Swiss stocks fell for a second day as the country’s second-largest bank was downgraded by Standard & Poor’s, while a resignation from Portugal’s government revived concern about its ability to pursue austerity measures.
Credit Suisse Group AG dropped 2.6 percent. Panalpina Welttransport Holding AG gained for a seventh day after Morgan Stanley raised the company’s price target.
The Swiss Market Index dropped 0.7 percent to 7,675.29 at the close of trading in Zurich, paring an earlier decline of as much as 1.6 percent. The equity benchmark has fallen 8.1 percent since Federal Reserve Chairman Ben S. Bernanke said on May 22 that the central bank may reduce its bond buying if the U.S. economy recovers in line with its forecasts. The broader Swiss Performance Index slid 0.7 percent today.
“Markets were just starting to digest the shift in the Fed policy,” Ion-Marc Valahu, co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Now markets are getting hit by renewed political uncertainty in Europe, Egyptian turmoil which has taken oil above $100 and European bank downgrades from S&P.”
In Portugal, Prime Minister Pedro Passos Coelho told voters in a televised speech from Lisbon yesterday that he’s trying to hold his government together after Foreign Affairs Minister Paulo Portas, leader of junior coalition party CDS, quit.
Portas was the second minister to resign this week after finance chief Vitor Gaspar stepped down, saying his credibility had been compromised by the government’s failure to meet budget targets set by the European Union.
Portas disagreed with the prime minister’s decision to name Secretary of State for Treasury Maria Luis Albuquerque as a replacement for Gaspar, saying it would mean a continuation of the policies deepening the country’s recession.
Portuguese bonds slumped, pushing 10-year yields above 8 percent for the first time this year. Spanish 10-year yields climbed 17 basis points to 4.79 percent, while yields on similar-maturity Italian bonds rose 10 basis points to 4.54 percent.
West Texas Intermediate crude surged to as high as $102.18, its highest price since May 1, 2012, as political uncertainty in Egypt escalated and an industry report showed U.S. stockpiles shrank the most this year.
Egyptian President Mohamed Mursi defied protests calling for his resignation hours before a military-imposed deadline for him to end the political crisis or step down.
Credit Suisse slid 2.6 percent to 25.04 Swiss francs after S&P cut its long-term counterparty credit ratings for Switzerland’s second-largest lender to A- from A. S&P said new rules and “uncertain market conditions” threaten business.
S&P also affirmed its A long-term rating and A-1 short-term rating on UBS AG. Still, shares in the country’s largest bank lost 0.9 percent to 16.04 francs, after earlier dropping as much as 3.5 percent.
Julius Baer Group Ltd., the third-largest Swiss wealth manager, slid 1.6 percent to 36.60 francs.
Panalpina rose 3 percent to 106.60 francs, its seventh day of gains and longest winning streak in more than two years.
Morgan Stanley raised its target price for the freight-forwarding company to 130 francs from 110 francs, saying a margin turnaround is possible without a major macro-economic recovery.
The volume of shares changing hands in SMI-listed companies was 5.5 percent lower than the 30-day average today, according to data compiled by Bloomberg.