Markets were mixed on Wednesday.
The S&P 500 fell 0.1 percent after the Federal Reserve held short-term interest rates steady but the STOXX Europe 600 rose 0.4 percent.
In Asia, the Nikkei 225 jumped 1.7 percent after Prime Minister Shinzo Abe announced a ¥28 trillion stimulus package but the Shanghai Composite Index tumbled 1.9 percent following a report that China's banking regulator was considering clamping down on the nation's multi-trillion-dollar wealth management products market.
In the US, investors are apparently already wary of the risk in stocks, rotating out of them and into bonds in the week to 20 July, according to data from the Investment Company Institute.
Todd Rosenbluth, director of ETF & mutual-fund research at S&P Global Market Intelligence, said that “investors appear to be getting nervous as the bull market ages”.
Indeed, Greg Ip at the Wall Street Journal is concerned that the economy is again under the sway of asset prices.
The past two recessions were ushered in by a collapse in asset prices. The risk of a repeat is growing...
[N]et wealth in the U.S. now tops 500% of national income. Ominously, net wealth has reached that level only twice before: from 1999 to 2000 during the Nasdaq bubble, and 2004 to 2008 during the housing boom...
[W]hen valuations are so high, even justifiably so, it takes only a small shift in the appetite for risk, expectations of profits, or interest rates to trigger a major downdraft. The U.S. Treasury’s Office of Financial Research noted this week that stocks have reached today’s valuations “only ahead of the three largest equity market declines in the last century.”