“The market doesn’t like to be reminded that COVID-19 is still with us”

After a few weeks during which the market seemed calm and steady, its volatility has returned, and the reason for this is one that has now become familiar: the pandemic. “The market doesn’t like to be reminded that COVID‑19 is still with us”, says Daniel Sancho, investment manager at MAPFRE Gestión Patrimonial, appearing on the weekly “Ponte en Acción” (“Take Action”) talk show on Negocios TV. “We’ve already had weeks of high uncertainty, but it seems like it took some time for the market to become convinced of this”, he explains.

Investors now see the end of the year approaching quickly, with a variety of factors in place that could upset the rally in the markets that is typically seen during this period. In addition to the new variant, an increasing number of experts believe that inflation will be more persistent than temporary (in the eurozone, it rose to a record 4.9% in November). “It can be stressful just trying to keep up with what the market is doing each day, because sometimes what’s happening is hard to understand. When these episodes of volatility are occurring, there is always a need to reassure the clients, reminding them that investing in equities requires a five‑year outlook, or even longer”, Sancho points out. “When the market is behaving in the way it has been recently, managers need to tune out the day-to-day noise and look for long-term opportunities”, he adds.

As a result of all this, in the United States a correction has occurred to the yield curve for all maturities. As an example, Sancho says that in the near term “the market is no longer expecting a rate hike by the Fed, or at least expecting that it will happen later”.

Click here to watch the full interview (spanish version)