Australia

Australian shares are set to open lower despite a good day on US markets.

ASX futures were down 0.3% or 21 points as of 8:00am on Tuesday, suggesting a lower open.

U.S. stocks inched higher Monday, with technology shares stabilizing after slumping at the end of last week.

Overall, it was a subdued trading session in the lead-up to the Federal Reserve's interest-rate decision on Wednesday. The S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite all rose less than 0.1%.

In the absence of major catalysts, traders took the opportunity to scoop up some stocks that fell last week.

In commodity markets, Brent crude oil rose 0.5% to US$94.43 a barrel while gold was flat at US$1,933.81.

In local bond markets, the yield on Australian 2 Year government bonds was up at 3.92% while the 10 Year yield was also up at 4.21%. US Treasury notes were higher, with the 2 Year yield at 5.05% and the 10 Year yield at 4.30%.

The Australian dollar rose to 64.36 US cents from its previous close of 64.33 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was flat at 99.29.

Asia

Chinese shares ended higher, as investor sentiment was boosted by better-than-expected August economic data released Friday, which raised hopes that Beijing's stimulus measures have been effective. The supportive measures could provide a floor for the economy, say economists from Barclay in a note, adding they didn't expect a meaningful turnaround in growth given Beijing is unlikely to announce a bazooka of stimulus in coming months, Consumer brands and auto related names led Monday's gains. China Tourism Group Duty Free added 5.4% and BYD Co. rose 1.3%. Among losers, telecom China Mobile declined 2.7% and developer Poly Developments & Holdings dropped 1.7%. The benchmark Shanghai Composite Index closed 0.3% higher at 3125.93. The Shenzhen Composite Index rose 0.5% and the tech-heavy ChiNext Price Index increased 0.9%.

Hong Kong shares ended lower, weighed by ongoing concerns over Chinese economic growth and depreciation pressure on the yuan. The Hang Seng Index declined 1.4% to 17930.55, while the Hang Seng Tech Index ended 2.2% lower. Consumer and technology stocks fell. China Mengniu Dairy and JD.com dropped 3.6% and 2.9%, respectively. Among property stocks, Country Garden lost 2.4%. Despite some signs of stability in China's August data, the property-sector slump remains a drag on the economy, ANZ analysts said in a note. Meanwhile, Galaxy Entertainment and China Unicom were among the few gainers, rising 1.8% and 0.5%, respectively.

Japan markets were closed for the Respect for the Aged Day public holiday.

India's benchmark Sensex fell 0.4% to end at 67596.84, tracking losses across most regional equities ahead of the Federal Reserve's interest-rate decision this week. The U.S. central bank is widely expected to hold rates steady, but investors will be looking for clues on whether one more rate hike is likely later this year. Bank stocks led losses, with HDFC Bank declining 2.0% and ICICI Bank dropping 0.2%. Industrial companies and other financial stocks led gainers on the benchmark index. Power Grid Corp. of India rose 3.0% and Bajaj Finserv increased 1.35%.

Europe

European stocks closed lower, with the Stoxx Europe 600 index down 1.1% at 456.88, on caution ahead of interest-rate decisions by the U.S. Federal Reserves and the Bank of England on Wednesday and Thursday, respectively. Although interest rates are expected to be close to their peak, a further rise in oil prices has sparked worries about renewed inflationary pressures while economies remain weak. "Everyone is worried about oil prices, and what they will mean for inflation figures heading into the end of the year," writes IG analyst Chris Beauchamp. Property and tech stocks were among the biggest fallers. Germany's DAX ended down 1.1%, while France's CAC 40 closed 1.4% lower.

The FTSE 100 closed down 0.8% Monday as investors showed caution before the Bank of England and the U.S. Federal reserve issue rate decisions later in the week. "Risk appetite evaporated as investors came to terms with the real possibility of higher rates for longer after a busy week of economic releases," interactive investor analyst Richard Hunter said in a note. RS Group was the session's biggest faller, down 4.3%, followed by Airtel Africa and Entain, down 3.6% and 3.4% respectively. Mondi was the day's highest riser, followed by Ocado and Hikma Pharmaceuticals, up 3.25%, 3.1% and 1.8% respectively.

North America

U.S. stocks inched higher Monday, with technology shares stabilizing after slumping at the end of last week.

Overall, it was a subdued trading session in the lead-up to the Federal Reserve's interest-rate decision on Wednesday. The S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite all rose less than 0.1%.

In the absence of major catalysts, traders took the opportunity to scoop up some stocks that fell last week.

Adobe, which kicked off the tech selloff on Friday after it reported earnings that failed to impress investors, stopped its slide by gaining 0.7%.

Likewise, Nvidia ticked up 0.2% and Apple climbed 1.7%, making it one of the S&P 500's biggest gainers. The vaccine maker Moderna led laggards, shedding 9.1%, after Pfizer's finance chief predicted weaker demand for Covid shots this year.

Elsewhere in markets, the yield on the benchmark 10-year U.S. Treasury note settled at 4.318%, down from 4.321% Friday.

Earlier in the session, the 10-year yield had climbed above its 2023 high of 4.339% -- its highest close since 2007. However, the yield slipped around midday, echoing a move in oil prices, which also retraced early gains.

Treasury yields sitting at the top of their recent range are one factor keeping a cap on stocks, according to many investors and analysts.

Major indexes advanced from late March to late July. But they have since flatlined, with investors pondering whether an improving economic outlook is enough to justify even higher prices when they can now get attractive returns from ultrasafe assets such as U.S. Treasury bills.

"The question is: OK, the bar has been raised, we're up a lot for the year, what's the next catalyst to drive things higher?" said Keith Lerner, co-chief investment officer at Truist Advisory Services.

For their part, Treasury yields have climbed based largely on bets that the Fed will keep interest rates higher for longer in the absence of any pressing need to start slashing borrowing costs.

The central bank on Wednesday is widely expected to keep the benchmark federal-funds rate unchanged at a target range of 5.25% to 5.5%. Officials will also release projections showing where they think rates will go over the next few years.

As it stands, interest-rate derivatives suggest that investors believe that the Fed likely won't raise rates again this year, even though most officials had forecast in June that rates would end the year above 5.5%.

Many investors expect the central bank will continue to signal on Wednesday that it remains open, but not committed, to raising rates this year, depending on the economic data.

Some said, though, that they are even more interested to learn how officials are thinking about next year.

"I think that people are going to be watching these meetings to get some color as to when the Fed might actually consider cutting rates, and what the circumstances will be," said Gregg Abella, chief executive of Investment Partners Asset Management.

For his part, Abella said he thinks investors might still be overestimating how soon the Fed will cut rates.

Even if inflation continues to fall toward the Fed's 2% target, he said, it will be hard for the central bank to cut rates "if the economy is still revved up and markets are still trading at relatively high valuations."