Will inflation cause a stock market crash?

In a word, Yes.

Inflation increases costs for businesses. The cost of raw materials - copper, steel, timber, oil and gas - rises. Employees demand payrises. The bond markets get spooked and demand higher interest rates when they lend to businesses.

Unless you are the type of business that can pass these costs to your customer, (for example a defence contractor who can pass cost increases to their government customers), your profits will shrink.

Shrinking profits inevitably mean a shrinking share price.

I think it is now clear that inflation is not "transitory" as the central banks hoped. And because central banks have delayed responding, inflation is likely to go higher and endure for longer.

The markets are hesitating as to whether to start selling. But once earning reports start to come in lower, they won't be able to hold off.

If you are currently in shares, consider selling and moving into cash. You can always buy back later at the bottom.

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