The European Securities and Markets Authority on Thursday released its second risk monitoring report for 2026, outlining the main risks and vulnerabilities facing European Union financial markets. The watchdog said markets have remained resilient, but that resilience is being tested by persistent inflation, weak economic growth, elevated technology valuations, and rising geopolitical tensions. Beyond listed markets, ESMA said investors should also watch other pockets of risk, including exposure to private credit tied to the U.S. market and the growing links between crypto-asset markets and the broader financial system. The report described the crypto market as increasingly fragile. ESMA Chair Verena Ross said investor optimism continues to support high valuations, but warned that the wider the gap becomes, the greater the risk of a sudden market correction. The report also examined selected themes including trends in U.S. technology IPOs and prediction markets.
The European Securities and Markets Authority, or ESMA, has released its second risk monitoring report for 2026, setting out the main risks and vulnerabilities across European Union financial markets.
The report said markets have remained resilient, but that resilience is being tested by persistent inflation, weak economic growth, elevated technology valuations, and intensifying geopolitical tensions.
Risks outside listed markets
ESMA said risks beyond listed markets also warrant close attention. It pointed in particular to exposure to private credit linked to the U.S. market, as well as growing ties between crypto-asset markets and the broader financial system. The report said the crypto-asset market is becoming increasingly fragile.
Ross warns on valuation gaps
ESMA Chair Verena Ross said investor optimism continues to support high valuations, but warned that the larger that gap becomes, the greater the risk of a sudden market correction.
Topics covered in the report
The report also took a closer look at selected themes, including trends in U.S. technology initial public offerings, or IPOs, and prediction markets.
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