Something significant is happening in the financial markets – what are they trying to tell us?

You could characterise the present mood as saying, whatever happens in the next few months, big business will prosper. But that is not the whole story, writes Hamish McRae

Last week saw a new all-time high in share prices in the most important market of all: Wall Street (Getty)

Something huge is happening in financial markets but, as always when we are in the middle of some seismic shift, it is not quite clear what it is.

Consider this. Last week saw a new all-time high in share prices in the most important market of all: Wall Street. The S&P 500 index of the largest companies in the US closed above 4,000. In April 2016, it was just over 2,000. So it has doubled in five years.

But while the US economy has grown decently, it has not doubled, even if the value of US companies is the highest, relative to the nation’s GDP, for at least half a century. The US is experiencing a strong recovery. But are its prospects really better than at any time in the past 50 years?