BUZZ-Financials start week on the backfoot as sentiment weakens

** Financial stocks kick off week on the back foot, underperforming broader markets

** S&P 500 Financials .SPSY down 2.8%, compared with a 0.7% decline in the S&P 500 .SPX

** Goldman Sachs GS.N falls 2.9%, Morgan Stanley MS.N and Wells Fargo WFC.N down 3.7%, JPMorgan Chase JPM.N falls 3.6%, Citigroup C.N slips 3.9%, and Bank of America BAC.N down 3%

** Ares Management ARES.N down 6.2%, KKR KKR.N slides 7.2%, Blackstone BX.N falls 7.6%, Carlyle Group CG.O down 6.5%, TPG TPG.O down 5.9%

** UBS strategists say AI disruption is expected to intensify over the next two years and markets could be heading for a credit crunch

** "Recent headlines on BDC redemptions have heightened concerns about forced selling and potential spillover effects. Credit markets are lagging equities in pricing disruption risk, with default rates forecast to rise by 1–4% across high yield, leveraged loans, and private credit" - UBS

** Software companies are delaying debt deals as higher borrowing costs and tougher scrutiny from lenders weigh on the sector, with AI disruption risk impacting leveraged loans more than high-yield bonds, Reuters has reported

(Reporting by Arasu Kannagi Basil in Bengaluru)

((ArasuKannagi.Basil@thomsonreuters.com;))