Markets were mostly higher on Monday.
The S&P 500 rose 0.2 percent to another record high while the Nikkei 225 rose 0.5 percent to a 21-year high.
However, the STOXX Europe 600 was flat. The IBEX 35 weighed down the region, falling 0.8 percent after the Spanish government gave Catalonia’s separatist leaders until Thursday to drop their push for independence.
Joanne Masters, senior economist at ANZ, said in a note that while the Federal Reserve may raise interest rates in December, “if goods inflation fails to show up next year, there might not be too many more in a hurry”.
Certainly, investors do not seem too concerned with monetary policy tightening, with markets having “gotten even calmer” in the typically-volatile month of October so far, noted Frank Cappelleri, technical strategist at Instinet.
Still, some analysts are concerned, especially for the US stock market.
Goldman Sach's chief US equity strategist David Kostin said in a note on Friday that the S&P 500 is currently trading in the 88th percentile of historical valuations and expects a “modest contraction” in valuation multiples.
That would mean that for the S&P 500 to rise, fundamental factors such as earnings and book values have to improve, but “a substantial increase in profitability in 2018 will likely require policy tailwinds”.
Meanwhile, William Watts at MarketWatch ponders the possibility of another market crash.
“It’s been three decades since Black Monday, the most disastrous single day in U.S. stock market history,” he wrote on Monday. “Critics charge that fragmentation and liquidity concerns resulting from market structure changes make an eventual rerun a near certainty.”
Joseph Saluzzi, co-founder and co-head of trading at Themis Trading, warned that “when it happens, it’s going to be really, really ugly”.
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