An economist asserts that the bull market will persist.

Following robust gains, shares may be poised for a pullback or increased volatility compared to earlier in the year.

According to AMP’s Shane Oliver, the current bull market has been underpinned by optimism surrounding declining inflation, allowing central banks to lower interest rates while economic growth remains resilient. However, with shares experiencing significant increases, there are growing concerns.

Oliver highlights several factors contributing to these worries, including geopolitical tensions such as Iran’s actions towards Israel, stretched valuations, uncertainty surrounding rate cuts, the upcoming US presidential election, and lingering recession risks.

Despite these concerns, Oliver suggests that the bull market is likely to persist for several reasons. Firstly, global and Australian shares continue to demonstrate a pattern of rising lows and highs since 2022, indicative of a bull market. Additionally, there hasn’t been a significant decline in the proportion of stocks making new highs, as typically seen at major market peaks. Furthermore, today’s tech and AI-focused companies generate real profits, unlike during the tech bubble of 2000, which contributes to a more stable market environment.

Secondly, global and Australian economic conditions, along with profits, remain better than initially feared. Thirdly, falling inflation rates globally are expected to continue, potentially allowing for further rate cuts.

Despite some weaknesses, Chinese economic growth remains steady, and the price of commodities like iron ore has remained within a consistent range.

Lastly, while geopolitical risks persist, they may not escalate to the extent feared, as recent events between Iran and Israel have been relatively measured and anticipated.

Overall, while there are vulnerabilities in the market, Oliver suggests that the bull market is likely to persist due to these factors.

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