Earnings unlikely to be as strong as expected

The exception is the mining companies, which trade more on commodity prices than financial results. Here, earning estimates are not factoring in current spot commodity prices, and have room to continue to rise. As always, reporting season will be good for some, not for others.

The divergence between CSL, which recently upgraded, and Brambles, which recently downgraded, shows that it will all come down to individual performances, regardless of whether they are big stocks, growth stocks or otherwise.

The outlook for the broader market is more muted, with performance hinging on the largest sectors – the banks and miners.  Bank share prices have run strongly lately, with very little related to improving fundamentals, indicating limited upside from here. Meanwhile the miners look set to continue to benefit from elevated commodity prices, at least in the short term, although they are vulnerable to a correction in commodity prices on a longer term view. Otherwise, the market faces the risk of its rather bullish sentiment abating, as Trump-based excitement eases, and earnings expectations come back.