San Francisco Frontiers - Stock markets drift higher before Fed minutes

Stock markets had retreated Tuesday following a series of weak indicators around the world and downbeat forecasts from big firms that chilled trading floors.

Worries have been mounting that the surge in prices is beginning to drag on consumer confidence, with warnings now swirling of a possible global recession.

But with the minutes of the Fed meeting held earlier this month due out later Wednesday, stocks pushed higher.

"I'm not sure what exactly investors are holding out for," said Craig Erlam, senior market analyst at Oanda.

"A lot has changed in the markets over the last few weeks, and we've had a lot of Fed commentary in that time that is arguably more relevant than almost anything we can take from the minutes," he added.

Investors expect the Fed to continue with more half-point hikes to bring inflation down from four-decade highs.

But the Fed also has vast holdings of government and corporate bonds on its balance sheet, and a reduction would also crimp borrowing markets.

"Tonight's minutes could offer clues on policymakers' thinking around balance sheet run-off," said Michael Hewson, chief market analyst at CMC Markets UK.

The Dow had edged 0.2 percent higher in late morning trading.

ECB policymakers have also indicated they plan to begin raising rates soon as well.

"It's clear that they are united in their desire to start raising rates in July and again probably in September," said Erlam.

London stocks closed 0.5 percent higher, with Frankfurt rising 0.6 percent and Paris 0.7 percent.

Traders are also closely watching China, which continues to struggle with the fast-spreading Omicron coronavirus variant.

The world's second-biggest economy is sticking to its zero-Covid strategy despite the dire impact of lockdowns on growth.

And with no easing of that policy in sight, observers warned that a series of recent support measures would not be enough to lift optimism.

"Fiscal multipliers will be minimal in an economy where economic interaction and activity have slowed sharply," said Stephen Innes of SPI Asset Management.

"Moving beyond mobility restrictions in short order is a pre-condition, but not a guarantee, for an Asia-led economic recovery."

Russia's invasion of Ukraine has meanwhile put financial markets under renewed stress by driving up prices and impeding growth, the European Central Bank said in a report published Wednesday.

Inflation in the eurozone, as elsewhere, has accelerated as costs for energy, agricultural goods and raw materials have risen sharply.

- Key figures at around 1530 GMT -

New York - Dow: UP 0.2 percent at 31,998.33 points

EURO STOXX 50: DOWN 0.2 percent at 3,603.82

London - FTSE 100: UP 0.5 percent at 7,522.75 (close)

Frankfurt - DAX: UP 0.6 percent at 14,007.93 (close)

Paris - CAC 40: UP 0.7 percent at 6,298.64 (close)

Tokyo - Nikkei 225: DOWN 0.3 percent at 26,677.80 (close)

Hong Kong - Hang Seng Index: UP 0.3 percent at 20,171.27 (close)

Shanghai - Composite: UP 1.2 percent at 3,107.46 (close)

Euro/dollar: DOWN at $1.0678 from $1.0739 on Tuesday

Pound/dollar: UP at $1.2552 from $1.2535

Euro/pound: DOWN at 85.06 pence from 85.64 pence

Dollar/yen: UP at 127.26 yen from 126.86 yen

Brent North Sea crude: DOWN 0.1 percent at $110.54 per barrel

West Texas Intermediate: DOWN 0.2 percent at $109.57 per barrel

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G.Collins--SFF