Investors' perspective on the biggest risks to market stability heading into 2025 has shifted compared with a year ago, with a global trade war now topping the list ahead of President-elect Donald Trump's inauguration, according to Deutsche Bank Research.

"The biggest global risks are seen as a global trade war, a U.S. tech sector plunge and concerns over inflation and bond yields," said Jim Reid, global head of macro and thematic research at Deutsche Bank, in a note emailed Monday. Last December, investors cited a "hard landing" for the U.S. economy as the top risk for the market by far, the chart below shows.

The U.S. economy has expanded this year, despite fears heading into 2024 that the Federal Reserve's tightening of monetary policy to fight inflation risked triggering a recession. Some investors now worry that Trump's trade agenda for more tariffs could spark a rise in still-sticky inflation.

Although the Fed began loosening its monetary policy in September after U.S. inflation eased significantly from its 2022 peak, Deutsche Bank Research found investors fear an unexpected hike by central banks to battle inflation is among the top three risks to market stability in 2025.

The bond market has been volatile as the Fed adjusts its monetary policy while aiming to bring inflation back down to its 2% target, with investors anxious about the potential for an unexpected jump in yields.

The yield on the 10-year Treasury note, BX:TMUBMUSD10Y which is closely watched by the equities market as it is used to calculate valuations of stocks, has climbed this year to around 4.4% on Monday afternoon, FactSet data show, at last check. Big, sudden moves higher in the 10-year Treasury yield risk rattling stocks.

The Fed will hold a two-day monetary policy meeting this week, with its decision on where to set interest rates expected on Wednesday afternoon at 2 p.m. Eastern time.

The S&P 500 has rallied hard this year, partly on investor enthusiasm for artificial intelligence, which has benefited so-called Big Tech stocks with an outsized weighting in the equities index. For example, AI chip maker Nvidia, with a market value of around $3 trillion, has skyrocketed about 166% so far in 2024, according to FactSet data on Monday afternoon.

Investors see a plunge in tech stock valuations and waning AI enthusiasm as the second biggest risk to market stability after a global trade war, the Deutsche Bank chart shows.

The U.S. stock market was trading mostly higher Monday afternoon, with the tech-heavy Nasdaq Composite COMP climbing a sharp 1.4%, the S&P 500 SPX gaining 0.6% and the Dow Jones Industrial Average DJIA about flat, according to FactSet data, at last check.

So far this year, the S&P 500 has soared 27.6% while the Nasdaq has surged 34.5% year to date based on Monday afternoon trading levels. Shares of the Roundhill Magnificent Seven ETF MAGS, an exchange-traded fund that holds Big Tech stocks known as the Magnificent Seven, have posted a massive jump of 73% so far in 2024, according to FactSet data, at last check.

"The Mag-7 are seen increasing by 6.8% in 2025, the S&P 500 by 5.2%," Reid said, citing results of Deutsche Bank's global markets survey for 2025.