The US equity market is overpriced and ripe for correction

Investors have had a strong start to 2017 as global markets moved higher during the first quarter, buoyed by expectations of global reflation and fiscal stimulus that has propelled equity markets higher since the US election last November.

In the US, the S&P 500 increased by 5.5% during the first quarter and the Nasdaq Composite Index advanced by just under 10% over the same period, reflecting continued strong performance from large-cap technology companies and a particularly strong quarter for semiconductor manufacturers.

However, there are a number of variables that should lead investors to question the direction of US equity markets from here.