Swiss Stocks Fall Before Fed Minutes; Givaudan, UBS DropInyoung Hwang
Swiss stocks slipped for a second day, posting the biggest two-day decline in two weeks, as investors weighed U.S. economic data and the outlook for Federal Reserve stimulus policy.
Givaudan SA declined 1.8 percent for the biggest drop in the Swiss Market Index. UBS AG, the nation’s biggest lender, fell 1.2 percent. Schmolz + Bickenbach AG slid 1.7 percent after forecasting that revenue in 2013 will decline from last year and reporting third-quarter sales that missed analysts’ estimates.
The SMI slipped 0.2 percent to 8,281.21 at the close in Zurich. The measure has surged 21 percent this year, heading for the biggest annual rally since 2005, as central banks around the world pledged to leave interest rates low for a prolonged period. The Swiss Performance Index slid 0.3 percent.
“The focus of the day will be on the October FOMC minutes,” Philippe Gudin, the Paris-based chief European economist at Barclays Plc, and Singapore-based economist Rahul Bajoria wrote in a note dated today. “We look for them to indicate that the committee chose to defer any decision to taper asset purchases due to a lack of commitment about the sustainability of economic progress.”
A Commerce Department report in Washington showed that retail sales rose 0.4 percent in October, the most in three months, following no change a month earlier. The median forecast of 86 economists surveyed by Bloomberg called for a 0.1 percent October advance.
A separate release showed sales of previously-owned homes fell 3.2 percent to a 5.12 million annual pace, the fewest since June. The median forecast of 76 economists surveyed by Bloomberg projected a 5.14 million pace.
The Fed will release minutes of its October policy meeting after European markets close today. The document will reveal more details on the central bank’s decision to maintain its pace of asset purchases at $85 billion a month. Fed policy makers will probably trim the bond-buying to $70 billion at their March 18-19 meeting, according to the median estimate in a Bloomberg survey conducted Nov. 8.
Fed Chairman Ben S. Bernanke said late yesterday the central bank will probably maintain its target interest rate long after ending its monthly bond purchases.
“The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after” the jobless rate breaches the Fed’s 6.5 percent threshold, Bernanke said in a speech to economists in Washington.
The SMI climbed as much as 0.2 percent earlier today after people familiar with the matter said the European Central Bank is considering a smaller-than-normal cut in the deposit rate if officials decide to take it negative for the first time.
The volume of shares changing hands in SMI-listed companies was 12 percent lower than the average of the last 30 days, according to data compiled by Bloomberg. The SMI is trading at 16.2 times the projected earnings of its constituents, compared with 15.1 times for the Stoxx Europe 600 Index, the data show.
Givaudan, the world’s largest flavorings maker, lost 1.8 percent to 1,284 Swiss francs, and Zurich-based UBS dropped 1.2 percent to 16.57 francs.
Schmolz + Bickenbach retreated 1.7 percent to 1.15 francs. The steelmaker reported third-quarter sales of 784 million euros ($1.06 million), falling short of the 832 million euros analysts had projected. The company predicted revenue in 2013 will decline as much as 8 percent from a year earlier.
Newron Pharmaceuticals SpA added 3.7 percent to 16.70 francs. The Italian drug-developer company slumped 17 percent yesterday for the biggest drop since August 2011. Newron has surged 82 percent this quarter.