Swiss Stocks Close at 14-Month High; Transocean Advances
Transocean rose 1.3 percent after posting earnings that beat estimates. Nestle, Novartis and Roche, which make up about 60 percent of the Swiss Market Index (SMI), advanced. UBS AG and Credit Suisse Group AG, Switzerland’s largest lenders, fell 1.5 percent and 3.9 percent, respectively.
The Swiss Market Index added 0.1 percent to 6,407.3 at the close of trading in Zurich, paring an earlier rally of as much as 1.4 percent as European Central Bank President Mario Draghi’s comments at a press briefing disappointed investors seeking more definitive measures to stimulate the euro-area’s economy. That’s still the highest level since June 2011. The market was closed yesterday for a holiday. The broader Swiss Performance Index lost less than 0.1 percent today.
“Draghi rowed back a bit at the press conference, which clearly disappointed the markets,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “The situation seems a bit disoriented. Draghi seems like he’d like to do more, but he can’t, and the ECB seems a bit clueless. Investors are fleeing into the safest values like Nestle, Roche and Novartis.”
ECB policy makers meeting in Frankfurt today left the benchmark rate at a record low of 0.75 percent, as predicted by 51 of 55 economists in a Bloomberg News survey. Four predicted a cut to 0.5 percent. The deposit rate was held at zero.
Draghi signaled the bank will join forces with governments to buy sovereign bonds in sufficient quantities to remove all doubts about the future of the euro. Details of the bond-purchase plan will be fleshed out in coming weeks, he said.
The SMI has rallied 5 percent since July 26, when Draghi pledged to do “whatever it takes” to save a euro battered for almost three years by spiraling bond yields in countries from Spain to Greece.
The volume of shares changing hands in companies listed on the SMI was 69 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
In the U.S., central bankers led by Federal Reserve Chairman Ben S. Bernanke concluded their two-day meeting yesterday saying they “will provide additional accommodation as needed” to bolster the expansion. The Federal Open Market Committee also said it will “closely monitor” economic data and financial developments.
A Labor Department report showed that U.S. initial jobless claims climbed to 365,000 last week, up from a revised 357,000 the previous week. Economists in a Bloomberg survey had called for a rise to 370,000.
Transocean, the world’s largest offshore-rig contractor, gained 1.3 percent to 47.10 Swiss francs. The company reported second-quarter earnings that beat analysts’ estimates as it controlled costs to maintain its rigs, partly to satisfy more stringent safety regulations following the Macondo oil spill.
Excluding various one-time items including a $750 million charge related to Macondo, per-share earnings beat the average of 32 analysts’ estimates compiled by Bloomberg by 28 cents. Sales climbed 10 percent to $2.6 billion.
Nestle, the world’s biggest food company, rose 0.7 percent to 60.45 francs, its highest price since at least October 1989, contributing the most to the SMI’s advance. Novartis climbed 1.1 percent to 57.90 francs, its highest price since December 2010. Roche, the world’s biggest maker of cancer drugs, added 0.6 percent to 174.40 francs.
Metall Zug AG (METN), Switzerland’s biggest supplier of industrial dishwashers, slumped 8.8 percent to 1,990 francs, the biggest decline since November 2008, after Christian Arnold, an analyst at Vontobel Holding AG, cut the stock to hold from buy.
Acino Holding AG fell 2.1 percent to 109 francs after the developer of drug delivery technologies reported first-half profit that missed analysts’ estimates. Earnings before interest and tax excluding acquisition-related items rose to 10 million euros ($12 million) from 2.8 million euros, the company said. The median of two analysts’ estimates was 11.2 million euros.
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