Despite escalating geopolitical tensions and societal divisions, equity markets continue to surge, defying expectations. The S&P 500 has set multiple records this year, increasing 36 per cent since April. Macquarie strategist Viktor Shvets says that most risks are ‘outside the system’, driven by technology and financialisation. According to Shvets, financialisation disproportionately benefits asset holders, exacerbating inequality and societal polarisation. This creates a situation where governments and central banks are incentivised to protect the financial bubble through stimulus, further entrenching inequality.
Technological advancements, particularly in artificial intelligence, also contribute to this divide by redefining the value of labour. Shvets paints a stark vision of the future, warning of increasing wealth inequality and societal divisions. He emphasizes that countries’ differing uses of technology and finance create geopolitical pressures.
While markets remain buoyant, some analysts caution that external risks could eventually impact financial stability. Geopolitical conflicts, climate events, and health crises pose potential threats that could disrupt the current market momentum. The question remains whether these ‘outside-the-system’ risks will eventually break through and affect the markets.
