ECB warns Eurozone financial stability

The European Union — European Central Bank>>> issued its biannual Financial Stability Report, warning that the Iran war and lingering trade tensions could significantly impact euro zone economic growth, increase borrowing costs, and strain public budgets. The report highlighted investor complacency, noting that financial markets have largely ignored these risks, with stocks at high valuations and corporate borrowing costs remaining low. The European Union — European Central Bank>>> also pointed to the increasing exposure of Hedge fund>>>s in government bond markets and the risks posed by opaque non-bank financial intermediaries. Furthermore, concerns over debt sustainability in the United States>>> were identified as a potential global spillover risk for Europe. The European Union — European Central Bank>>> also noted concerns about AI-related firms' reliance on debt financing. Despite these warnings, the S&P 500>>> and Nasdaq-100>>> closed at record highs.