The Bank of England has today warned that technology firms focused on artificial intelligence could be overvalued, posing a risk to financial stability.
Its financial policy committee also said the economy was at risk from threats to the independence of the Federal Reserve caused by interference by US President Donald Trump.
Its quarterly update cited US tariffs, elevated government debt worldwide and geopolitical unrest as other risk factors.
"On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on artificial intelligence," the report said.
"This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic," it added.
The price of gold today topped $4,000 an ounce for the first time.
Analysts said support for the safe-haven asset was in part due to investor concerns about stock markets regularly reaching all-time highs as tech company valuations soar.
AI progress could be hit by "material bottlenecks... from power, data, or commodity supply chains", the Bank of England warned.
Other threats to AI included "increased competition which could drive a re-evaluation of currently high-expected future earnings", it added.
On the Fed, the Bank of England said: "A sudden or significant change in perceptions of Federal Reserve credibility could result in a sharp repricing of US dollar assets, including in US sovereign debt markets, with the potential for increased volatility and global spillovers."
And it added that "risks associated with geopolitical tensions, global fragmentation of trade and financial markets, and pressures on sovereign debt markets remain elevated".
"The risk of a sharp market correction has increased," the Bank of England warned.
"A crystallisation of such global risks could have a material impact on the UK as an open economy and global financial centre," it added.
