Swiss Stocks Rise as ECB Keeps Rates Low; Swatch AdvancesCorinne Gretler
Swiss stocks rebounded, with the Swiss Market Index rising for the first time in three days, as the European Central Bank said interest rates will remain low, and politicians in Portugal sought to stabilize the government.
Swatch Group AG and Cie. Financiere Richemont SA advanced more than 2 percent. UBS AG and Credit Suisse Group AG, the country’s largest lenders, followed a gauge of European banks higher. OC Oerlikon Corp. increased 3.5 percent after it completed the sale of its natural-fibers business.
The SMI climbed 2 percent to 7,831.59 at the close of trading in Zurich. Stocks slid yesterday after Standard & Poor’s downgraded Credit Suisse, while a resignation from Portugal’s government revived concern about its ability to pursue austerity measures. The SMI has fallen 6.9 percent since Federal Reserve Chairman Ben S. Bernanke said the central bank may pare its bond buying if the U.S. economy recovers in line with its forecasts. The broader Swiss Performance Index also added 2 percent today.
“The markets benefit from the ECB’s decision to keep interest rates low,” said Michele Rimann, a trader at Luzerner Kantonalbank AG in Lucerne. “The continued low interest rates should keep pushing investments and further boost the economy. Market sentiment is more positive after a few rough days.”
ECB President Mario Draghi said the central bank expects to keep interest rates low for an “extended period” as he tries to restrain market borrowing costs.
With ECB officials today leaving their main refinancing rate at 0.5 percent, Draghi fleshed out their outlook for monetary policy, a new departure for the central bank, after investors pushed up long-term bond yields.
In Portugal, Paulo Portas, the minister whose resignation on July 2 threatened to bring down the government, is meeting with Prime Minister Pedro Passos Coelho to try to patch up a rift that triggered a surge in bond yields.
In Egypt, the army removed President Mohamed Mursi from power and suspended the constitution. West Texas Intermediate crude traded near the highest price in 14 months amid concern the unrest in the Arab world’s most populous state will disrupt the supply of oil through the Suez Canal.
The volume of shares changing hands in SMI-listed companies was 17 percent lower than the 30-day average today, according to data compiled by Bloomberg.
Swatch, the biggest maker of Swiss watches, increased 2.4 percent to 533 Swiss francs. Richemont, the owner of the Cartier brand, added 3 percent to 85.45 francs.
UBS rose 2.7 percent to 16.48 francs, while Credit Suisse jumped 4.2 percent to 26.10 francs. A gauge of European lenders was the second-best performer of the 19 industry groups in the Stoxx Europe 600 Index.
Roche Holding AG, the world’s biggest maker of cancer drugs, rose 2.1 percent to 240 francs. Bank of America Corp. added the stock to its list of most preferred health-care shares, saying the price offers a buying opportunity.
Novartis AG gained 1.6 percent to 67.90 francs and Actelion Ltd. increased 1.6 percent to 58.30 francs, following European pharmaceutical shares higher.
Oerlikon added 3.5 percent to 11.70 francs after the maker of textile machinery said it will receive 470 million francs ($495 million) from the sale of its natural-fibers business to Jinsheng Group of China. The Jinsheng deal was announced in December.
“The divestment reduces overall cyclical exposure and thus risk, which we rate as positive,” Michael Foeth, an analyst at Vontobel Holding AG, wrote in a note to clients today.
Barry Callebaut AG advanced 1 percent to 892.50 francs, as the world’s largest maker of bulk chocolate confirmed its mid-term guidance for average volume growth of 6 percent to 8 percent through 2016. The company also said nine-month revenue fell 0.5 percent to 3.54 billion francs amid lower-than-average raw material prices.