Swiss Stocks Drop as U.S. Services Gauge Misses Estimates
Swiss stocks declined to their lowest level in more than three weeks after a report showed that U.S. non-manufacturing industries expanded at a slower-than-expected last month.
Credit Suisse Group AG (CSGN) and UBS AG (UBSN) fell more than 1 percent. Sonova Holding AG (SOON) rose 1.7 percent as UBS named the maker of hearing aids among its most-preferred equities. Addex Therapeutics Ltd. (ADXN) jumped 5.8 percent after the biotechnology company released the results of a comparative trial of its treatment for a hereditary motor disease.
The Swiss Market Index (SMI) lost 0.3 percent to 7,942.5 at the close of trading in Zurich. The equity benchmark rose 3.6 percent in September, extending its gain last quarter to 4.4 percent, as the Federal Reserve refrained from reducing its monthly bond purchases. The gauge has rallied 16 percent so far in 2013. The broader Swiss Performance Index also slipped 0.3 percent today.
“The September ISM non-manufacturing index came in below market expectations,” Jonathan Basile, an economist at Credit Suisse in New York, wrote in a note. “Disappointment. The words ‘uncertain/uncertainty’ showed up three times in the report, the most in at least the last 12 months. And this was before the Federal government shutdown.”
The volume of shares changing hands in SMI-listed companies was 28 percent lower than the average of the last 30 days, according to data compiled by Bloomberg. Many businesses were closed in Germany today for the Unity Day holiday.
The U.S. non-manufacturing index decreased to 54.4 in September from 58.6 in August, according to the Institute for Supply Management. The median forecast in a Bloomberg survey had called for a drop to 57. A number greater than 50 means that activity expanded.
The first face-to-face talks between President Barack Obama and congressional leaders late yesterday failed to break the impasse over the budget for the new financial year. The U.S. government shutdown has temporarily placed as many as 800,000 federal employees out of work. A partial halt lasting one week would probably shave 0.1 percentage points from economic growth, according to the median estimate of economists in a Bloomberg survey. The costs will accelerate if the closure persists.
Congress also faces a dispute over raising the $16.7 trillion debt ceiling this month. The Treasury has said that it will exhaust measures to avoid exceeding the borrowing limit on Oct. 17. If that happens, the government would run out of cash to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
Credit Suisse fell 1.2 percent to 28.05 Swiss francs, its biggest drop in almost three weeks, while UBS slipped 1.1 percent to 18.46 francs, its lowest price in a month.
Sonova rose 1.7 percent to 110.30 francs. UBS predicted that the company will post good growth for the first half of its financial year because of the success of its new Phonak products, according to a note. Sonova reports its financial results on Nov. 18.
Addex Therapeutics jumped 5.8 percent to 3.63 francs, its biggest gain in seven weeks. The company said its drug reduced the expression of a gene that can cause a rare type of hereditary motor and sensor neuropathy. Addex compared the effect of the treatment in a trial on rats to baclofen, a drug which is marketed to treat nervous-system disorders and spinal-cord injuries, it said in a statement.
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