J.P. Morgan says there's still room for a global run-up in equities — but "the most important thing" is whether the world economy responds to efforts to spur its growth.
Stocks have recovered significantly in the United States and China and moved higher in Europe following last year's global markets tumble amid worries over rising interest rates, trade tensions and slowing economic growth.
However, accommodative policies by the U.S. Federal Reserve and the European Central Bank, as well as increasing efforts by Chinese authorities to boost the world's second-largest economy, have helped fuel stocks' rally this year, said Tai Hui, J.P. Morgan Asset Management's chief market strategist for Asia.
"But for the rally to really continue, I think the most important thing we're watching out for is whether the global economy starts responding to a more dovish Fed, a more dovish ECB, to more stimulus from China," Hui told reporters in Hong Kong on Thursday.
Concerns about the global economy spiked last year over tensions between the U.S. and its trading partners, with the International Monetary Fund cutting its global growth forecasts for both 2019 and 2020.
Hui, however, said that recent data offer some cause for optimism.
He cited Chinese combined data from January and February for fixed asset investment and industrial production, as well as some U.S. jobs figures, as positive signs.
"If these numbers continue to stabilize — and even pick up a little bit, as we move to the summer — I do think that this (stock) rally can continue," Hui said. "And I do think that we will see some stabilization."