Most Swiss Stocks Drop Amid Speculation of Fed Tapering

Most Swiss stocks retreated amid speculation the Federal Reserve will start reducing its monthly bond-buying program as the U.S. economy heals.

UBS AG (UBSN) and Credit Suisse Group AG (CSGN), the country’s largest lenders, declined more than 1.5 percent. Holcim Ltd., the world’s largest cement maker, slumped to a three-week low. Novartis AG gained 1.4 percent after receiving breakthrough-therapy status for a drug. Lindt & Spruengli AG (LISP) climbed to a five-year high as the world’s largest maker of premium chocolate reported earnings that beat estimates.

The Swiss Market Index (SMI) slipped less than 0.1 percent to 7,935.89 at the close of trading in Zurich, as 15 shares fell and four rose. The gauge has still gained 16 percent this year, driving its valuation to 15.2 times estimated earnings, compared with an average of 13 times over the past three years. The broader Swiss Performance Index lost 0.1 percent today.

“Investors are hoping for details on when and by how much the Fed will reduce its bond purchases,” Peter Buergler, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland, wrote in a report. “Many fear that the monthly purchases will already be reduced in September.”

Minutes of the Federal Open Market Committee’s July 30-31 meeting are due to be released tomorrow. They may give indications of when the central bank will begin to reduce its $85 billion pace of monthly bond purchases. The FOMC holds its next meeting on Sept. 17-18.

Volumes Climb

The volume of shares changing hands in SMI-listed companies was 20 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

UBS and Credit Suisse fell 1.9 percent to 18.47 Swiss francs and 1.5 percent to 27.96 francs, respectively. A gauge of banks was the third-worst performer of the 19 industry groups in the Stoxx Europe 600 Index. Julius Baer Group Ltd. slid 1.7 percent to 42.43 francs.

Holcim slumped 2.1 percent to 66.30 francs after CRH Plc, a Dublin-based maker of cement, cut its second-half earnings guidance. Holcim dropped 4.4 percent yesterday, the most in 21 months, as UBS downgraded the shares.

Givaudan SA (GIVN), the world’s largest maker of flavors and fragrances, fell 1.5 percent to 1,299 francs as Bank J. Safra Sarasin AG cut the stock to neutral, the equivalent of hold, from buy.

“We recommend taking profit due to the rather full valuation of the stock, which offers only limited further upside in the nearer term,” Philipp Gamper, an analyst at Safra Sarasin, wrote in a note.

Novartis Rises

Novartis gained 1.4 percent to 68.65 francs after the drugmaker received breakthrough-therapy designation for its BYM338 treatment for sporadic inclusion body myositis from the U.S. Food and Drug Administration. The company said that, if approved, the drug has the potential to be the first treatment for sIBM patients.

Preferred shares of Lindt & Spruengli added 1.9 percent to 3,790 francs, the highest since January 2008. The chocolate maker raised its profitability forecast after reporting first-half earnings that beat estimates as improving economic growth boosted consumption.

The operating-margin increase this year will be near the upper end of a targeted 0.2 percentage-point to 0.4 percentage-point range. First-half net income rose 40 percent to 48.8 million francs ($53 million), beating the 44.3 million-franc average of five analyst estimates compiled by Bloomberg.

Straumann Holding AG (STMN) jumped 8.5 percent to 166 francs, the highest price since February 2012. The world’s biggest maker of dental implants reported first-half earnings before interest and taxes of 56.8 million francs, compared with 54.6 million francs a year earlier.

“Straumann has now shown that they are able to drive profitability up again and hence we will lift our estimates for the full year,” Carla Baenziger, an analyst at Vontobel, wrote in a note to clients today.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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