Swiss stocks closed little changed, erasing earlier losses, as signs emerged that U.S. lawmakers will reach an agreement to reopen the government and raise its debt ceiling before a deadline tomorrow.
Swisscom AG rallied to a 6 1/2-year high as Citigroup Inc. upgraded its recommendation for the stock. Swatch Group AG and Cie. Financiere Richemont SA retreated more than 1 percent after LVMH Moet Hennessy Louis Vuitton SA reported revenue that missed projections. Holcim Ltd. declined 1.8 percent after JPMorgan Chase & Co. recommended selling the shares.
The Swiss Market Index lost less than 0.1 percent to 7,981.87 in Zurich, after earlier sliding as much as 1 percent. The gauge has lost 0.5 percent so far this month, trimming its 2013 increase to 17 percent. The broader Swiss Performance Index was also little changed today.
“Everyone is waiting for a solution and becoming more nervous as the deadline approaches,” said Alessandro Fezzi, a senior market analyst at LGT Bank Schweiz AG in Zurich. “It’s a good idea to go a bit more defensive at the moment.”
A bipartisan Senate agreement to end the U.S. fiscal impasse is almost completed, Senator Richard Durbin said today. Durbin of Illinois, the second-ranking Senate Democrat, said at the Capitol that we are “moving into the next phase.”
While Representative Kevin Brady of Texas, a House Republican, said the deal will probably be accepted in the House by Speaker John Boehner, Boehner’s spokesman said no decision has been made about how or when a potential Senate agreement could be voted on in the House.
A final Senate deal and House agreement to accept it could clear the way to bring the fiscal impasse to an end with votes as soon as today.
Robert Costa, National Review’s Washington Editor, had earlier reported on Twitter that the House will take up the Senate proposal and Boehner will allow it to pass with Democratic votes.
Senators are considering a plan that would fund the government through Jan. 15, 2014, and suspend the debt limit until Feb. 7.
Fitch Ratings yesterday put the U.S. AAA credit grade on ratings watch negative, citing lawmakers’ inability to raise the debt ceiling in a timely manner, according to a statement after markets in New York closed.
Swisscom gained 2.4 percent to 454.20 francs, its highest price since March 2007. Citigroup raised the shares to buy from neutral, saying the stock price of Switzerland’s biggest phone operator has lagged its peers recently and that company stability and growth potential will push up the premium again. Swisscom rose 5.1 percent in the quarter ended September, compared with a 16 percent rally in a gauge of European telecommunications shares.
Swatch, the biggest maker of Swiss watches, slid 1.4 percent to 566.50 francs, its lowest price since Sept. 12. Richemont, the owner of the Cartier brand, lost 1.5 percent to 90.85 francs. LVMH reported total third-quarter revenue of 7.02 billion euros ($9.5 billion), missing the median analyst estimate that called for 7.24 billion euros.
Holcim fell 1.8 percent to 64.55 francs after JPMorgan cut its recommendation on the world’s biggest cement maker to underweight, a rating similar to sell, from neutral.
“We expect that emerging markets, particularly India, are likely to face headwinds related to currency, weaker-than-expected demand and lack of supply discipline leading to margin pressure,” analysts including Elodie Rall wrote in a report.
Schindler Holding AG fell 1.9 percent to 122.70 francs, extending its two-day decline to 7.7 percent, the biggest since September 2011. The company yesterday cut its profit target for the second straight quarter.