Swiss Stocks Snap Three Days of Losses; Novarti AdvancesTom Stoukas
Swiss stocks rose, snapping three days of losses, as Novartis AG gained after reporting better-than-expected profit, and before the U.S. House of Representatives votes to suspend the country’s borrowing limit.
Novartis AG climbed 4.1 percent after fourth-quarter earnings beat estimates and it appointed a new chairman. SGS SA and Straumann Holding AG advanced at least 1.7 percent after the shares were upgraded at Goldman Sachs Group Inc. and Credit Suisse Group AG, respectively.
The Swiss Market Index rose 1.4 percent to 7,391.95 at the close of trading in Zurich, after the biggest three-day slide in more than two months. The gauge has rallied 8.4 percent so far in 2013, the best start to a year since the measure was formed in 1988. The broader Swiss Performance Index added 1.3 percent today.
“We had good news from Novartis, which surprised market participants,” Andreas Lipkow, a senior market strategist at Kliegel & Hafner AG in Berlin, wrote in an e-mail. “Upgrades for SGS and Straumann gave good support for the positive market move. Traders are very focused on positive company news.”
The volume of shares changing hands in companies listed on the equity benchmark was 38 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
In the U.S., the Republican-led House will vote today to pass legislation suspending the government’s $16.4 trillion debt limit until May 19. At that point, the U.S. borrowing authority would be automatically increased to accommodate the amount the Treasury borrows during those three months.
By postponing a decision on raising the debt ceiling, Republicans plan to focus on other deadlines to seek deeper spending cuts from President Barack Obama and Congressional Democrats. Lawmakers have until March 1 before automatic spending reductions start and until the end of that month to pass a bill to fund the government.
Swiss investor confidence rose in January for the fourth straight month to the highest level since May 2012.
An index of investor and analyst expectations that aims to predict economic developments six months in advance climbed to minus 6.9 from minus 15.5 in December, the ZEW Center for European Economic Research in Mannheim, Germany, and Zurich-based Credit Suisse said in a statement today.
In a speech in Frankfurt late yesterday, European Central Bank President Mario Draghi said the “darkest clouds” over the euro area have receded because of policy steps taken last year, including the introduction of an unlimited bond-buying plan.
Novartis added 4.1 percent to 62.55 Swiss francs after saying earnings excluding some costs climbed 3 percent to $3.1 billion, or $1.27 a share, in the fourth quarter, from $3 billion, or $1.23, a year ago. Analysts had predicted profit of $1.25 a share, the average of 14 estimates compiled by Bloomberg.
The drugmaker also announced that Chairman Daniel Vasella will step down from the board after 17 years, and Bayer AG’s Joerg Reinhardt will take over as non-executive chairman.
SGS advanced 1.7 percent to 2,165 francs, its highest price since at least 1989. Goldman raised its recommendation on the world’s largest product-inspection company to buy from neutral, saying it expects 2013 to be a key year for margin progress.
Straumann, the world’s biggest maker of dental implants, gained 4 percent to 122.30 francs. Credit Suisse upgraded its rating on the stock to outperform, meaning investors should buy the shares, from neutral, citing the company’s cost-reduction program and benefits from a weakened franc.
Adecco SA, the world’s largest provider of temporary workers, rose 2.3 percent to 52.75 francs, its highest level since July 2011. Exane BNP Paribas raised its price estimate for the shares by 17 percent to 62 francs, citing its resilient margins.
Logitech International SA surged 6.7 percent to 7.20 francs, its biggest gain since May. The world’s largest maker of computer mice will take a goodwill impairment charge of $211 million related to its video conference reporting unit.
The writedown isn’t a surprise and raises the possibility of Logitech disposing of unprofitable LifeSize Communications Inc., which would be a positive move, according to a note from Vontobel Holding AG.
Ascom Holding AG gained 7.4 percent to 10.15 francs, its highest price since August 2011. The Swiss provider of mobile communications said its operating margin almost tripled in the second half as it cut costs at the network-testing unit.
Ascom implemented measures to reduce costs at its network-testing unit by 20 million francs ($21.5 million) in 2013, the Dubendorf-based company said in a statement today. The unit’s second-half sales were 15 percent higher than in the first half, bringing its full-year revenue to about 130 million francs.