The stock rally of 2009 can continue this year as there are three key factors underpinning the market, Kevin Gardiner, head of investment strategy EMEA at Barclays Wealth, told CNBC Wednesday.
"Firstly there is a recovery out there. I think economists have underestimated just how resilient the global economy is … and that's clearly going to contribute to top-line growth," Gardiner said.
"Second reason is that liquidity conditions are still really very generous. We don't see central banks on either side of the Atlantic actually raising rates for quite a few months to come," he said.
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And thirdly, stock valuations are "pretty undemanding" at current levels, according to Gardiner.
Gardiner adds that the US consumer is showing signs of resilience, revenues at companies are growing and the restocking phase is yet to take hold, which are all positive for stocks, he said.
Even though Gardiner said he thinks there is a positive backdrop for the stock market to rise, he concedes that interest rates have to go up at some stage and large government deficits will result in rising taxes and shrinking spending.
Meanwhile, Commerzbank analyst Petra Von Kerssenbrock is less bullish on the outlook for stocks and thinks the S&P and DAX are due for a slowdown and prolonged period of range-bound trading that could last the whole year.
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