Vonovia announces new prospects for the weekend closure

In a positive turn of events for the real estate sector, particularly German residential real estate company Vonovia, the company experienced a gain of over two percent in Friday's afternoon trading. This upward trend is attributed to improved prospects of interest rate cuts, both in the U.S. and Europe.

The U.S. employment data for August showed weak job growth and a rise in unemployment, with the economy creating fewer new jobs than expected. These figures have raised expectations of a U.S. Federal Reserve interest rate cut at its September 17 meeting. According to the CME FedWatch Tool, a 0.25% rate cut is likely, with a 91.8% probability.

Experts, including the Federal Reserve Bank of St. Louis President Alberto Musalem, who supports a quarter-point rate cut based on current data, and Bank of America economists, are also predicting a 25 basis point cut in September with further cuts in 2025. These predictions are driven by recent weak US labor market data and inflation considerations.

The hopes of decreasing financing costs are boosting interest-sensitive sectors, particularly real estate companies like Vonovia. As capital market interest rates fall, the relative advantages of residential real estate as an asset class increase. However, it's worth noting that secure bonds yield less return in such a scenario.

In Europe, expectations of falling interest rates have provided tailwind recently for Vonovia. The expected limited interest rate cut of 0.25 percentage points is likely to benefit the company, as it makes new investments more attractive.

Despite the positive developments, the chart picture of Vonovia has significantly deteriorated recently. Those who are already in Vonovia should keep an eye on the stop at 24.00 euros. The still bleak chart picture suggests that new entrants should wait a bit before investing.

The job growth situation in the U.S. economy is also being impacted by cuts in the public sector. This, coupled with the weak labor market data, has turned out to be good news for Vonovia and other interest-sensitive sectors.

In conclusion, the improved prospects of interest rate cuts have given a boost to Vonovia's stock, with markets interpreting the interest rate cut as a turning point. As we approach the Fed meeting, it is almost certain that the U.S. central bank will cut interest rates, and this could continue to benefit Vonovia and other real estate companies.

Vonovia announces new prospects for the weekend closure