Stocks Slip As Traders Turn Focus To Powell Speech

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.

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.