World shares have held just under record highs while European indexes edged lower, as investors focused on earnings and the Federal Reserve's two-day meeting which ends on Wednesday.
Although Wall Street hit new highs on Monday, during the Asian session sentiment became more mixed, with equities and bonds of Chinese property developers down over worries about spreading financial contagion from the Evergrande debt crisis.
A debt exchange from one of China's top homebuilders triggered a flurry of credit warnings.
At 0905 GMT (8.05pm AEDT), the MSCI world equity index, which tracks shares in 50 countries, was down 0.1 per cent, having come close to the all-time highs reached in September.
European indexes were mostly in the red, with the STOXX 600 down 0.2 per cent, having been knocked off the previous session's all-time high.
Matthias Scheiber, global head of portfolio management at Allspring Global Investments, said he expected European and US shares to pick up during the session as more company earnings are released.
"There are probably more worries in earnings about inflation and margin pressure, rather than systematic impact from the Chinese property market," he said.
"We have not seen any negative spillover back into other sectors."
The Reserve Bank of Australia took a major step towards unwinding its pandemic-induced stimulus measures by dropping its target for bond yields and said a rate move in 2023 was now possible given inflation had risen more quickly than forecast.
But it also pushed back against hawkish market expectations.
Short-dated Australian government bond yields fell and the Australian dollar was down 0.7 per cent at $US0.74695 at 0912 GMT (8.12pm AEDT).
The NZ dollar was also down. The US dollar index was steady at 93.938.
"Our view is still that similar to other major developed banks, like the Federal Reserve or the ECB, to a certain extent (the RBA) will be willing to look through those short-term high inflation numbers," Allspring's Matthias Scheiber said.
Fed policymakers are expected to approve plans for scaling back their current $US120 billion in monthly bond purchases that would phase them out completely by the middle of next year - a first step away from the core policies put in place in early 2021 to battle the economic fallout from the pandemic.
On Monday, Goldman Sachs brought its forecast for the first post-pandemic US interest rate hike forward by a year to July 2022, as the investment bank expects inflation to remain elevated.
The US 10-year Treasury yield was lower on the day, at 1.5523 per cent.
European government bond yields also fell, pausing from the selloff which was sparked by the European Central Bank last week disappointing expectations of a firm push back against aggressive market pricing for rate hikes.
Meanwhile, oil prices rose close to multi-year highs.