Bloomberg News

Swiss Stocks Extend 19-Month High After U.S. Jobs Report

October 05, 2012

Swiss stocks advanced for a second day, extending a 19-month high, as a report showed the unemployment rate in the world’s largest economy unexpectedly dropped to the lowest since January 2009.

Givaudan SA, the largest maker of flavors and fragrances, climbed 1.8 percent as UBS AG (UBSN) recommended the shares. Basilea Pharmaceutica (BSLN) AG increased 2.3 percent. Nobel Biocare Holding AG (NOBN) dropped for a fourth straight day as Kepler Capital Markets cut its rating on the maker of dental implants.

The Swiss Market Index (SMI) rose 0.7 percent to 6,674.82 at the close of trading in Zurich. That’s the highest level since Feb. 21, 2011, and brings this week’s rally to 2.8 percent. The benchmark gauge has surged 17 percent from this year’s low on June 4 as European Central Bank policy makers agreed on an unlimited asset-purchase program and the Federal Reserve announced a third round of quantitative easing. The broader Swiss Performance Index added 0.6 percent today.

“Stocks are riding high as traders welcomed the latest employment report from the U.S.,” David Madden, a market analyst at IG in London, wrote in e-mailed comments.

A Labor Department report showed U.S. unemployment fell to 7.8 percent in September from 8.1 percent the previous month. The economy added 114,000 workers last month after a revised 142,000 gain in August that was more than initially estimated. The median estimate of 92 economists surveyed by Bloomberg called for an advance of 115,000.

“Job growth was in line with expectations, but the revision from the previous month is a positive surprise,” Viola Julien, an analyst at Helaba Landesbank Hessen-Thueringen in Frankfurt, wrote in e-mailed comments.

Economic Conditions

The Fed signaled it’s moving toward linking its outlook for near-zero interest rates to specific economic conditions, such as a decline in the unemployment rate, rather than giving calendar-based forecasts. At its last meeting, the Federal Open Market Committee extended its time horizon at least through the middle of 2015 from late 2014, a decision that some policy makers said could be misinterpreted as a downgrade of their economic outlook, according to minutes of the Sept. 12-13

German Chancellor Angela Merkel will travel to Athens next week for the first time since Europe’s financial crisis broke out there three years ago, a sign she’s seeking to silence the debate on pushing Greece out of the euro.

Merkel Visit

Merkel’s visit to the Greek capital on Oct. 9 to meet with Prime Minister Antonis Samaras underscores the shift in her stance since she held out the prospect last year of Greece exiting the 17-nation currency regime.

Switzerland’s economy may grow more slowly in 2012, expanding 0.9 percent compared to a previous forecast of 1.2 percent, according to Zurich-based KOF research institute. The forecast for 2013 was 1.3 percent, down from a previously estimated 1.7 percent.

The volume of shares changing hands in SMI-listed companies was 12 percent less than the 30-day average, according to data compiled by Bloomberg.

Givaudan (GIVN) increased 1.8 percent to 926 Swiss francs after UBS added the stock to its most preferred list of European chemical companies.

Basilea Pharmaceutica advanced 2.3 percent to 48.05 francs as the company said the European Marketing Authorization Application for its ceftobiprole pneumonia treatment was accepted for review.

Credit Suisse Group AG (CSGN), the country’s second-biggest bank, gained 1.1 percent to 21.24 francs. A gauge of European lenders was the best performer of the 19 industry groups in the Stoxx Europe 600 Index. Julius Baer Group Ltd. (BAER) added 0.8 percent to 32.60 francs, snapping three days of losses.

Nobel, Lonza

Nobel Biocare dropped 1.4 percent to 8.90 francs, posting its longest losing streak in nearly four months, as Kepler downgraded the world’s second-largest maker of dental implants to hold from buy. The stock slumped 4.3 percent yesterday after the company cut its profit forecast.

Lonza Group AG (LONN) slid 4.2 percent to 48.48 francs, the biggest decline since May 23. Lonza and Teva Pharmaceutical Industries Ltd. are still evaluating the path forward for a phase III trial of its rituximab generic drug based on the latest changes in the regulatory environment, the drug- ingredient maker said in a statement today.

“The development of biosimilars is very cost intensive, which could be a burden for Lonza to reduce net debt in the future,” Carla Baenziger, an analyst at Vontobel Holding AG, wrote in a note to clients today.

Sonova Holding AG (SOON) fell 2 percent to 98.55 francs, the largest drop in more than a week. Simon Goetschmann, an analyst at Helvea AG, cut the maker of hearing aids to reduce from neutral, meaning investors should sell the company’s shares.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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