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Swiss blue chips recover from year lows

The SMI fell with other European markets before its strong recovery

(Keystone Archive)

The Swiss Market Index ended down two per cent on Wednesday after recovering more than half of a near six per cent decline, which had taken the market to a fresh year-low around midday.

At one stage worries about the Japanese banking sector and possible contagion to international banks blended with further declines in technology stocks. This sent a powerful sell signal in what is still a generally uneasy market climate where investors are worrying about recession while looking forward to interest rate cuts.

Only shares in SAirGroup and Sulzer managed to close higher, a novel distinction for SAirGroup which managed to lose 14 per cent of its value on Monday on further top level resignations and ahead of expected losses to be revealed in April.

The SMI closed 154.9 lower, or down 2.1 per cent at 7,225.7, after trading down by as much as 435 points at a low of 6980.9. It was the first time the index had dropped beneath the pschologically important 7,000 level since March 2000.

At current levels the SMI is 14 per cent below the all-time high of 8407 reached in August last year.

The broader Swiss Performance Index was 2 per cent down at 4998.09.

One trader called the mid-afternoon drop "a freefall. I would never have thought that the market would drop under 7,000 points again."

Other traders saw the losses as a buying opportunity, helping shares move off lows in late trading despite continued losses seen on Wall Street.

The biggest decliners were SGS, down 4.9 per cent at SFr1,800, Swiss Life shed 4.7 per cent at SFr1,277 and Swatch dropped more than 4 per cent.

The watch group is expected to release earnings for 2000 on Friday, but will face problems in its Asian markets in 2001 as the Japanese continue to cut back their spending.

swissinfo with agencies


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