Stay attentive

US equities are again trading close to the highest valuation levels of the past 125 years, alongside 1929, 1965 and the late 1990s technology bubble. What is remarkable is that markets remain near all-time highs despite rising long-term interest rates and a difficult geopolitical environment linked to the Iran conflict.

At the same time, market dispersion remains extremely high. A small number of AI-related winners continue to drive index performance, while many other sectors lag behind. Concentration risk is therefore increasing.

Valuations are never good timing indicators, but they do provide an important framework for future return expectations and risk awareness. Stay attentive.