Swiss stocks fell for the first time in three days as the Bank of Japan refrained from expanding stimulus and a German court began hearings on the European Central Bank’s bond-buying plan.
Cie. Financiere Richemont SA, the owner of the Cartier brand, posted the biggest drop on the benchmark Swiss Market Index, sliding 3.4 percent. UBS AG and Credit Suisse Group AG, Switzerland’s largest banks, retreated at least 1 percent.
The SMI declined 1.5 percent to 7,673.01 at the close in Zurich. The equity benchmark has pared this year’s gains to 12 percent, from as much as 23 percent on May 22, as speculation grew that the Federal Reserve may reduce the size of its bond-purchase program as the U.S. economy grows. The broader Swiss Performance Index also lost 1.5 percent today.
The news from Japan and the U.S., “together with the overbought condition we had, is creating volatility, and that could last for the summer,” Philippe Gijsels, a strategist at BNP Paribas Fortis in Brussels, said in a phone interview today. “Central banks will remain in very expansive mode, and that will continue to support markets, but we can have some sort of rough patch to battle with in the coming months.”
The benchmark 10-year U.S. Treasury yield was little changed, after climbing as much as five basis points to 2.26 percent, the highest level since April 2012.
BOJ policy makers refrained from expanding their tools to address bond-market volatility, sticking with an April plan to double the monetary base as they seek to rekindle inflation and stoke growth.
Germany’s constitutional court began a two-day hearing to consider a case against the ECB’s Outright Monetary Transactions program. The as-yet-unused OMT, introduced last year as concerns peaked that the euro region would break apart, foresees potentially unlimited purchases of bonds of debt-stricken countries that sign up to adjustment programs.
The Swiss government raised its forecast for the country’s economic growth in 2013 to 1.4 percent from 1.3 percent. Gross domestic product will increase 2.1 percent next year, matching the previous prediction, the State Secretariat for Economic Affairs in Bern said today.
Richemont fell 3.4 percent to 81.70 Swiss francs, the biggest decline in almost two weeks.
UBS dropped 2.2 percent to 16.49 francs and Credit Suisse lost 1.2 percent to 26.79 francs. The Economics Committee of the Swiss Parliament’s upper house recommended rejecting a tax agreement with the U.S. by 7 votes to 6, Neue Zuercher Zeitung reported, citing committee Chairman Konrad Graber.
Newron Pharmaceuticals SpA advanced 4.7 percent to 8.99 francs. The Italian developer of an experimental drug for Parkinson’s disease rose to a nine-month high after the company made presentations to investors in the U.K. and U.S. last week.