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Stocks slip as traders turn focus to Powell speech

·3-min read
South Korea became one of the first major economies to lift interest rates as it tries to rein in bubbling household debt and soaring property prices (AFP/Ed JONES)

Global stock markets retreated on Thursday as worries mounted over an end to central bank largesse.

On Wall Street, all three major indices fell, with the broad-based S&P 500 dropping 0.6 percent after two days of records.

London and Frankfurt stocks fell 0.4 percent and Paris shed 0.2 percent.

Equities and oil have by and large enjoyed a positive week, helped by full US approval of the Pfizer-BioNTech vaccine and speculation the Federal Reserve will take its time in removing its ultra-loose monetary policy.

But the rally in US equities began to lose steam after news of the attack near the Kabul airport that killed at least 12 US troops cast a pall on the late summer trading session.

"The devastating news coming out of Afghanistan is having an effect on the psychology of investors," Art Hogan of National Securities told AFP.

With US inflation rising and fears about the potential for economic overheating on the rise, global sentiment remains blighted by the prospect of an end to the Fed's emergency financial support.

The US central bank has signaled that it expects to start reducing its bond buying by the end of the year, as long as the aggressive Delta variant of Covid-19 doesn't derail the economic outlook.

- Waiting for Jackson Hole -

Markets are waiting to see if Fed chief Jerome Powell's comments to the annual Jackson Hole central banking symposium Friday will reveal any details of its taper plans, though it might be too early to get a road map.

But traders are also leery after comments from Fed officials seeming to push for a rapid start to the wind down, offering an incentive to take profits after this week's gains, he said.

"I think you've got a combination of those two things with a market in a precarious position, the constant bit of investor anxiety and a good reason to take some profits tomorrow," Hogan said.

Asian markets fell after South Korea became one of the first major economies to start lifting interest rates since they were cut to record lows last year to battle the coronavirus impact.

"South Korea (is) leading the way when it comes to removing emergency stimulus measures and tightening policy," said OANDA analyst Craig Erlam.

"Others have considered similar moves and will likely follow in the coming months," he added.

Erlam said many central bankers now are concerned about their economies overheating, and are pointing to higher inflation or financial stability risks as reasons to tighten monetary policy.

- Key figures around 2130 GMT -

New York - Dow: DOWN 0.5 percent at 35,213.12 (close)

New York - S&P 500: DOWN 0.6 percent at 4,470.00 (close)

New York - Nasdaq: DOWN 0.6 percent at 14,945.81 (close)

EURO STOXX 50: DOWN 0.3 percent at 4,169.87 (close)

London - FTSE 100: DOWN 0.4 percent at 7,124.98 (close)

Frankfurt - DAX 30: DOWN 0.4 percent at 15,793.62 (close)

Paris - CAC 40: DOWN 0.2 percent at 6,666.03 (close)

Tokyo - Nikkei 225: UP 0.1 percent at 27,742.29 (close)

Hong Kong - Hang Seng Index: DOWN 1.1 percent at 25,415.69 (close)

Shanghai - Composite: DOWN 1.1 percent at 3,501.66 (close)

Euro/dollar: DOWN at $1.1755 from $1.1772

Pound/dollar: DOWN at $1.3698 from $1.3763

Euro/pound: UP at 85.79 pence from 85.54 pence

Dollar/yen: UP at 110.04 yen from 110.02 yen

West Texas Intermediate: DOWN 0.9 percent at $67.78 per barrel

Brent North Sea crude: DOWN 1.3 percent at $71.32 per barrel

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