Swiss Stocks Little Changed Near Five-Year High
Swiss stocks were little changed, after the Swiss Market Index last week rallied to its highest level in five years, as a report showed euro-area services and manufacturing output shrank last month.
The SMI (SMI) fell 0.1 percent to 7,927.34 at the close in Zurich. The gauge rallied 1 percent last week as the European Central Bank cut interest rates and as U.S. employment picked up more than forecast in April. The broader Swiss Performance Index was also little changed today.
“Markets are digesting the fantastic last week we had with central banks saying what investors wanted to hear,” said John Plassard, who helps oversee $28 billion as vice president at Mirabaud Securities LLP in Geneva. “You also had good releases for U.S. employment on Friday. As we are once more at new record highs in different indexes, especially the U.S., people are trying to think what will be the next focus.”
Volumes plunged in European markets with the U.K. closed for a public holiday. The number of shares changing hands in SMI-listed companies was 54 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.
Euro-area services and factory output declined for a 15th straight month in April. A composite index based on a survey of purchasing managers in both industries rose to 46.9 from 46.5 in March, London-based Markit Economics said today in a final reading. Figures below 50 signal a contraction.
A separate report showed that retail sales in the euro area fell 0.1 percent in March after a 0.2 percent drop in February, the European Union’s statistics office in Luxembourg said in a separate report today.
In France, Finance Minister Pierre Moscovici declared the era of austerity has ended, while his German counterpart offered flexibility on deficit cutting.
“We’re witnessing the end of the dogma of austerity” as the only tool to fight the euro debt crisis, Moscovici said yesterday on Europe 1 radio. “We’ve been pleading for a growth policy for a year. Austerity on its own impedes growth.”
Meanwhile, Germany’s Wolfgang Schaeuble said there is a “certain flexibility” in allowing France, as well as Spain, to meet its deficit targets, the Bild am Sonntag newspaper reported yesterday.
Holcim, the world’s largest cement maker, fell 1.5 percent to 70.95 francs as a measure of European construction-related companies posted the third-worst performance on the Stoxx Europe 600 Index. Peer Italcementi SpA reported a first-quarter net loss of 78.2 million euros, missing the average analyst estimate that called for 66.1 million euros.
UBS AG (UBSN), Switzerland’s largest lender, which accounts for more than 6 percent of weight in the SMI, shaved off 4.4 points as it traded without the right to its latest dividend. Adjusting for the lost dividend, the shares were little changed.
Swiss Life Holding AG (SLHN) lost 1.2 percent to 148.30 francs.
Transocean gained 1.9 percent to 50.55 francs, posting the best performance on the SMI and rising for a third day. ISI Group LLC raised the stock to strong buy from buy and increased its price estimate by 10 percent to $66 a share.
“We believe the combination of cost cutting, better capital discipline, and a long-term dividend policy provides significant upside to the shares,” ISI Group analysts wrote in a note.
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