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Barclays has identified a list of global stocks poised to benefit as central banks in Europe and the U.K. prepare to cut interest rates. The investment bank’s analysis comes as financial markets anticipate a shift in monetary policy, with potential implications for various sectors and companies. The European Central Bank and the Bank of England are expected to continue, or begin, reducing interest rates in the second half of this year, continuing into 2025. Barclays economists project that by mid-2025, the ECB’s key rate could reach 2.5%, while the Bank of England’s rate might settle at 4%. Barclays included the following stocks in its “rate-cut winners basket”, among which are: Cellnex Telecom, Royal KPN , Hermes , Zalando , and Siemens Healthineers . While banks are often thought to suffer from lower interest rates, Barclays suggests that any loss in earnings from lower rates could be partially offset by higher lending volumes and reduced provisions for bad loans. “While bank profitability is no doubt linked to rates, we note that their [earnings per share] never saw the full benefit of higher rates this cycle (less leverage and less risky business), meaning their earnings beta to a shallow cutting cycle should be lower than expected,” said the bank’s strategists led by Matthew Joyce in a note to clients on July 24. However, according to the bank, the real estate sector is an exception and stands out as potentially vulnerable. Barclays estimates that interest costs as a percentage of sales for real estate companies could jump from about 14% to 21.5% by the end of 2026.
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