Why Wall Street matters more than ever

Keep your eye on the S&P500 this year - it will determine global market performance.

Summary: At $US19.7 trillion, the US represents 52 per cent of the world’s market share. In 2016 investors should watch the S&P500 closely, as its performance will impact global share markets in the long term. It’s uncertain if a new rally can be sustained this year – on the one hand, US is approaching dangerously high P/E ratios, while on the other, real earnings yield is currently high. Meanwhile, Australia looks to be coping with the post-mining phase better than expected.

Key take out:  It remains to be seen how the US economy will respond to rising interest rates. Australian investors should keep an eye on whether iron ore and coal prices stabilise.

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