Stock markets mixed as Fed's Powell takes centre stage

Equity markets were mixed Friday ahead of a much-anticipated speech by Federal Reserve chief Jerome Powell on plans for tapering monetary policy with some top bank officials calling for a move within months.

The cautious end to the week followed a drop on Wall Street, with sentiment also jolted by geopolitical concerns after a suicide attack at Kabul airport that left dozens dead, including 13 US servicemen.

While the spread of the Delta variant of Covid has raised concerns about the global recovery outlook, the general consensus is that the vast sums of financial support provided by the Fed will likely come to an end next year as the economy gets back on track.

Powell's address to the annual Jackson Hole symposium of central bankers and economists later Friday will be closely watched for an idea about plans to reduce the bond-buying that has helped support the pandemic recovery, though a timetable is not yet expected.

Analysts say the timing of the taper is crucial as it could also give an indication of when to expect interest rates to go up. Still, three leading Fed officials have called for the bank to begin winding down soon.

Dallas Fed president Robert Kaplan said he was eyeing an October move or shortly after. The hawkish Kaplan had surprised many last Friday by saying he was open to rethinking his view on withdrawing support in light of the spread of Delta, but in an interview Thursday said his latest position was based on conversations with business contacts.

Meanwhile, St. Louis boss James Bullard called for a start later in the year, a call echoed by the Kansas City Fed's Esther George.

"An announcement on tapering is highly likely to come before the end of the year, something even the doves on the committee seem to agree on," said National Australia Bank's Tapas Strickland, pointing out that policy meetings are set for September, November and December.

"What will be as much, if not more important than the start date will be how quickly the Fed decides to taper and whether the Fed attempts to de-link the market's perception that tapering 'starts the clock ticking' on rate hikes."

Earlier, Asian markets were mixed Wednesday, with news that Joe Biden's multi-trillion-dollar spending plans were edging closer providing another colossal boost, but the optimism was offset by profit-taking after a strong start to the week. The US Food and Drug Administration's decision Monday to give full approval to PfizerBioNTech's vaccine has given a huge lift to sentiment and eased worries about the fast-spreading Delta variant in the world's top economy.

That came as some countries including the United States see infection spikes easing, while China appears to have overcome a weeks-long outbreak. Still, others such as Australia,

Japan and New Zealand remain in a tough battle with the disease, forcing them into containment measures.

The FDA move "is paving the way for organisations to mandate vaccines for workers and thus lift vaccination rates higher", said National Australia Bank's Tapas Strickland. "China's Delta outbreak also appears to be under control with two consecutive days of no new domestic cases (only one suspected case), while the PBoC vowed to boost credit support for smaller businesses and the real economy."

Wall Street enjoyed another strong day, with the S&P 500 at a record and the Nasdaq topping 15,000 for the first time. Asia picked up the baton but with smaller gains than those enjoyed on Monday and Tuesday.

Shanghai, Seoul, Sydney, Singapore, Wellington, Taipei, Manila, Mumbai, Bangkok and Jakarta all rose but Tokyo was flat. Hong Kong dipped after rising around three percent in the previous two days. London and Paris edged up at the open but Frankfurt was flat.

Buying was helped by news that Democrats in the House of Representatives had settled internal differences to push forward Biden's massive spending bill.

While there remains a long way to go before it hits his desk to be signed, the agreement gets the president closer to realising his near $5 trillion goal for updating US infrastructure and providing much-needed improvements to education, health care and climate change resiliency.