Traders at the New York Stock Exchange (Photo: Xinhua/VNA).

In its Global Financial Stability Report, the IMF said economic uncertainty increases so-called market tail risks – the chance of extreme, unexpected losses in an investment portfolio – which in turn boost the risk of stock market crashes.

It noted that news-based measures of risk, including conflicts, wars, terrorist attacks, military spending and trade restrictions had increased sharply since 2022.

In an accompanying blog, the IMF urged financial institutions to hold enough capital and liquidity to help them deal with potential losses from geopolitical risks, and urged them to use stress tests and other analyses to identify and manage such risks.

The IMF is due to release the full report at its spring meeting with the World Bank the week of April 21. President Trump's tariff policy will likely dominate the meeting.