Swiss Stocks Decline on Investor Concerns Over Stimulus

Stocks in Switzerland declined the most in more than a week as Federal Reserve officials signaled that the U.S. central bank may soon reduce bond purchases.

Swiss Re lost 0.9 percent. Meyer Burger Technology AG, the supplier of machinery to solar-panel makers, slumped 4.6 percent. Swisscom AG rose the most in three months after the country’s biggest phone company posted second-quarter profit and revenue that exceeded analysts’ estimates.

The SMI lost 0.3 percent to 7,976.28 at the close of trading in Zurich, having earlier advanced as much as 0.3 percent. The equity benchmark rallied 2.1 percent last week as the European Central Bank said interest rates will remain low for an extended period and the Federal Reserve kept its monthly bond purchases unchanged. The broader Swiss Performance Index also dropped 0.3 percent today.

“I think investors are hanging in the air a bit,” said Christian Gattiker, the head of research at Julius Baer Group Ltd. in Zurich. “Investors are focusing on the timing of the Fed tapering again as there’s no major news out otherwise.”

Fed Bank of Chicago President Charles Evans, a proponent of monetary stimulus, said late yesterday he would not rule out a decision to begin reducing bond purchases from September.

“We’ve seen good improvement in the labor market, there’s no question in my mind about that,” Evans said in a meeting with reporters in Chicago. “I’m still wanting to see greater evidence that it’s a sustainable improvement.”

Fisher Comments

Fed Bank of Dallas President Richard Fisher, one of the most vocal critics of quantitative easing, had said Aug. 5 that policy makers were “closer to execution mode” in considering the right time to begin reducing purchases.

The Bank of England for the first time linked the outlook for its benchmark interest rate to unemployment and inflation and will keep its current policy “at least” until the jobless rate falls to 7 percent.

The London-based central bank said today the level is a threshold, not a “trigger,” and will provide a point at which the Monetary Policy Committee will reassess its policy stance, which currently has the key rate at a record-low 0.5 percent. The jobless rate was at 7.8 percent in the quarter through May and the BOE sees it staying above 7 percent at least until the third quarter of 2016.

Swiss Re

Swiss Re, the world’s second-biggest reinsurer, dropped 0.9 percent to 72.45 Swiss francs, bringing its two-day decline to 3.1 percent, the most in two months.

Meyer Burger slid 4.6 percent to 6.80 francs, snapping the longest winning streak since August 2012. Shares rallied 19 percent over the previous six days. First Solar Inc., the largest U.S. solar-panel manufacturer, reported lower second-quarter profit as sales slid 46 percent.

Swisscom rose 3 percent to 425.50 francs. Net income dropped 6.8 percent to 427 million francs ($461 million). That still exceeded the 408 million-franc average analyst estimate, according to data compiled by Bloomberg. Sales rose 1.5 percent to 2.86 billion francs, compared with the 2.8 billion-franc estimate.

Novartis AG added 0.2 percent to 68.05 francs, after earlier rising as much as 1 percent. The company’s Afinitor drug failed to meet its primary endpoint in an advanced liver cancer study.

“The setback is not grave as the liver cancer indication was always regarded as risky,” David Kaegi, an analyst at J. Safra Sarasin in Zurich, wrote in a note to clients today. “With the other cancer indications for Afinitor still in place, Novartis’ plate remains full and Afinitor is still on track to reach consensus 2015 sales expectations.”

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