The adrenalin released during the stress reaction inhibits insulin, the major hormone whereby the body removes sugar from the blood.
This is great when we have a physical response to a stressor or trigger that threatens our survival.
When we have chronic stress, without the physical outlet, as is mostly the case, sustained high sugar levels combined with high cortisol (the hormone secreted during long-term stress) levels and a susceptible individual, this might lead to diabetes in later life.
Stress also exacerbates existing diabetes. Diabetes can, in turn, lead to other diseases, mostly cardiovascular disorders.