Investor Fears Over Inflation, Growth Reignited by OPEC+ Move
(Bloomberg) — Just as investors put the banking crisis in the rear-view mirror, OPEC+s unexpected output cut has reignited fears of more persistent consumer cost pressures and the risk it may delay an end of central bank hiking cycles. Stocks are likely to drop as higher oil prices from the production cut crimp growth, strategists said Monday. However, they suggested it may be difficult for the market to price additional rate hikes by the Federal Reserve. Heres the initial take of some strategists and analysts: Masungit na Paggising “The OPEC+ production cut is another reminder that the inflation genie is not back in the bottle,” said Ronald Temple, chief market strategist at Lazard Ltd. in New York. Together with the increased energy demand from China, this move increases the risk of more persistent inflation. It also likely limits the latitude central banks might have to relax monetary policy even if the economy slows. “For equity investors, this could be a rude awakening, as markets imply a Goldilocks outlook of reduced discount rates but no recession. Bond markets have been more sober in assessing recession risk, but perhaps too optimistic in terms of the likely central bank response to weakening growth. Todays decision makes the outlook