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Better economic data driver of global mkt rally: AMP Cap

Published on Fri, Jul 24, 2009 at 10:29 | Source : CNBC-TV18

Updated at Sat, Jul 25, 2009 at 11:54

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Shane Oliver, Head-Investment Strategy and Chief Economist, AMP Capital Investors

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Shane Oliver, Head-Investment Strategy and Chief Economist, AMP Capital Investors, said global markets have rallied on better than expected econimic data and fundamentals of this rally were better than last year. He further added that the number of stocks, which participated in the rally were very high. "Markets may have seen a technical breakout," he added.

The S&P 500, Oliver said, could go up to 1200-1250 levels. He added that leading US indicators were showing signs of recovery and 74% of US results were better than expected. "We expect some recovery by end of the year," Oliver said. He further added, better economic data will be a key market driver.

Here is a verbatim transcript of the exclusive interview with Shane Oliver on CNBC-TV18. Also watch the accompanying video.

Q: Any concerns the market is looking a bit over stretched or do you think this is looking like a long rally?

A: I think the danger in trying to time pauses in this market is you end up missing out on the bigger picture. If you go back a couple of wks ago, the market was at the tail end of a correction. We saw most markets down 8-9% or so. And then came along some better than expected data on which markets have taken off. So yes, you could say that the markets are getting overbought, due for a bit of a pullback. But the flipside is the fact that the markets have been able to breakout to new highs for the year, the volumes have been reasonable, the number of stocks participating in the rally that we have seen over the last couple of weeks has been very high. In other words, the breadth has been good, that augurs well.

In the technical sense you can make an argument that the US market having broken the neckline of what we call the head and shoulders pattern is now on its way to around 1200-1250 level for the S&P 500. So I think there is a lot of upside to go. Yes, there are going to be setbacks along the way but the broad trend will be up.

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