“Valuations remain reasonable, particularly if low interest rates are allowed for, global earnings are continuing to improve on the back of gradually improving economic growth, monetary conditions are set to remain easy,” said Mr Oliver.
“Absence of investor euphoria, reasonable valuations, easy global monetary conditions and the improving economic outlook suggest what we are seeing is just a correction, not the start of a major bear market,” he said.
Mr Oliver also said the US Federal Reserve will remain an ongoing source of investor “nervousness” as the case for a rate hike gradually builds.
“As expected the Fed announced another US$10 billion of cuts in its quantitative easing program and it now sees less risk of too low inflation and recognises the stronger labour market,” said Mr Oliver.
“However, it still sees significant labour market slack and has not changed its assessment that the Fed Funds rate will remain in its current range for a considerable period after the end of QE,” he said.
“Expect to see a gradual hawkish shift over time, but no rate hike until around mid-2015,” Mr Oliver added.
