Politicians have usurped central bankers as the most important drivers of investors’ behaviour, creating a much more diverse financial landscape, according to one of the world’s biggest monetary authorities.

The Bank for International Settlements has used its latest quarterly review to declare an end to the dominance of the herd-like behaviour of investors that have spent recent years responding to every utterance of major central bankers.

So-called “risk-on, risk-off” trades, in which market movements are driven by expectations of changes in the policies of the European Central Bank and the US Federal Reserve, that has characterised the years following the global financial crisis was becoming less important.

Investors are increasingly circumspect and broadening their investments across asset classes, economic sectors and geographical regions, said the BIS – known as the “central bank of central banks”.

“Politics tightened its grip over financial markets in the past quarter, reasserting its supremacy over economics,” said Claudio Borio, head of the monetary and economic department at the BIS.

Since Donald Trump’s shock win in the US presidential election, winners emerged in sectors such as defence and construction company stocks.

Central banks continue to play an important role in driving market trends, however. The expectation that the Federal Reserve will raise interest rates in March sent stock markets in the US to fresh highs last week.

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