Stocks in Switzerland retreated the most in 21 months after Federal Reserve Chairman Ben S. Bernanke said the central bank may cut bond purchases later this year if the world’s largest economy strengthens.
UBS AG and Credit Suisse Group AG, Switzerland’s largest lenders, dropped after the Swiss National Bank said they need to improve their leverage ratios. Swatch Group AG and Cie. Financiere Richemont SA each slumped more than 5 percent as Swiss watch exports fell in May. Feintool International Holding AG jumped 8.1 percent.
The Swiss Market Index lost 3.1 percent to 7,496.05 at the close of trading in Zurich, its biggest drop since September 2011. The benchmark gauge has fallen 11 percent from its May 22 high and is heading for its fifth weekly decline, amid speculation the Fed will start to reduce its bond-purchasing program as early as September. The broader Swiss Performance Index retreated 2.9 percent today.
“On the one hand, markets are being prepared for an end to the bond purchases soon; on the other hand, it shows that it won’t happen immediately,” Peter Buergler, a trader at Luzerner Kantonalbank AG, wrote in a report today. “But markets have reacted disappointed. They still depend on the drip of the ample liquidity injections by central banks.”
The number of shares trading hands in SMI-listed companies was 31 percent higher than the average of the past 30 days, data compiled by Bloomberg show.
The Fed may “moderate” the pace of bond purchases later this year and could end them around mid-2014, Bernanke said late yesterday. The Federal Open Market Committee said at the conclusion of a two-day meeting in Washington that risks to the outlook for the economy and the labor market have diminished.
The central bank said it will keep buying bonds at a pace of $85 billion a month, and repeated that it’s prepared to increase or reduce the pace of purchases depending on the outlook for the job market and inflation.
More Americans than forecast filed applications for unemployment benefits last week. Jobless claims climbed by 18,000 to 354,000 in the week ended June 15 from a revised 336,000 the prior period, the Labor Department reported today in Washington. The median forecast of 46 economists surveyed by Bloomberg called for 340,000.
Sales of existing homes in the U.S. climbed 4.2 percent in May to a 5.18 million annualized rate, the National Association of Realtors said today. The median forecast of economists surveyed by Bloomberg had predicted a gain of 0.6 percent.
Credit Suisse slid 4.2 percent to 25.34 Swiss francs and UBS slipped 3.1 percent to 16.10 francs. The banks still need to improve their ratios of capital compared with total assets as risk-weighted models are being called into question, the Swiss central bank said today.
Swatch, the biggest maker of Swiss watches, sank 5.2 percent to 506.50 francs, the largest drop since September 2011. Richemont, the owner of the Cartier brand, fell 5.2 percent to 80.70 francs, the most in five months.
Shipments of Swiss timepieces and watch components to other countries fell 3.9 percent to 1.84 billion francs ($1.97 billion) last month, with exports to Hong Kong, China and France, three of the largest markets, declining more than 10 percent, the Federation of the Swiss Watch Industry said today on its website.
Feintool jumped 8.1 percent to 67 francs, the most in two months. The supplier of metal-cutting equipment said it sold 1.49 million registered shares at 62 francs each as part of a capital restructuring process.