. In this change there is going to be fear, and some companies that are good companies will suffer. Those cases will definitely bring buying opportunities.”
Swatch, which gets 53 percent of revenue from Asia, retreated 3 percent to 491.40 francs, following yesterday’s 5.2 percent drop.
UBS fell 1.9 percent to 15.79 francs, the lowest price since April.
ABB dropped 1.5 percent to 19.86 francs for a second day of declines. The company counts on Asia, the Middle East and Africa for about 37 percent of sales.
“While Europe may no longer be seen as the epicenter of global risks and its economy appears close to an inflection point, we view its equity markets as vulnerable to emerging-market weakness,” a team of Goldman Sachs Group Inc. strategists wrote in a report distributed today, noting that about a quarter of sales for European stocks come from developing nations.
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