Mr Craig said the outsized gains this year may also reflect catch-up to the moves seen in other major markets late last year.
“Some of this is a bit of a catch up from the softer fourth quarter the ASX had compared to many other markets,” he said.
The gains on Thursday were led by the information technology sector which surged 1.7 per cent. Like the benchmark, it too hit record highs, propelled upwards by a rally in the so-called “WAAAX” stocks, which gained between 1.3 per cent to 4.3 per cent, the largest move coming from Altium which closed at $38.14.
Financials, consumer staples and REITs also posted gains of 1 per cent or more.
Healthcare rose 0.9 per cent to fresh highs, the latter helped by CSL which jumped above the $300 level for the first time. It eventually finished up 1.1 per cent at $300.89, swelling its market cap to $135.1 billion. Credit Suisse upped its price target for the stock, flagging the potential for a guidance upgrade at its half-year results.
Communications and consumer discretionary lifted 0.8 per cent apiece, while materials expanded 0.1 per cent.
Investment manager Challenger was the top performer on the benchmark, jumping 5.6 per cent to $8.80. Biotechnology firm Polynovo gained 5.3 per cent to $2.40, while Mayne Pharma Group rose 4.4 per cent to $0.475.
On the downside, Super Retail Group shed 6 per cent to $9.77 after analysts at Morgans warned of an “indirect, short-term impact” of the ongoing bushfire crisis across the country for the diversified retailer.
While he believes “equities are the right place to be” for investors, Mr Craig said he is concerned about valuations and about how fast the market is moving higher at present.
“It’s very hard to think about what more good news could actually be built into the market. It seems there’s fundamentally a lot in the price and valuations are looking a little bit stretched across many sectors,” he said.
Mr Craig said that despite the benign global backdrop, geopolitical threats remain, including trade tensions between the US and China.
“Trade has not gone away and we expect trade tensions will come back,” he said.
Anthony Doyle, cross-asset specialist at Fidelity International, also warned about the potential for speedbumps for the local market from abroad.
“While conditions remain constructive for the Australian equity market it’s certainly not without risk,” he said.
“The ‘populism-based’ politics that seems to be sweeping the world is very anti-growth in its approach.”
However, Mr Doyle said he is still positive on the outlook for local equities this year.
“We’re in the unusual position of having tailwinds from both monetary and fiscal policy,” he said.
“Low interest rates combined with fiscal stimulus is normally a positive environment for equity returns.”
There were some pockets of weakness with utilities down 0.4 per cent, the largest decline of any sector. Industrials slipped 0.2 per cent, while energy eased by 0.1 per cent.
Among other blue-chip names, the big four banks closed higher, led by the Commonwealth which rose 1 per cent to $84.46. Macquarie Bank hit a record high, surging 1.4 per cent to $143.47.
QBE Insurance jumped 3.4 per cent to $13.81 after it was upgraded by Credit Suisse.
Woolworths and Telstra gained 1 per cent each to close at 38.68 and $3.88 respectively.
Pilbara Minerals slumped 2.8 per cent to $0.35, the same percentage point decline notched by property group Domain Holdings which finished at $3.86 after the company was cut to sell by UBS on valuations grounds after recent share-price strength.
For the session, 123 stocks gained, 61 fell while 16 were unchanged.
David Scutt covers markets for The Sydney Morning Herald and The Age