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Liquidity, “big tech” results help boost the stock market

Oct 28, 2021

Redacción Mapfre

In the midst of corporate results season, stock exchanges in the U.S. and elsewhere continue their upward trend and are posting gains day after day. But what is behind these increases? According to Ismael García Puente, investment manager and fund selector at MGP, the fundamental factor lies in the liquidity level, since “there is a correlation between the cash injections from central banks and the markets’ behavior in the following weeks.” However, he adds that these increases are also being supported by the presentation of results, especially in the “big tech” sector, in which “investors are already seeing profits close to 30%.”

Amid fears that central banks will start putting the brakes on stimulus policies, analysts acknowledge that there is no reason to be alarmist. “We must bear in mind that it's not about putting out the fire, but rather not continuing to feed the flames,” the expert says. With U.S. fixed income heading for minimum levels since 2009, he adds, investors have no alternatives, and part of last year’s savings continues to move into the stock markets."

The macroeconomic figures, together with the possible effects of comparison with 2022, could be lowering investors’ confidence, something that, in his opinion, is far from reality. "Data like the PMI, while worse than expected, are well above last year." According to Ismael García Puente, the issues we should be concerned with have more to do with raw materials, where “supply is unable to respond to current levels of demand.”

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