One suspects we are seeing a growing belief that the Trump inspired rally may be coming to an end, with little detail emerging around policy statements. It seems this is a key reason why the S&P 500 is looking so directionless and struggling to move over the key 2400 level. Bank of America’s strategists have taken a more bullish stance suggesting the S&P 500 will reach 2500 points by year's end and I would not rule this out either. Considering the benchmark index has already exceeded every analysts’ estimation for 2017 by the end of February, 2500 points may just be another milestone in this animal spirits driven market. Add in the expectation for earnings per share (EPS) growth between 13% and 19% for 2017, and growing dividend yield, the markets may fulfil this very strong projection.
A parallel with this outcome is the emerging markets ETF (EEM) moving 3.9% higher along with a stronger AUD/USD on the back of a commodities market recovery into the end of last week. This now leaves the door wide open for a buoyant 2017.
The Australian market is expected to open slightly lower this morning with the SPI futures down 13 points. The ADR’s (American Depository Receipt) from BHP, FMG and CBA have remained relatively steady with the BHP ADR closing at $24.77 down 7 cents from Friday’s close of $24.84. CBA is down a little at $84.60 from the last close of $84.77.