Despite the announced peace agreement between the United States and Iran, the European Securities and Markets Authority (ESMA) maintains concerns about potential stock market downturns. ESMA chief Verena Ross told the Handelsblatt that the Iran conflict, combined with rising energy prices, has significantly increased market risks, describing the current situation as highly volatile. She expressed doubt about whether the markets have fully priced in the long-term consequences of the war, such as its impact on global economic growth and inflation.
Ross also highlighted structural dangers, including cyber risks and problems within the private credit market, stating that these factors are generating considerable uncertainty. She warned that the risk of market setbacks remains high. Her warning joins a growing group of senior regulators who have recently issued stark warnings about a potential stock market crash, including ECB Vice-President Luis de Guindos and BaFin CEO Mark Branson.
While the private credit market is significantly larger in the U.S., it has also expanded sharply within the EU, according to Ross. She noted that across the globe, some private credit funds have lowered their valuations, restricted payouts, or completely halted distributions. Ross stated, “The critical question now is whether this is a normal market correction or the beginning of a larger crisis, where more funds fall into difficulty and then trigger a domino effect.” She concluded that this question cannot yet be answered definitively.
