LONDON: Global stock markets marked time Tuesday with investors nervous on the eve of a US Federal Reserve interest rate decision.

London and Paris held firm but Frankfurt dipped, after a broadly downbeat session in Asia and despite surging Tokyo stocks.

Wall Street stocks opened on the upside, pushing higher into record territory, with the Dow adding less than a tenth of a percentage point.

Equities had rallied Monday as investors turned their attention to macro issues, particularly the Fed’s policy meeting, and US President Donald Trump’s maiden speech to the UN General Assembly.

All eyes are now on the US central bank, whose two-day gathering kicks off later Tuesday, amid global moves towards tighter monetary policy.

While the Fed is not expected to raise interest rates, remarks from the Fed and its boss Janet Yellen will be pored over for clues about future moves — with talk of another rise — and plans to wind down the vast bond-buying stimulus put in place during the financial crisis.

“I suspect they are not going to raise rates quite yet; I suspect they will guide towards December,” said David Hussey, head of international core equities at Manulife Asset Management.

“The US economy is in reasonably good health at the moment. It’s doing okay.

“Unemployment is very low and the weak dollar is probably going to boost a bit of inflation so she (Yellen) will probably be raising rates again early next year.”

With global economic growth improving, major central banks around the world are mulling moves to tighten monetary policy.

That has sparked investor jitters over the impact of higher borrowing costs on consumers, businesses and financial markets.

“There’s no reason not to start normalising policy. People are obsessing about this,” Hussey told AFP.

“The big picture is that we are at incredibly low rates and they have to start slowly moving back up to some sort of normal neutral level, which is probably some way higher than they are at the moment.

“So ... people see it coming and therefore they are nervous. It’s as simple as that.”

The Fed is also expected this week to announce the start of a plan to gradually reduce the multi-trillion dollar investment holdings built up to support the economy in the wake of the 2008 financial crisis.

World stocks had bounced higher Monday on optimism that Trump can push through the market-friendly policies that helped propel a global rally at the start of the year.

After the selling earlier this month fuelled by North Korea’s nuclear test, Wall Street rebounded Monday to more record peaks.

“The surge was yet another testament that the reinvigoration of the Trump trades is gaining traction,” said Greg McKenna, chief market strategist at AxiTrader.

Japanese dealers returned from a three-day weekend on Tuesday and sent Tokyo stocks two per cent higher with exporters buoyed by the dollar’s push towards 112 yen. The weak yen boosts Japan’s exporters.

However, elsewhere in Asia, markets turned lower as traders cashed out.