Global equity prices need to fall significantly to provide more sustainable valuations and expectations, an analyst told CNBC on Tuesday.
"We're starting to see a much more challenging picture from a very high level; we are starting to see very narrow markets; we've got very high expectations and we've got high valuations. That's a pretty horrible concoction to have effectively in terms of markets," Roger Jones, head of equities at London Capital, told CNBC's "Squawk Box Europe."
He noted that risks in stocks markets are elevated. Traders have very high expectations for corporate earnings, for instance.
Results in U.S. companies were up by 24 percent year-on-year during the second quarter. However, data shows that traders expect earnings to grow 31 and 30 percent year-on-year in the third and fourth quarters, respectively. In comparison, earnings rose 2 and 8 percent from the previous year in the third and fourth quarters of 2017, respectively.