Political risks in the US, such as the Mueller inquiry into whether president Donald Trump colluded with Russian authorities to advance his election campaign, pose a threat to share markets, AMP Capital chief economist Shane Oliver has cautioned.

“Political risks in the US have escalated a bit with the Mueller inquiry intensifying and the need to avoid a government shutdown and raise the debt ceiling next month which will likely see the usual brinkmanship ahead of a solution; the risks around US-China trade seem to be increasing; North Korean risks remain; and we are in the weakest months of the year seasonally for shares,” he said.

Mr Oliver noted that Australian shares have already seen a 5 per cent correction since hitting highs in May, but warned they are still vulnerable to a pullback in global or US markets.

“However, with valuations remaining okay – particularly outside of the US, global monetary conditions remaining easy and profits improving on the back of stronger global growth, we would see a pullback as just a correction, with the broad rising trend in share markets likely to resume through the December quarter and into 2018,” he said.