Markets mostly up before Fed, Biden

LONDON: Stock markets were mostly up on Wednesday with eyes on the Federal Reserve's policy update and US President Joe Biden, who is expected to unveil a huge spending plan.

European markets followed Asian indices slightly higher as investors reacted to some strong earnings updates, notably from banks, ahead of the key events in the United States later Wednesday including Biden's first speech to Congress.

But on Wall Street, the Dow Jones was off 0.3 percent in early trading despite a strong rise for Google parent Alphabet, which added 5.7 percent on surging ad sales.

Oil prices edged higher a day after OPEC and its oil-producing allies, including Russia, said they would stick to an agreement for progressive production increases over three months from May.

The main focus was in the US, where Biden was Wednesday set to call for a reversal of his predecessor Donald Trump's tax cuts for the wealthy to pay for a huge middle class families spending programme, senior administration officials said.

Biden will use his speech to a joint session of Congress to unveil the $1.8-trillion American Families Plan, funded by ending Trump's tax cuts and closing loopholes used by the most wealthy to escape paying their share, they added.

Wall Street had provided a tepid lead overnight despite another day of forecast-beating US earnings, which analysts said indicated the latest rally may have run out of steam.

While Alphabet stormed ahead, Microsoft was down 2.8 percent despite higher Q1 results and Boeing plunged 3.4 percent after burning through more cash than forecast in the opening quarter for a sixth straight quarter in the red.

Although in some countries vaccines are rolling out, lockdowns are easing and economies are recovering, there is a growing concern that frightening spikes in others -- particularly India and Brazil -- could torpedo the global rebound.

Long-running worries over inflation remain, with many observers warning that the expected surge in economic activity and demand will put massive upward pressure on prices that will force central banks to hike interest rates from their current ultra-low levels.

"Inflationary pressures are building up," noted Fawad Razaqzada, market analyst with ThinkMarkets, citing large price rises in commodities such as copper and iron ore.

"So it will be only a matter of time before the CPI overshoots the two percent target and there is a risk that inflation could be more sticky than the Fed expects."

Fed boss Jerome Powell is expected to repeat his mantra that borrowing costs will be kept at record lows until unemployment has been tamed and inflation is consistently running hot.

But many feel the bank might not be able to stick to that if prices continue to surge.

"The economic outlook now is starkly different from when the Federal Reserve last met in March," said CMC Markets analyst Michael Hewson.

Key figures around 1400 GMT -

New York - Dow: DOWN 0.3 percent at 33,865.29

London - FTSE 100: UP 0.5 percent at 6,979.82 points

Frankfurt - DAX 30: UP 0.4 percent at 15,310.46

Paris - CAC 40: UP 0.6 percent at 6,311.91

EURO STOXX 50: UP 0.1 percent at 4,016.07

Tokyo - Nikkei 225: UP 0.2 percent at 29,053.97 (close)

Hong Kong - Hang Seng Index: UP 0.5 percent at 29,071.34 (close)

Shanghai - Composite: UP 0.4 percent at 3,457.07 (close)

Euro/dollar: DOWN at $1.2073 from $1.2095 at 2110 GMT

Pound/dollar: DOWN at $1.3880 from $1.3911

Euro/pound: UP at 86.98 pence from 86.90 pence

Dollar/yen: UP at 108.93 yen from 108.68 yen

West Texas Intermediate: UP 0.8 percent at $63.45 per barrel

Brent North Sea crude: UP 0.6 percent at $66.82 per barrel