London, April 25, 2026, 20:07 BST
- Bank of England Deputy Governor Sarah Breeden warned that global equities have run up too far and she expects a pullback, since markets aren’t properly accounting for risks.
- London stocks ended down for the fifth day running, even as benchmark indexes in the U.S. and Japan keep notching fresh records. The warning follows persistent uncertainty.
- Private credit risks, frothy AI-related valuations, and fallout from the Middle East conflict are at the top of the Bank’s list of worries.
Bank of England Deputy Governor Sarah Breeden says global equities are trading above sustainable levels and warned of a likely pullback, arguing that stock prices are overlooking significant risks to the global economy. “There’s a lot of risk out there,” Breeden told the BBC. The Bank, she added, anticipates a market correction at some stage. Reuters
The timing of the warning is awkward, hitting just as markets diverge. London’s FTSE 100 keeps slipping, while tech-driven gains have sent Wall Street and Tokyo to fresh highs. Investor bets that Middle East turmoil won’t dent company earnings are holding up sentiment.
This month, the Bank’s Financial Policy Committee flagged the Middle East conflict as a “negative supply shock”—lifting costs for things like energy and borrowing, and dragging on growth. The committee warned that multiple weak points could snap in tandem, pointing to sovereign debt markets, risky asset prices, and private credit as areas of concern. Bank of England
Private credit refers to loans from non-bank funds instead of conventional banks, typically targeting companies with already elevated debt levels. According to the Bank, private markets have expanded quickly over the past twenty years, but no real test has come at this scale during a major macroeconomic shock. The Bank pointed out risks including lack of transparency, fragile underwriting, and complicated deal structures.
London shares struggled, with the FTSE 100 ending Friday off 0.75% at 10,379.08—that’s the weakest close since April 7. Over the week, the index slumped 2.71%, according to Sharecast figures on the LSE website.
But there was more dragging on the FTSE than the Bank. Patrick Munnelly, partner of market strategy at Tickmill Group, pointed to “fading confidence in a swift resolution” to the Iran conflict as the bigger driver behind the weekly slump. Some lift came from solid UK retail sales, which offered support to sterling. London South East
Even so, Breeden’s comments caught attention—central bankers almost never go this direct on equity risks. Russ Mould, investment director at AJ Bell, called it rare for a Bank official to “explicitly warn” about a stock-market pullback. According to Mould, the statement likely piled more pressure on the City. The Guardian
Competition is fierce. The S&P 500 and Nasdaq both notched new highs Friday, thanks in part to a rally in Intel after its earnings release. Over in Japan, the Nikkei 225 finished up 0.97% at a record 59,716.18, boosted by tech stocks fueled by AI demand.
That’s the pressure Breeden is highlighting. Investors keep chasing AI-related growth, but the Bank has warned that U.S. tech firms tied to AI look overvalued, and any sudden correction could make fundraising tougher for companies outside tech as well.
There’s another side to consider. U.S. earnings have proved more resilient than expected, with AP noting that analysts are looking for S&P 500 profits to climb roughly 14% from last year—assuming the rest of reporting companies just meet forecasts. Bank of America CEO Brian Moynihan, for his part, pointed to “healthy client activity” and steady asset quality. AP News
Still, there’s a risk hanging over the market. Should negotiations with Iran collapse or if oil supplies tighten further, sentiment on Wall Street could sour fast. Elevated energy costs would put pressure on both corporate margins and consumers’ wallets.
Breeden stopped short of predicting when a drop might come, or how steep it could get. Her warning was sharper: if private credit trouble, AI-related repricing, and a bigger macro shock arrive at once, she said, the financial system has to take those losses in stride instead of making things worse.
