Stock markets will fall, Bank of England deputy governor says
Summary
A deputy governor of the Bank of England warned that global stock markets, currently at record highs, may fall because they do not fully reflect economic risks. She pointed to worries about risky loans in private credit markets and high values of technology stocks, especially those related to artificial intelligence (AI).Key Facts
- Global stock markets are at record highs but may face a drop due to hidden economic risks.
- Sarah Breeden, Bank of England deputy governor for financial stability, expressed concerns about private credit markets, meaning loans funded by investors that may be risky.
- AI-related technology stocks are seen as highly valued and potentially over-priced.
- The US stock market and Japan’s Nikkei 225 recently reached record highs despite worries about inflation and the Iran war.
- Britain’s FTSE 100 index is about 5% below its record high before the Iran conflict started.
- The Bank of England fears a “private credit crunch,” a sudden difficulty in getting or repaying these risky private loans.
- Breeden is concerned about multiple economic shocks happening at once, which could cause stock prices to fall sharply and affect the economy.
- Following her warning, the FTSE 100 index dropped by over 0.5%, possibly influenced by her comments and ongoing concerns about the Iran war.
Read the Full Article
This is a fact-based summary from The Actual News. Click below to read the complete story directly from the original source.