* cpurl://apps.cp./cms/?pageId=stock-index-poll Reuters poll data
* Graphic of Reuters stock market poll: tmsnrt.rs/2nHJiJ9
By Rahul Karunakar
BENGALURU, March 30 (Reuters) - Developed market share prices are looking expensive, according to a plurality of strategists and brokers, with a majority in a global Reuters poll saying those major indexes are due for a correction of 10 percent or more this year.
Stock markets everywhere have rallied so far in 2017, with Wall Street hitting record highs on hopes that the U.S. administration will usher in financial deregulation and sweeping tax cuts. Last month, the U.S. Standard & Poor’s 500 market capitalisation pushed above $20 trillion for the first time.
But the blistering rally stands in contrast to much more measured views from global fund managers, who have trimmed recommendations for equities or left them unchanged at best in their model portfolio this year.
Many are now arguing that markets have become too reluctant to consider several key risks, including potentially-disruptive elections in Europe and no guarantees that the U.S. administration’s stimulus plans will be put into action.
The view that President Donald Trump will soon light a fire under the economy may have peaked, according to the latest Reuters poll of strategists who forecast U.S. shares will gain less than 3 percent between now and year-end.
Julian Emanuel, executive director of U.S. equity and derivatives strategy at UBS Securities in New York, said stocks have been pricing in a “strongly” pro-growth agenda.
“But it has yet to be fully implemented, and the devil is in the details,” said Emanuel, who sees the S&P 500 ending the year at 2,300, about 50 points lower than where it closed on Wednesday. He said he is cautious on stocks in the near-term.
On Friday, Republican leaders pulled legislation to overhaul the U.S. healthcare system, a key 2016 election Trump campaign promise, which has led to questions about his ability to deliver other pledges, including sweeping tax cuts.
Still, views from more than 200 equity strategists and brokers around the world were bullish, with the outlook for almost all the 22 indexes upgraded from just three months ago, when almost everyone missed the size of the recent rally.
Most indexes have already surpassed the levels predicted in December for where they would trade by mid-2017 and many have even breached end-2017 forecasts made three months ago.
But while the general view is for stock markets to keep rising, corporate earnings now have to catch up to justify the surge in share prices, with valuations for a majority of stock indexes already trading above their 5-year averages.
That is definitely the case for developed market shares, according to a near-majority of ever-bullish strategists and brokers polled by Reuters, something they have not said in recent years.
“Absolutely, it is definitely expensive. It is expensive by virtue of the fact people are too optimistic on earnings,” said Emanuel referring to the S&P 500.
A majority also predict a correction of 10 percent or more for developed market stocks. Such a drop is generally considered normal, but the last time stock markets went through that kind of a correction was at the beginning of last year.
Still, there is an increase in confidence. The recent surge in equity markets is also based on a view the world economy at last is in a synchronous upturn, along with inflation.
But that is at odds with the outlook for bond markets, with bond strategists as a whole in a separate Reuters poll still not very concerned about global inflation.
Emerging market stocks are expected to notably outperform developed economy shares this year.
Brazilian stocks are likely to rise for the second straight year to a record high in 2017, above the previous high hit almost a decade ago.
India’s benchmark BSE Sensex share index is also expected to scale a new record high by mid-year, with forecasts upgraded significantly from just three months ago.
(For other stories from the Reuters global stock markets poll)
Additional reporting and polling from reporters in Seoul, Shanghai, Taipei, Sydney, Tokyo, London, Frankfurt, Milan, Moscow, New York, Brasilia, Toronto and Bengaluru; Editing by Ross Finley and