Live Markets: Base rate cuts not a cure for real estate firms

Castellum AB

10/05/2024 09:40

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    BASE RATE CUTS NOT A CURE FOR REAL ESTATE FIRMS
    As expected, Sweden's central bank made its first rate cut since 2016 on Wednesday but
Barclays says that cuts alone are not the panacea for the struggling real estate firms, and
encourages focus on fundamentals instead. 
    "The day after base rate cuts ... focus on fundamentals," the British bank says in a note,
as real estate stocks are down and swap rates moved higher.
    Castellum  CAST.ST , seen as a rate hedge, closed 0.11% down on Wednesday and is 1.3% lower
by 0832 GMT.
    "Our long-held view that base rate cuts don't matter due to the inverted rate curve appears
to be vindicated," Barclays adds.
    The analysts, who stick to their "neutral" view on European real estate, say that the
steepening of the rate curve that they anticipated has started, and expect this to continue.
    "We believe the market can and will now focus increasingly on property and company
fundamentals, rather than be beholden to the gyrations in the rates market," they say.
    Still, it sees the fundamentals as deteriorating for office-exposed landlords, and as
inflation is easing, says it believes the inflation-linked revenue growth will not offset higher
finance costs.
    It cuts Castellum to "underweight" from "overweight" to reflect the weakening operational
performance and declining earnings.

    (Anna Pruchnicka)
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        FOR FRIDAY'S OTHER LIVE MARKETS POSTS: 
        NEW RECORDS FOR STOXX 600, FTSE 100 AND DAX; CAC CLOSING IN ON FRESH PEAK CLICK HERE
        EUROPEAN SHARES SET TO END STRONG WEEK ON A HIGH CLICK HERE
    RATE CUT HOPES FAN RISK RALLY CLICK HERE
        
  


($1 = 0.9282 euros)


($1 = 0.9276 euros)

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