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Swiss Stocks Retreat; Exporters, Banking Shares Lead Decline

Updated on

Swiss stocks fell for the first time this week, led by exporters and banking shares after the Federal Reserve said the pace of the economic recovery in the U.S. is likely to be “more modest” than forecast.

ABB Ltd. lost 4.3 percent, while Adecco SA slid 4.1 percent notwithstanding better-than-expected results. UBS AG followed European banks lower, losing 4.5 percent. Nobel Biocare Holding AG sank 11 percent after posting a drop in quarterly net income.

The Swiss Market Index retreated to the lowest this month, losing 129.18, or 2 percent, to 6,265.84 at the 5:30 p.m. close in Zurich. Even so, the SMI is still up 5.5 percent from this year’s low on July 5 as concern eased that Europe’s debt crisis may derail the economic recovery. The broader Swiss Performance Index also fell 2 percent today.

“The Federal Open Market Committee took a ‘baby step’ towards renewed quantitative easing,” Goldman Sachs Group Inc. economists Edward McKelvey and Sven Jari Stehn wrote in a note. “The decision was taken in response to a downgrade of the FOMC’s economic outlook.”

After European markets closed yesterday afternoon, the FOMC decided to reinvest the proceeds from maturing mortgage-backed securities in long-term Treasuries, the Fed’s first attempt to bolster the U.S. economy since March 2009.

ABB, Adecco Drop

ABB, the world’s largest builder of electricity networks, fell 4.3 percent to 20.24 Swiss francs.

Adecco, the world’s largest supplier of temporary workers, retreated 4.1 percent to 53.30 francs, even though the company reported a second-quarter profit that beat analysts’ estimates after a year-earlier loss, helped by acquisitions and the economic recovery in Germany, France and the U.S.

“Second-quarter update was strong,” Matrix Corporate Capital LLP, which has a “sell” recommendation on the stock, wrote in a note after the release. “Nonetheless, our focus is on prospects for 2011 onwards and in that respect we continue to believe that consensus is factoring in too strong revenue growth and EBITA margin progression over the medium term.”

UBS and Credit Suisse Group AG, Switzerland’s biggest banks, declined 4.5 percent to 17.23 francs and 3.3 percent to 47.40 francs, respectively. Banking shares were the worst performers in Europe today.

Julius Baer Group Ltd., the 120-year-old Swiss private bank, fell 4.3 percent to 35.40 francs.

Swatch Group AG, the maker of Omega and Breguet watches, declined 3.3 percent to 333.60 francs. Cie. Financiere Richemont SA, Switzerland’s largest jewelry maker, retreated 3.8 percent to 39.92 francs.

Nobel Biocare

Nobel Biocare plummeted 11 percent to 16.81 francs, the stock’s biggest decline since April. The world’s biggest maker of dental implants said second-quarter net income fell 31 percent as the company’s sales in Europe and the U.S. dropped while the sales of its two closest competitors increased in both regions. Profit was 19.6 million euros ($25.3 million) compared with 28.2 million euros.

Kuehne + Nagel International AG retreated 3 percent to 108.20 francs. Credit Agricole Cheuvreux SA downgraded the 120-year-old shipping company controlled by Klaus-Michael Kuehne to “outperform” from “selected list” because of lack of triggers in the short term.

Interroll Holding AG climbed 3.3 percent to 305 francs. The Swiss maker of motors for conveyor belts said first-half sales rose 20.3 percent in local currency.

Vontobel upgraded the stock to “buy” from “hold,” saying that the results “exceeded all market expectations.”

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