Market Performance in August, according to MAPFRE Gestión Patrimonial

The end of the summer period is approaching, and while the markets have experienced weeks of highs and lows, the overall tone is positive. Experts from MAPFRE Gestión Patrimonial—Investments Supervisor Daniel Sancho and Investment Manager and Fund Selector Ismael García Puente—have reviewed the latest events on the market on Radio Intereconomía. With the IBEX 35’s return to upward growth, starting out from a better position than 12 months ago, both experts are optimistic. Still, despite the fact that “August tends to be an uneventful month,” they warn that uncertainties such as “the Delta variant or problems in the supply chain” could reduce investor confidence.

Following the good employment numbers in the United States, the “historical” increase in the American CPI and the encouraging business results of the S&P 500, investors are still awaiting the upcoming meetings of the Fed in light of a possible “tapering” and, especially, the annual Jackson Hole meeting of the world’s leading central banks, where, according to García Puente, “they will talk about whether it is a good idea to add more fuel to the fire, but not about putting it out.” Along this line, mentioning Jerome Powell’s imminent appearance, Daniel Sancho admits that “there is still a way to go to reach the pre-pandemic situation” and that “it is too soon to see the effect of the Delta variant on the growth rate.”

The eighth month of the year also saw data from the German ZEW, which measures investor confidence and, according to the MGP investment supervisor, was “better than expected in the current situation”, while the European PMI, despite exceeding 50 points, was worse than the analysts’ estimates. With regard to the level of prices in the Eurozone, which reached 2.2, there were no surprises after the latest revision of the ECB’s inflation objective, although the expert estimates that it is necessary to “analyze the data and its components and to see whether this new figure is here to stay or whether it will return to lower levels.” However, Ismael García Puente admits that these data “have not changed the market consensus and have not led to major changes in market prices.”

Beyond the numbers for this month marked by tourism and high temperatures, Daniel Sancho believes that it is a good idea for investors to analyze companies from the tourism sector and airlines that have been able to adapt to the current situation and that “could be very attractive in the long term.”

The increase in fixed income in August has made it possible to make up lost ground following the drop in profitability the previous month. According to the expert, it is important not to lose sight of this, as “this rebound is more in keeping with the current context.” However, with regard to variable income, he recommends not focusing on daily fluctuations that “could be confused with noise,” and he says that it should be analyzed from a long-term perspective. Meanwhile, Ismael García Puente highlights that the dollar is still the “market’s primary shelter asset”: “The greenback lets us see the level of market risk,” he explains.

Daniel Sancho concludes by adding the geopolitical situation in Afghanistan as one of the variables that could affect market volatility in the coming weeks. However, recent events have not been as dramatic for the stock markets, which have interpreted them with a certain level of calm. With that, he states that geopolitical risks, which are “difficult to understand and, especially, to predict,” will always be present.