Storm Clouds Linger as AMF Flags Growing Market Risks in 2025

Key Takeaways

• Volatility Is Back: Across equities, bonds, and crypto-assets, volatility has risen sharply and looks set to stay.
• Tariffs and Geopolitics Weigh on Growth: Global forecasts were cut by the IMF this spring, with eurozone growth expected at 1% and US growth at 1.8%.
• Asset Managers Brace for Liquidity Risk: Funds exposed to commercial real estate and illiquid assets are under regulatory watch for vulnerabilities.
• Cyber Risk Rising: Cyberattacks are up, preparedness remains uneven, and systemic infrastructure incidents are growing.
• Retail Investors Embrace Risk: Crypto, ETFs, and equities continue to attract retail capital, often steered by social media.

Deep Dive

The French financial markets regulator, the Autorité des Marchés Financiers (AMF), has published its 2025 Markets and Risk Outlook, painting a picture of resilience tempered by deepening volatility, persistent geopolitical tensions, and growing operational and cyber threats.

The annual risk-mapping report lands amid a global economic climate still reeling from April’s US tariff shocks and a broader deceleration in growth. While markets have rebounded from their spring tremors, the AMF warns that the underlying conditions remain fragile, propped up for now by policy interventions, but increasingly vulnerable to renewed disruption.

Markets proved remarkably elastic following the US’s early April announcement of reciprocal tariffs, initially sending the CAC 40 into a 12% slide before a swift rebound triggered by a moratorium and bilateral talks. Valuations have since not only recovered but, in some cases, exceeded pre-shock levels.

Still, the AMF cautions that this rebound may be deceiving. Market risks are on the rise, it says, and the uncertain outcome of ongoing trade negotiations means growth forecasts remain on shaky ground. The IMF’s spring revisions, down to 1% for the eurozone and 1.8% for the US, reflect the macroeconomic strain, with trade disruptions fueling inflationary pressure and undermining confidence.

Monetary policy has only deepened the divergence across the Atlantic. The ECB has aggressively slashed rates (eight times since June 2024) bringing its key rate to 2% by mid-2025. Meanwhile, the Fed paused its own rate cuts in December 2024 at 4.5%, citing inflation risks and economic fragility.

Risks Lurking Beneath the Surface

While French collective investment schemes weathered April’s turbulence without mass redemptions, vulnerabilities are beginning to show. The AMF identifies two pressure points: funds exposed to commercial real estate, still grappling with high debt costs and stagnant transaction volumes, and funds invested in illiquid assets, such as private equity and unlisted securities.

“Their sustained growth, coupled with the potential for liquidity tensions, pose risks that could spill into the broader financial system,” the AMF said. Stress testing across banks, insurers, and asset managers, developed jointly with the ACPR and Banque de France, is currently underway to assess system-wide resilience.

Meanwhile, corporate bond issuance remains strong and sovereign spreads are largely stable, but the AMF warns that a sudden economic downturn could flip this stability. Germany’s March 2025 fiscal policy pivot already pushed Bund yields up 40 basis points, rattling other eurozone sovereigns.

Crypto Booms… and Shakes

Crypto-assets have surged following the election of a pro-crypto US administration. Bitcoin hit new all-time highs, and stablecoin capitalization jumped 35% in the first half of the year. Yet this momentum comes with sharp edges: volatility is high, market size is growing rapidly, and interconnections with the traditional financial system are deepening.

That expansion could pose new systemic challenges, especially as macroeconomic and geopolitical conditions fluctuate. “The sector’s sensitivity to shocks has grown,” the AMF notes, raising flags around its increasing potential to propagate risks.

Cyber Threats, AI Fears, and Infrastructure Strain

Cyberattacks have continued to rise across all sectors, and major infrastructure disruptions, including failures in the EU’s T2S settlement platform and widespread power cuts in Spain and Portugal, highlight growing operational fragility. Incidents such as the Bybit breach have amplified calls for stronger cybersecurity defenses, particularly in emerging crypto platforms.

The January 2025 introduction of the EU’s Digital Operational Resilience Act (DORA) is expected to bring much-needed harmonization and enforcement to operational risk management, but the AMF notes that preparedness among market participants remains uneven. Concerns are also growing over the potential misuse of AI in financial attacks, adding another layer of uncertainty.

Risk-On Retail

French retail investors continue to embrace riskier investments. In 2024, household savings reached 19% of gross disposable income, with a growing share directed toward life insurance, ETFs, and equity products, particularly those exposed to international indices. Crypto-assets now attract around 8% of the population, with younger investors especially drawn in via social media influence, raising concerns over the quality of information shaping investment decisions.

The AMF’s mid-2025 risk map shows several categories flashing orange and red. Market and contagion risks are rising, while cyber and operational risks remain elevated. Credit and liquidity risks are steady for now, but vulnerable to broader macro shifts.

The AMF summed up its warning by clarifying that the market rebound since April may be brief, and underlying risks, from geopolitical tremors to illiquid assets and infrastructure failures, could yet test the system’s resilience.

“In a context marked by persistent uncertainty, the outlook for 2026 remains clouded,” the report concludes, “with heightened volatility across all asset classes likely to endure.”

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