The senior market analyst for eToro, Javier Molina, evaluated in his weekly commentary the risks of the real estate sector in the face of the effects of the restrictive monetary policy. Molina points out that the financial crisis that we are witnessing is only one of the symptoms or first consequences of the monetary policies and regulations of the sector in the last decade.
After a decade of interest rates close to zero and even negative, a decrease in bank cash ratios and a penalty for the liquidity of these entities, the sharp rise in interest rates experienced in the last year has generated strong instability and problems in a part of the banking sector. This situation raises a series of uncertainties in the real estate sector, especially in the office segment.
In the coming months, the real estate sector will face a high volume of refinancing, while demand has experienced a decline due to changes in work patterns and a lack of clarity in the business cycle. This opens the door to credit risks, both in terms of economic recession and financing, in an environment of low demand and falling prices. Molina questions whether this will be the next consequence of the change in interest rates in the economy.
On the macroeconomic outlook, Molina highlights that the second quarter began volatilely, with defensive assets leading the market due to recession fears. Weaker than expected US data such as employment and PMI have sent gold soaring and the US Federal Reserve is expected to cut interest rates three times this year. eToro’s macro view is for an accelerating V-shaped recovery, with an earlier slowdown in growth but also an earlier drop in inflation and rate cuts. The upcoming first quarter earnings season will be a major test for the market, with expectations already low but GDP growth still decent.
In the field of financial markets, the eToro analyst also provides his technical view on the IBEX-35 and Bitcoin. From a technical point of view, Molina points out that the recovery of the IBEX-35 from the 8,500 point area has a bullish target of 9,500 points. The overcoming of 9250 points opens the possibility of reaching that objective, and marks the first level of short-term support. However, if this area is lost, the next support level is at 9000 points.
On the other hand, In the case of Bitcoin, Molina points out that a stretch of consolidation continues to unfold between an increasingly narrow price range, delimited by USD 26,500 in the lower zone and USD 28,500 in the high zone. Despite the reduction in volatility, an imminent move is expected that would take prices straight to $31,400.
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