Investors fret about 'overvalued' stocks

“In spite of serious geopolitical events, stock markets are at or close to highs,” said Will Goodhart, the chief executive of CFA UK, which surveyed 584 of its members last month.

On Wall Street, both the Dow Jones Industrial Average and the S & P 500 have hit record levels this year, while in London the FTSE 100 has come to within less than 1pc of surpassing the all-time high touched at the end of 1999, just before the dotcom bubble burst. But more recently markets on both sides of the Atlantic have come under pressure.

The FTSE 100 fell 1.7pc last week amid fears that Russia was preparing to invade Ukraine, as well as worries about the consequences of American air strikes in Iraq.

Ian Williams, a strategist at stockbroker Peel Hunt, said the increase in geopolitical risk had coincided with an “extended period of very low volatility, and it’s almost like a pent-up volatility is waiting to happen”.

European and British company earnings released during the recent reporting season have been lacklustre.

“The way the market has behaved over the last couple of weeks is kind of rational when you look at the gap between top down valuations and bottom up earnings numbers, which has got a bit too wide, and we’re seeing a bit of a snap back as result of that,” he said.

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