Global Share Buybacks Return With a Bang as Stocks Hit Records

Stronger than expected earnings are leading companies on both sides of the Atlantic to announce share buybacks at a blistering pace as 2024 gets going — a potentially crucial pillar of support for global stock markets already trading at all-time highs.

Facing the highest borrowing costs in decades, corporations turned stingy on share repurchases in 2023, but that’s changing with buybacks projected to increase this year. Profit growth is improving and investors expect the Federal Reserve and European Central Bank to start cutting interest rates this year. The reduced borrowing costs should give companies more cash and room to take on debt to boost their share prices.

US companies have announced $105 billion in planned share repurchases in the first seven days of February, surpassing the full-month tally in January. It’s the strongest start to a February ever for announced buybacks and the second-best start to a year after 2023, data by research firm Birinyi Associates Inc. show. Perhaps not surprisingly, the S&P 500 Index is has posted nine records so far this year.

“It does tell you that management is getting more confident about where the economy is headed,” said Matt Maley, chief market strategist at Miller Tabak + Co. “It should be seen as somewhat constructive indicator. Stocks are not as cheap as last year, but companies announcing buybacks think the rally has more room to run.”

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