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Tag: Fitch Ratings

  • Home prices may pick up speed after the Fed cuts rates with 88% of the housing market still overvalued, Fitch says

    Home prices may pick up speed after the Fed cuts rates with 88% of the housing market still overvalued, Fitch says

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    (Left) Kevin Dietsch/Getty Images, (Right) Getty Images

    • Home prices may pick up speed after the Fed cuts rates next year, according to Fitch.

    • The ratings agency see prices rising as much as 3% next year and up to 4% in 2025.

    • That would come after the Fed is expected to cut rates by 75 basis points in 2024.

    Home prices may pick up speed after the Federal Reserve cuts rates next year, Fitch Ratings said, offering little relief to an already-overvalued housing market.

    In line with the central bank’s own projections, Fitch expects the Federal Reserve to cut interest rates by 75 basis points in 2024.

    Meanwhile, home prices are expected to move up 0%-3% next year, followed by a 2%-4% boost in 2025.

    “This will continue to impact affordability, particularly for entry-level and first-time homebuyers, thereby constraining demand,” Fitch said on Wednesday.

    The projected increase in home prices would come as 88% of the metro areas in the US housing market were overvalued as of the second quarter, Fitch added.

    That’s little changed from 89% a year ago and up from 73% in the first quarter of last year. In addition the margin by which homes were overvalued widened. Fitch found that homes were 9.4% overvalued in this year’s second quarter, up from 7.8% at the end of 2022.

    Not everyone shares Fitch’s price projections. For instance, Realtor.com sees lower mortgage rates slowing demand as buyers won’t feel rushed to buy before rates rise further, resulting in a home-price dip of 1.7% in 2024.

    Still, between high mortgage rates and rising home prices, the US housing market in 2023 was the least affordable on record, according to Redfin data going back to 2013.

    That came as persistently high mortgage rates kept current homeowners largely off the market, worsening an already limited market supply. Some relief to this trend may come in 2024, as mortgages have already started slipping from highs of almost 8%.

    Read the original article on Business Insider

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  • Fitch warns it may be forced to downgrade multiple banks, including JPMorgan – CNBC

    Fitch warns it may be forced to downgrade multiple banks, including JPMorgan – CNBC

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    An analyst at Fitch Ratings warned that U.S. banks, including JPMorgan Chase, could be downgraded if the agency further cuts its assessment of the operating environment for the industry, according to a report from CNBC on Tuesday.

    In June, Fitch lowered the score of the U.S. banking industry’s “operating environment” to AA- from AA, citing pressure on the country’s credit rating, gaps in regulatory framework and uncertainty about the future trajectory of interest rate hikes.

    Another one-notch downgrade, to A+ from AA-, would force Fitch to reevaluate ratings on each of the more than 70 U.S. banks it covers, analyst Chris Wolfe told CNBC.

    Lenders were rocked earlier this month after Fitch’s peer Moody’s downgraded 10 mid-sized U.S. banks and warned it may cut ratings of several others. (Reporting by Niket Nishant in Bengaluru; Editing by Maju Samuel)

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  • Nifty and Sensex posted second consecutive weekly gains after hitting all time highs amid signals of cooling off global inflation

    Nifty and Sensex posted second consecutive weekly gains after hitting all time highs amid signals of cooling off global inflation

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    The Federal Open Market Committee (FOMC) minutes which hinted towards a less hawkish approach in the coming policies are expected to start a rally in global equities. While in the domestic market, India’s forex reserves have grown by $2.537 billion to $547.252 billion for the week ended November 18. Some optimism also came as Fitch Ratings said India’s bank credit will see strong growth in the current financial year despite effects of higher interest rates.

    Added to that Foreign portfolio investors have infused funds worth Rs 32,344 crore in Indian stock markets so far in November and became net buyers again along with this market participants also turned bullish with S&P Global Ratings’ latest report that the global slowdown will have less impact on domestic demand-led economies such as India, Indonesia and the Philippines. These positive signals helped the BSE Sensex to gain 574.86 points, or 0.92 per cent, at 62,868.5 during the week ended December 02, while the Nifty inclined 183.35 points, or 0.99 per cent, to 18,696.1.

    Market veteran Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, said: “Nifty and Sensex gained around 0.8% in the past week creating all-time highs. The BSE Midcap Index gained 1.63% while the BSE SmallCap Index gained 1.94%. A steady softening of global bond yields on expectations of ‘peak’ inflation and a decline in crude prices, helped equity markets continue the momentum and helped the Nifty-50 Index log its new all-time high on a closing basis.”

    “FPIs were net buyers in the past five trading sessions, while DIIs were net sellers in the same period. Going forward, D-street will focus on macro trends. Going ahead, markets may be dominated by global news flows and steps taken by different governments to tackle their economies. On the economy front, Q2FY23 real GDP grew by 6.3%, while GST collections for October (collected in November) stood at Rs1.469 lakh cr (September: Rs1.517 lakh cr)” Chouhan added.

    As many as 41 stocks in the Nifty 50 index delivered a positive return to investors in the passing week. With a gain of (5.8 per cent), Britannia Industries emerged as the top gainer in the index. It was followed by Tata Steel (up 5.5 per cent), Ultratech Cement (up 5.3 per cent), Bharat Petroleum Corporation (up 5.1 per cent), and Grasim Industries (up 5.0 per cent).

    SBI Life Insurance Company, Hindalco Industries, Hero MotoCorp and Reliance Industries also advanced by over 4 per cent. On the other hand, Eicher Motors, Maruti Suzuki India and Coal India declined 2.4 per cent, 2.2 per cent and 2.1 per cent, respectively.

    Sector-wise, the BSE Realty index gained 4.2 per cent during the week gone by. BSE Metal has also given a 3.4 per cent return. While, BSE Fast Moving Consumer Goods, BSE Information Technology, BSE Oil & Gas, BSE Carbonex, BSE Teck and BSE Healthcare indices also surged more than 1 per cent during the week.

    Market strategist Vinod Nair, Head of Research at Geojit Financial Services, said: “The rally in the domestic market was halted by negative cues from global counterparts and broad-based profit booking in large caps. The correction in the market was led by auto stocks as the sales data came in lower than expected due to weaker exports and sequential de-stocking. Declining manufacturing activity in the US is proof that the central bank’s policy tightening has started to show results, which in turn will encourage the Fed to keep rate hikes at bay.”

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