The market was saying that there were still no arguments to buy given the uncertain interest rate prospects. Vonovia was recently among the biggest losers in the DAX with a minus of 1.7 percent. For LEG Immobilien, things went downhill in a similar way in the MDAX. Aroundtown lost 1.4 percent.
Real estate companies and their share prices have been suffering from the sharp rise in interest rates due to inflation for months. In a comment on Thursday, the experts at Credit Suisse mentioned the risk of interest rates rising further in the USA given inflation and economic developments.
And in Europe, stopping interest rate hikes by the European Central Bank (ECB) is not an issue. Although there was inflation in the euro zone more than expected in May. However, the inflation rates are currently still above the key interest rate, so that the work of the European currency guardians is not yet over, explained the chief economist at the Liechtenstein VP Bank, Thomas Gitzel. “Two more interest rate hikes of 25 basis points each will probably be launched. After that, the ECB is likely to go into pause mode.”
This assessment was underpinned by statements by the ECB President Christine Lagarde at the German Savings Banks Day in Hanover. “Inflation is too high today and likely to remain so for too long. We are determined to bring it back to our medium-term target of 2% in a timely manner.” Lagarde emphasized: “You shouldn’t have any doubts about that.”
With regard to the Fed, expert Edward Moya from broker Oanda also referred to the recently robust signals from the US job market before the US job market report due on Friday. These increased the risk that the Fed will “raise interest rates at least once more” in the face of stubbornly high inflation.
However, higher key interest rates also mean higher interest rates for loans and new bonds, and this is exactly what has weighed on the real estate sector for some time.
Although Fed officials signaled an interest rate pause for the next interest rate meeting of the US Federal Reserve in just over two weeks on June 14, this does not mean that interest rate hikes will end yet. “A decision to keep the key interest rate constant at one of the next meetings should not be interpreted as meaning that we have reached the highest level in this cycle,” stressed Fed Governor Philip Jefferson in Washington on Wednesday.
The interest rate decision of the ECB follows one day after the Fed.
While the overall market recovered significantly on Thursday, the European real estate sector index was the only loser among the Stoxx 600 sectors, down slightly to just under 106 points. Below 106 points, it is once again approaching the 100 point mark, near which it hit its lowest level since 2012 a few months ago.
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