Proactive Investors -
- FTSE 100 rallies, up 33 points at 7,290
- BT (LON:BT) chief executive Philip Jansen to step down
- Utilities bounce after Thames Water funding boost
HSBC turns bearish on UK real estate sector
HSBC (LON:HSBA) has now removed all buy recommendations for stocks in the real estate sector as the bank predicts a “precarious” situation in the near-to-medium term.
Interest rate hikes have caused a surge in borrowing costs, which have caused pain for Britain’s real estate investment trusts (REITs).
One footsie REIT tracker has underscored a 12% year-to-date decline in the sector.
British Land, a commercial property company, and Land Securities Group, a real estate investment trust, have both been double downgraded to a reduce rating.
Stephen Bramley-Jackson, HSBC’s global head of real estate research, said: “The near to medium-term looks particularly precarious.
“Real estate equity is factoring in a further 20%-plus fall in asset prices and looming refinancing risk is a major concern.”
Commercial real estate has doubly suffered due to the persistent post-Covid trend of working from home.
Pound dips against dollar and euro
On the forex front, the pound has fallen sharply against the dollar today, with Cable dipping 0.6% or around 80 pips since Sunday’s close.
However, this still puts Cable on a comparatively strong footing given last week’s 1.7% rally.
The euro has also rallied against the pound today by adding around half a percentage point.
This dynamic could change in the next two days, when UK unemployment rates are announced on Tuesday followed by US inflation on Wednesday.
ING analysts said: “We are still reluctant to chase the dollar lower from this point – not particularly because we expect incoming data (US CPI above all) to surprise on the upside, but because the dollar still has to catch up with some recent market dynamics.”
That said, a downside surprise on inflation could drag the greenback lower.
Cable was swapping at 1.2755 at the time of writing.
Back to the stock market, the footsie remains buoyant at 7,288, nearly half a percent higher on the day.
US equities are down across the board, with DJIA down 0.55% and Nasdaq down 0.13%.
Here’s a quick recap of the top risers and fallers on the junior market today
Ondo InsurTech plc, the creator of the LeakBot device, saw its shares jump nearly 20% after it penned a new five-year deal with a leading Swedish insurer.
Länsförsäkringar, Sweden’s largest non-life insurance company, will roll out Ondo’s LeakBot across the country as part of a wider package for its customers.
Western Australia-focused lithium mining group Artemis Resources Ltd saw its shares jump 10% on Monday morning after a promising update to its Osborne joint venture project.
The dual London and Australia-listed group identified lithium-bearing pegmatites in the West Pilbara region, boding well for the joint venture 49% owned by Artemis.
Knights Group Holdings plc shares rose 12% after the legal and professional services business posted full-year results showing a resilient performance against a challenging backdrop.
Petro Matad Limited shares fell 11% as it revealed that the Velociraptor-1 exploration well, in central Mongolia, drew a blank.
The exploration company, in a statement, said that the well was drilled down to a depth of 1,500 metres but all the reservoirs it encountered were water-bearing.
Totally plc, the health service provider, lost a quarter of its value after it warned revenue and underlying profits for the upcoming financial year would be lower than the previous twelve months.