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The ECB is warning that global markets are running on thin ice as Big Tech swells to 31.1% of the S&P 500’s total value while producing only 20.8% of the index’s earnings, a mismatch that is now driving alarm inside Europe’s central bank, according to its Financial Stability Review released Wednesday. The bank said financial stability risks across the euro area are now elevated, with asset prices stretched, sudden selloffs possible, and weak government finances in parts of Europe ready to test investor confidence. The report said market mood can turn fast if growth weakens or if news around AI adoption disappoints. It added that concern over high public debt in several advanced economies could strain global bond markets, push capital across borders at speed, and hit currencies without warning. The ECB said these risks now sit next to record market valuations, rising debt piles, and unresolved trade pressure already flagged by central bankers and regulators across the world. ECB tracks AI stock surge and rising market concentration The ECB said the AI-driven stock rally has pulled sharp attention from officials worried about how fast prices could drop if sentiment turns. It said investors have started to question how large spending on the technology will truly become. That doubt has already weighed on stocks, with the S&P 500 now heading for its first monthly decline since April. The ECB said persistently high valuations and growing market concentration raise the chance of sudden price breaks.Luis de Guindos, the ECB vice president, said the current setup is not the same as the tech crash of the late 1990s. “This is not identical to the dot-com bubble,” Luis said at a press briefing. He said firms today have “very clear business plans” and high revenues. “You can have doubts about the valuations, but…

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Filed under: News - @ November 26, 2025 2:29 pm