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The ban on share buybacks ended on Friday, and the resumption of buybacks could provide strong support for the stock market, writes Goldman Sachs strategist John Flood.
“The volume of share buyback permits at the beginning of this year has grown strongly compared to previous years,” the expert notes. “In particular, it turned out to be 75% higher than the same indicator in 2020, as well as 24% and 26% higher than in 2019 and 2018, respectively.”
It is worth recalling that in 2018, American companies carried out a record buyback of shares, and this factor turned out to be the main driver of market growth on the eve of the fall-winter collapse.
The number of buyback permits issued since the beginning of this year exceeds the same indicator in 2018, however, the volume of actually carried out buybacks is still 90% of the same indicator in 2018, the strategist writes.