BetaShares chief economist David Bassanese says the US equity markets have had a strong run since Donald Trump became president and valuations are now highly priced.
“I think there’s still a risk of some disappointment in the short run in terms of what Donald Trump can deliver and so equity markets are still at risk of a correction over the next one to three months,” Mr Bassanese said.
“You’ve got the Federal Reserve still looking to raise interest rates so that’s going to put pressure on valuations which are already high.”
In the long-term, however, Mr Bassanese said he expects the US economy to continue to have solid performance with earnings growth still surprising on the upside.
“I think it would only be a relatively short run – a 5 or 10 per cent correction within a bigger picture equity bull market.”