Most Swiss stocks fell as fear that the so-called fiscal cliff of automatic spending cuts and tax increases may push the world’s biggest economy into recession offset better-than-expected U.S. consumer confidence data.
UBS AG (UBSN) and Credit Suisse Group AG (CSGN), Switzerland’s biggest banks, retreated as a measure of European lenders slipped. Adecco SA lost 1.7 percent after it was removed from a bank’s preferred list. Novartis AG (NOVN) and Sonova Holding AG (SOON) advanced.
The Swiss Market Index (SMI) closed little changed at 6,715.20 in Zurich, for a 0.2 percent weekly gain. Thirteen of the gauge’s 20 members fell, while six rose. The measure has rallied 18 percent from this year’s low on June 4 as European Central Bank policy makers agreed on an unlimited bond-buying plan and the Federal Reserve announced further quantitative easing. The broader Swiss Performance Index was also little changed today.
“Regarding the fiscal cliff, we think a compromise will eventually be reached after a hard struggle,” said Manfred Hofer, senior investment analyst at LGT Capital Management AG in Pfaeffikon, Switzerland. “Until then, uncertainty is likely to irritate the financial markets. The European debt crisis continues to be on investors’ minds. Greece still awaits the approval of new financial aid, while weaker economic data from the euro zone weighs on sentiment.”
U.S. consumer confidence improved this month. The Thomson Reuters/University of Michigan’s preliminary index of consumer sentiment for November increased to 84.9 from 82.6 the prior month. Economists projected a reading of 82.9 for the gauge, according to the median forecast of 71 economists surveyed by Bloomberg.
The U.S. economy will contract if Congress fails to act, allowing more than $600 billion of tax increases and spending cuts to take effect next year, Fitch Ratings said.
“We think that will tip the U.S. back into recession,” Fitch Managing Director Ed Parker said in an interview in Istanbul yesterday. “This should be a wholly avoidable, unnecessary recession.”
French industrial production slumped and confidence among factory executives held near the lowest in almost three years, prompting the Bank of France to indicate that Europe’s second largest economy may be tipping into recession.
Production fell 2.7 percent in September from August, Paris-based statistics office Insee said today. That’s the biggest drop since January 2009 and more than the 1 percent decline forecast by economists in a Bloomberg News survey. With sentiment among manufacturing executives unchanged at 92 in October, the Bank of France said the economy may shrink in the fourth quarter. Previous surveys suggest it also contracted in the third.
China’s National Bureau of Statistics said industrial production rose 9.6 percent in October from a year earlier, a faster pace than the 9.4 percent median estimate in a Bloomberg survey of economists. Retail sales climbed 14.5 percent last month from a year earlier. Economists had projected a 14.4 percent gain.
“Our indicators show that investors are still building on risk,” said Martin Schlatter, a fund manager at Swiss Rock Asset Management AG in Zurich, which oversees about 1 billion Swiss francs. “Despite the mixed signals -- positive ones from China, negative ones from Europe -- many investors realize that they’re not invested enough in equities. Therefore, we think non-financial stocks definitely still have potential.”
UBS and Credit Suisse lost 1.3 percent to 14.37 francs and 0.8 percent to 21.66 francs, respectively. A measure of European lenders sank the most among the 19 industry groups in the Stoxx Europe 600 Index.
Adecco (ADEN) slipped 1.7 percent to 44.60 francs after UBS removed the world’s biggest supplier of temporary workers from its list of most preferred stocks.
Swiss Re Ltd., the world’s second-largest reinsurer, dropped 1.8 percent to 65.95 francs, following a gauge of insurers lower. Swiss Life Holding AG (SLHN), Switzerland’s biggest life insurer, decreased 1.1 percent to 116.60 francs.
Schmolz & Bickenbach AG slipped 1.8 percent to 2.74 francs after Vontobel Holding AG cut its price estimate by 29 percent to 3.20 francs. The maker of high-grade steel products last week said it doesn’t expect operating profit to rise this year.
Huegli Holding AG (HUE) retreated 4.6 percent to 494 francs, its lowest closing price since December 2009, after the food marketer predicted 2012 sales will fall 1 percent in local currencies, compared with a previous forecast for a 2 percent increase. The company also said it will miss its 7 percent to 8 percent margin target and will report a drop in 2012 operating profit.
“The margin decline below its target range of 7 percent to 8 percent comes as a disappointment as the company did not have a margin below 7 percent since 2003,” Rene Weber, a Vontobel analyst, wrote in a note to clients. “We would not invest into the stock as it is uncertain if the margin decline will see a turnaround in full-year 2013.” Vontobel also cut its price estimate for the shares by 7.7 percent to 480 francs.
Novartis added 0.8 percent to 57.45 francs, while Sonova rose 0.7 percent to 92.85 francs. A gauge of European health- care companies posted the best performance on the Stoxx 600.
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