(Bloomberg) — Stocks declined and dollar rose after comments by Minneapolis Fed President Neel Kashkari dampened hopes of speedy interest rate cuts from the US central bank.
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S&P 500 futures lost 0.3%, indicating that the US equity benchmark will snap a six-day winning streak, while Europe’s Stoxx 600 index was little changed. West Texas Intermediate crude dropped below $80 a barrel for the first time in more than two months. The dollar strengthened.
Kashkari, speaking in an interview on Fox News on Monday, said it’s too soon to declare victory over inflation. He added that while there have been three months of promising data on inflation, it isn’t enough.
“There are a number of risk factors that could prevent inflation from easing in the nice, tidy sort of manner that people who are expecting a central bank pivot would like to see,” said Tom O’ Hara, a portfolio manager at Janus Henderson Investors.
Meanwhile, bond markets were broadly higher, led by the UK, as Bank of England Chief Economist Huw Pill hinted that rate cuts may be on the table by the middle of 2024 and German industrial output figures suggested that recession isn’t far off. Two-year gilt yields fell 11 basis points to 4.61% and the rate on 10-year Treasuries slid five basis points to 4.59%.
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Among individual stock movers, oil producers dragged down European equity benchmarks, with Shell Plc and BP Plc sliding more than 1%.
UBS Group AG added 3.7% after reporting stronger-than-expected client inflows in its wealth-management business. Watches of Switzerland Group Plc, the top UK Rolex retailer, jumped 10% after saying it expects to more than double sales and profits by 2028.
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In Asian markets, South Korea’s Kospi Index lost 2.3% after Monday’s rally that was triggered by a short-selling ban. Australia resumed policy tightening and raised its inflation forecast, a sign that central banks are not necessarily done hiking interest rates.
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