The stock market is due for another sharp leg higher before the end of the year and the strength of the economic recovery will be equal to the deepness of the downturn, analysts told CNBC.
“The picture really seems quite rosy now and I think between now and the end of the year we could see a further 10-to-15 percent gain on the equity markets,” Daniel Vassall Adams, research strategist at Helvetia Wealth, told CNBC.
Vassall thinks that the economic data will continue to bring positive surprises and retail investors will start switching out of corporate bonds and into equity funds. He recommends buying on the dips in the stock market.
“What has to happen now is that the consumers pick up the baton from government to take this forward,” Vassall said.
- Watch the full interview with Daniel Vassall Adams here >>>
Recovery to Equal Slump
Peter Toogood, head of investment at Old Broad Street Research, is also bullish on the strength of the economic recovery and told CNBC that it will be of equal force to the economic slump.
“The downturn was deep, the recovery will be the same,” Toogood told CNBC.
“There’s a positive earnings story on margins because of costs and then there’s a top-line recovery because of the deepness and darkness of the downturn,” he said.
Consumption has not collapsed around the world and there is a vacuum between production and consumption, according to Toogood. That situation will now reverse, which will help to boost the economy, he said.
- Watch the full interview with Peter Toogood here >>>
Meanwhile, Roger Nightingale, strategist at Pointon York, told CNBC that continued weakness in the global economy could actually provide a boost for the stock market.
“It’s with a weak economy that you get easy money and low interest rates,” Nightingale said.
Nightingale expects interest rates to remain low for many years to come.
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