Interest rates for March remain unchanged at 5.50% despite the outlook for 2024 being biased towards three possible rate cuts. Trading.biz analyst Rahul Nambiampurath believes that the steady rates follow a stability pattern, and when the rate cuts eventually come Real Estate and utilities can be the biggest benefactors.
“Lower interest rates are directly related to lower mortgage rates, which might boost demand in the housing space,” Rahul says. He adds that utilities are often considered a haven during low-interest rates and can generate stable returns.
Key Stocks To Focus on Amid the Rate Cut Expectations
Rate cuts are going to show. And keeping that in mind, having a few thematic stocks in sight is advisable. As for the Utilities and Real-Estate sectors, Rahul has the following players listed:
Real-Estate
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Prologis (PLD): Down 4.24% YTD
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American Tower Corporation (AMT): Down 10.77 YTD
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Equity Residential (EQR): Up 0.93% YTD
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Host Hotels & Resorts (HST): Up 5.46% YTD
Utilities
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NextEra Energy (NEE): Up 1.05% YTD
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Southern Company (SO): Down 0.72% YTD
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Duke Energy (DUK): Down 2.37% YTD
Notice how Rahul has handpicked stocks still at value buying levels, trading at a discount or only up marginally.
Residential Real-Estate To Boom: EQR as the Dark Horse?
While each of the listed stocks has potential, Rahul believes that Equity Residential (EQR) might have the strongest legs to lead the rate-cut rally if and when it arrives. The company has reported robust Q4 2023 numbers, charting a 95.2% surge in earnings per share compared to Q4 2022.
EQR Daily chart: TradingView
The daily chart of EQR shows it trading inside a triangle/pennant pattern. Within this pattern, you can even see a Cup-and-Handle pattern forming. If the “Handle” completes successfully, you might see EQR breaching the upper trendline of the Pennant and rising towards the $66.20 level.
Also, declining or even steady interest rates can lower the cost of borrowing and encourage increased consumer spending, eventually favouring firms like Equity Residential (EQR).
