Despite its slow start to the year, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) found its feet in March and now trades just a touch lower than its multi-year high.
Only time will tell what happens over the rest of the year and the ASX is likely to throw up a few more surprises after a 2016 that saw the Brexit vote, victory for Donald Trump, a strong U.S. economy, and resurgent commodity prices.
Markets though are forward looking and the way to generate the best returns is by identifying the winners of tomorrow, not yesterday. So here are my top five predictions for the rest of 2017.
1. The iron ore price will fall below US$60 a tonne.
According to Metal Bulletin the spot price for the benchmark 62% fines has fallen to US$66.25 a tonne. This means that iron ore is now trading a whopping 30% lower than prices it posted in February 2017. I expect an increase in supply and weaker demand to drive prices below US$60 a tonne later this year. This could put big pressure on the Fortescue Metals Group Limited (ASX: FMG) share price.
2. The Australian dollar will fall below 70 U.S. cents.
As U.S. rates rise and the iron ore price falls, I expect to see significant selling pressure placed on the Australian dollar. This could take it below the 70 U.S. cents mark again. Great news for companies such as Cochlear Limited (ASX: COH), CSL Limited (ASX: CSL), and Ardent Leisure Group (ASX: AAD), which are all likely to benefit from a weaker local currency.
3. The S&P/ASX 200 will break through 6,000 points.
The benchmark index has been flirting with 6,000 points for the last few weeks. Barring any unexpected risk events, I believe it is inevitable that the index will push higher and finally break through 6,000 points later this year.
4. Pot stock shares will retreat.
Whilst I believe companies like Auscann Group Holdings Ltd (ASX: AC8) and Zelda Therapeutics Ltd (ASX: ZLD) could have bright futures and potentially develop game-changing treatments, I feel their current share prices have got a little ahead of themselves. As a result I wouldn’t be surprised to see them fall back over the next few months.
5. Ramsay will smash the market.
After a mixed start to the year the Ramsay Health Care Limited (ASX: RHC) share price is up 3% year-to-date and behind the market’s overall performance. But thanks to growing demand for its services as a result of ageing populations and increased chronic disease burden, I expect another record profit result from this leading private hospital operator will send its shares rocketing higher over the second half of the year.
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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.