Stocks slide as early rate cut hopes fade

Mark Crouch, analyst at investment platform eToro, says:  “It’s been a bearish day, with stocks pressured by various central bankers stressing their commitment to combatting inflation. FOMC member Christopher Waller said yesterday he sees no reason to cut rates as rapidly as in the past, while ECB president Christine Lagarde indicated policy has to remain restrictive as long as necessary and ECB Governing Council member Klaas Knot warned if markets conditions do not reflect monetary policy, it decreases the chance of a rate cut.

“There’s nothing particularly new here in the message – central bankers have been consistent in how firmly they are pursuing their inflation targets – but communicating it once again, hand-in-hand with the latest data, has seen financial markets respond. The strength of the latest US retail sales report provides no ammunition for the Fed to ease, while an unexpected uptick in UK inflation for last month means similar for the BoE. We’re seeing bond yields climb as the market recalibrates, while the FTSE slid more than 1.8%, testing the 7400 level in afternoon trading.”