HONG KONG, Aug 27, 2021 (BSS/AFP) - Asian markets mostly rose 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 positive start to the day came as traders brushed off a drop on Wall
Street, though sentiment was 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.
- All about timing -
"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."
Asian investors were on course to end the week as they started, with gains
in most markets.
Hong Kong and Shanghai were among the best performers, helped by reports
that China's central bank was looking at fresh ways to support businesses,
with a cut in the amount of cash that lenders must keep in reserve being
considered.
Sydney, Seoul, Taipei, Wellington, Manila and Jakarta also rose, though
Tokyo and Singapore struggled.
Oil prices, which have enjoyed a strong run this week after recent hefty
selling, extended gains as traders buy into the view that Delta's spread will
only delay the economic recovery and demand will continue to improve.
OANDA's Edward Moya said WTI will likely hover around $68 a barrel until
OPEC and other key producers signal their plans for output next month and
whether a storm in the Gulf of Mexico will hit supplies.
"A big question for energy traders remains what will happen with Iran
sanctions and if they are lifted how much crude could rush back to the
market," he added, referring to talks with Tehran over its nuclear programme.
"The oil market is still heavily in deficit, but eventually Iranian crude
will be a primary catalyst fuelling oversupply fears later in 2022."
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: DOWN 0.3 percent at 27,651.51 (break)
Hong Kong - Hang Seng Index: UP 0.8 percent at 25,621.40
Shanghai - Composite: UP 0.6 percent at 3,523.69
Dollar/yen: DOWN at 109.98 yen from 110.04 yen at 2130 GMT
Pound/dollar: DOWN at $1.3694 from $1.3698
Euro/dollar: UP at $1.1757 from $1.1755
Euro/pound: UP at 85.84 pence from 85.79 pence
West Texas Intermediate: UP 0.7 percent at $67.92 per barrel
Brent North Sea crude: UP 0.8 percent at $71.80 per barrel
New York - Dow: DOWN 0.5 percent at 35,213.12 (close)
London - FTSE 100: DOWN 0.4 percent at 7,124.98 (close)
