Overvalued stocks and the prospect of rising U.S. interest rates will soon trigger another stock market correction, according to one market analyst.
U.S. stocks tumbled into correction territory Monday, as deepening declines among technology companies and elevated trade tensions between the U.S. and China unnerved market participants. The tumultuous session cast a shadow over Europe and Asia, with global investors subsequently starting the second quarter on a sour note.
"I do believe one of the fulcrums of unrest will be in Europe," David Marsh, managing director and co-founder at think tank OMFIF, told CNBC Tuesday.
He explained that while European bonds had largely "trodden water" since the Italian election last month, the situation could soon deteriorate as Euroskeptic and anti-establishment parties look to gain a foothold in power.
Alongside rich valuations and the risk of higher interest rates in the U.S., these factors are likely to trigger a "time of reckoning" for global investors over the coming weeks, according to Marsh.
"I actually do see the correction of another 10 percent happening (and) I think it will be overdue and probably salutary … It might cause some blood to flow and I'm afraid to say I think that is going to happen at some stage in the next weeks or months," Marsh said.
Europe and Asia track Wall Street losses
A broad-based sell-off in the previous session pushed U.S. stocks below important technical levels, signaling more pain ahead for global markets. During afternoon deals, 10 of the 11 major S&P sectors were trading at correction levels on Monday — which is 10 percent or more off their recent highs.
The sell-off continued to reverberate across European and Asia indexes as second-quarter trading began after the Easter break. The pan-European Stoxx 600 was around 0.7 percent lower on Tuesday morning, with every sector moving into negative ground. Meanwhile, Asian equities were also lower after tracking overnight losses on Wall Street.
— CNBC's Patti Domm contributed to this report.