Warning of Sudden Correction from the European Securities and Markets Authority

The European Securities and Markets Authority published its second risk monitoring report for 2026, drawing attention to the widening gap between high market valuations and worsening macrofinancial conditions, and warned against the risks of sharp corrections.

Details of the Risk Monitoring Report

The European Securities and Markets Authority shared with the public its second risk monitoring report of 2026, evaluating the core risks and vulnerabilities in European Union financial markets. The report stated that markets have remained resilient, but that high valuations of technology companies and weakening economic growth are testing this resilience.

Assessments and Divergence

Although the strong performance of technology and artificial intelligence-linked sectors supports investor optimism, this does not mean that financial vulnerabilities have disappeared. It was stated that the divergence between worsening macrofinancial conditions and high market valuations has grown.

Stock and Bond Markets

It was recalled that stock markets, which experienced a sharp decline following the conflicts in the Middle East, later rebounded to pre-conflict levels. In bond markets, it was noted that government bond yields and risk premiums have increased.

Crypto Assets and Cyber Threats

It was emphasized that the risk of vulnerabilities in crypto asset markets spilling over into the broader financial system must be closely monitored. It was reported that cyber threats have gained importance as advanced artificial intelligence technologies alter the operational risk environment.

Statements by Chairperson Verena Ross

ESMA Chairperson Verena Ross stated that, despite rising geopolitical tensions and a weakening economic outlook, investor optimism continues to support high valuations, and that the widening of this gap increases the risk of a sudden market correction.