Swiss Stocks Decline as ECB Holds Rates, Cuts InflationJonathan Morgan
Swiss stocks declined for a fourth day as the European Central Bank cut its inflation forecast for next year and President Mario Draghi reiterated that interest rates will be kept low for the foreseeable future.
Credit Suisse Group AG fell 1.2 percent as it sold its German private-banking business. Actelion Ltd. added 0.7 percent after the biotechnology company said it will buy back as many as 10 million shares over the next three years. Zurich Insurance Group AG rose 1 percent as Chief Executive Officer Martin Senn signaled he’s ready to sell some businesses to bolster earnings.
The Swiss Market Index fell 0.3 percent to 8,025.59 at the close of trading in Zurich, its lowest level since Oct. 16. The benchmark has still climbed 18 percent this year as central banks around the world pledged to keep interest rates low for a prolonged period of time. The broader Swiss Performance Index also slipped 0.3 percent today.
“I think the markets are lacking conviction as we are approaching year-end,” Witold Bahrke, who helps oversee $55 billion as a senior strategist at PFA Asset Management in Copenhagen, wrote in an e-mail. “As Draghi didn’t came up with any new dovish hints, tomorrow’s payrolls are seen as the most important signpost in a monetary policy context. Markets are still to a large extent driven by monetary policy signals.”
The ECB Governing Council meeting in Frankfurt today left the main refinancing rate at 0.25 percent after cutting it by a quarter point last month. The decision was predicted by all 60 economists in a Bloomberg survey.
Draghi said at a press briefing after the decision that the central bank’s key interest rates would remain at their present or lower levels as the euro area faces an extended period of low inflation.
The ECB forecast inflation at 1.1 percent in 2014, 0.2 percentage point lower than the previous prediction. It sees inflation at 1.3 percent in 2015, the first time it has made a forecast for that year.
Tomorrow’s U.S. payrolls report may help investors gauge the outlook for the Federal Reserve’s stimulus measures. The Fed Open Market Committee meets on Dec. 17-18 to consider changes to its $85 billion of monthly bond buying. Officials said at their Oct. 29-30 meeting that they may slow their asset purchases if the economy improves as forecast.
U.S. Commerce Department figures today showed gross domestic product in the world’s largest economy climbed at a 3.6 percent annualized rate, up from an initial estimate of 2.8 percent and the strongest since the first quarter of 2012. The median forecast of 77 economists surveyed by Bloomberg predicted a 3.1 percent gain.
Credit Suisse fell 1.2 percent to 26.10 francs. Switzerland’s second-biggest bank sold its German private-banking business to ABN Amro Group NV’s Bethmann Bank for an undisclosed fee.
ABN will acquire about 10 billion euros ($13.6 billion) in assets under management and about 200 employees in nine locations in Germany, Marc Dosch, spokesman for Credit Suisse, said by telephone today.
Actelion added 0.7 percent to 72.50 Swiss francs after saying it plans to buy back as many as 10 million shares, or an 8.31 percent stake, over a maximum of three years, to be used for its employee share-ownership program.
Zurich Insurance rose 1 percent to 247.20 francs. “We will invest in priority markets but manage other businesses for value,” Senn said in a statement. “This will mean improving the profitability of certain businesses, while we will either turn around or exit those that are under-performing.”
Syngenta AG climbed 1 percent to 347.70 francs. The world’s largest maker of crop chemicals forecast annual sugarcane sales of $650 million by 2015 and $2 billion by 2020, in a presentation on its website dated yesterday.