Global markets hit another all-time high yesterday, with the receding threat of political instability in the EU boosting investors' confidence.
On Monday, the CBOE Volatility Index, dubbed the Vix Index and considered Wall Street's "fear gauge", fell to its lowest level since 1993, bolstered by last weekend's French presidential election result and solid corporate earnings, says Reuters.
Volatility in the US equity market "has dissipated as stock investors whistled past geopolitical unknowns from populist politics to heightened threats from North Korea", says Bloomberg.
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While trade agreements, tax reform and the future of financial regulation may hang in the balance, "investors have instead focused on one of the best global earnings seasons in a decade and signs of economic growth".
However, not everyone has welcomed this newfound confidence. Adrienne Murphy, chief market analyst at online traders AvaTrade, told the Daily Telegraph that with nationalism and populism still spreading, she was "surprised the Vix was so low".
Piers Curran, head of trading at Amplify Trading, also said the current volatility level "was not sustainable", while George Goncalves, a fixed income strategist at Nomura, issued a note of caution to his clients.
He said: "Complacency has returned in such quick fashion that it's starting to feel like 2005-06, when nothing seemed to faze the broader markets."
With Emmanuel Macron's victory over Marine Le Pen in the French elections, "the EU and the euro have dodged a bullet, but geopolitical risks are continuing to proliferate", says Nouriel Roubini, an economist known as "Dr Doom", in The Guardian.
As examples, he cites the continuing populist backlash against globalisation, Russia's expansionist agenda and North Korea threatening a military conflict on the Korean peninsula.
"It is worth asking if investors are underestimating the potential for one or more of these conflicts to trigger a more serious crisis, and what it would take to shock them out of their complacency if they are", he adds.
