The group reported an eight year high in private investor bullishness, driving its weekly composite investor sentiment indicator into ‘euphoric’ territory.

Trevor Greetham, head of multi-asset at Royal London Asset Management, said the key question for investors is how long this enthusiasm about Donald Trump’s first substantive piece of legislation can be sustained. Although the indicator has only produced readings this high 5% of the time since 1991, it can sometimes remain at an elevated level for several months when there has been a development seen as positive for stocks.

Previous sustained bouts of euphoria took place after the invasion of Iraq in 2003, in the aftermath of the global financial crisis in summer 2009 and after the election of Donald Trump in November 2016.

However, Tom Beckett, chief investment officer at Psigma, said the market’s elevated sentiment is cause for concern: “Future economic growth expectations need to come down. To use a baseball analogy, we are now in the 8th or 9th innings of this match.”

He admits that the 9th (final) innings can go on for a long time, but believes investors should be cautious. He favours Japanese and European stock markets over the US, where shares are very expensive.

Greetham said markets may still rise higher: “Despite the plethora of records being broken in equity markets and rising valuations, we still see a positive backdrop for stocks. After eight and a half years of economic expansion, global inflation remains muted, interest rates are low and tax cuts should boost US company profits. Interestingly, US company directors remain strong buyers of stock in their own companies, which is usually a good sign.

“However, with investor sentiment so upbeat, we wouldn’t rule out a short-term setback. Possible triggers could be weaker data in China where policy has been tightening or a faster than expected rise in inflation and interest rates in the US.”