(new: US labor market report, further analyst opinion)

FRANKFURT (dpa-AFX Broker) - The shares of German real estate companies came under further pressure on Friday after a surprisingly robust US labor market report and a negative industry study by the US bank Morgan Stanley. They had already fallen the previous day following the first interest rate cut by the European Central Bank (ECB) since 2019. There were no concrete indications of further interest rate cuts.

Before the weekend, Vonovia shares recently lost 6.5 percent. They extended their losses after strong US jobs data. "The combination of a predominantly robust labor market and high wage growth at the same time has prevented the Fed from cutting interest rates for even longer," commented Thomas Altmann from QC Partners. Real estate companies are suffering particularly from the high interest rate level.

On top of this, Morgan Stanley downgraded the DAX-listed company to "underweight". As a result, Vonovia slipped back into negative territory in the annual results and moved further away from the 21-day line as an indicator of the short-term trend. Since the low in March 2023, however, Vonovia's share price had also doubled at its peak.

The US bank withdrew its buy recommendation for LEG and downgraded it to "Equal-Weight", the shares fell by 4.3 percent. TAG Immobilien was also caught up in the downward spiral and fell by 3.3 percent. Aroundtown fell by 2.1 percent.

Morgan Stanley analyst Bart Gysens wrote that after the ECB's first interest rate cut, there was little chance of a further price driver. He pointed out that after the rise in share prices so far, it was worth considering taking profits. The risk/reward ratio is better elsewhere in the sector than for German residential real estate shares, he said. He mentioned the UK.

Real estate stocks are usually particularly sensitive to monetary policy decisions. In the current case, investors had probably hoped for clearer signals regarding the ECB's future interest rate policy. However, ECB President Christine Lagarde emphasized that the central bank would continue to act based on data. "This practically rules out a further interest rate cut before September," commented chief investment strategist Ulrich Stephan from Deutsche Bank.

In the USA, interest rate cuts are not expected until later anyway. The strong jobs data should not cause the Fed to rush, wrote Ralf Umlauf from Helaba. "Expectations of interest rate cuts will also be dampened again for the rest of the year." The Fed's next interest rate decision is due next week. Umlauf believes that an interest rate cut is almost impossible.

High interest rates make business difficult for real estate companies in two ways: Firstly, higher interest rates make refinancing on the capital market, where companies obtain fresh money, more expensive. In addition, sales from the portfolios tend to become more difficult./niw/edh/ngu


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