LONDON/SYDNEY – Global shares hovered below record highs on Tuesday, while anticipation of earlier tapering by the Federal Reserve kept investors cautious which drove the US dollar to a four-month high versus the euro.

Markets were looking ahead to US inflation numbers on Wednesday for further indications of when the world’s largest economy may start to withdraw stimulus after taper talk was amped up by strong jobs data.

Wall Street's main indexes edged higher, helped by a rebound in oil stocks, while investors awaited a Senate vote on a much-anticipated US$1 trillion infrastructure bill.

At 9:58 am ET, the Dow Jones Industrial Average was up 70.53 points, or 0.20 percent, at 35,172.38, the S&P 500 was up 8.41 points, or 0.19 percent, at 4,440.76, and the Nasdaq Composite was up 23.54 points, or 0.16 percent, at 14,883.72.

MSCI’s All Country World Index, which tracks shares across 49 countries, was 0.1 percent up on the day, below record highs scaled last week.

European shares pushed to fresh record highs, with the STOXX 600 0.2 percent stronger, extending gains to a seventh straight session, boosted by travel and leisure companies.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.4 percent higher after trading much of the day in the red as worries weighed about the spread of the Delta variant of COVID-19.

Nasdaq futures added 0.1 percent and S&P 500 futures were flat.

Gold prices recovered after touching a four-month low on Monday when data showed that US job openings shot up to a fresh record high in June and hiring also increased.

Spot gold XAU= was up 0.3 percent at US$1,733.20 per ounce.

That followed Friday’s non-farm payroll report showing jobs increased by a larger-than-expected 943,000 in July.

Two Fed officials said on Monday that while the labour market still has room for improvement, inflation is already at a level that could satisfy one leg of a key test for the beginning of interest rate hikes.

“If markets rapidly decide to price in a move at the September FOMC meeting, look for another rally in the US dollar, a jump in US yields finally, and perhaps a tough day at the office for equities,” said Jeffrey Halley, OANDA’s senior market analyst in Asia Pacific.

After strengthening on Friday and Monday, the dollar index reached a high of 93.02 during Asian trading hours on Tuesday – an 18-day high.

The euro hit a new four-month low against the dollar, with the pair changing hands at US$1.1726.

Analysts said that the greenback was getting support from strong US bond yields.

The benchmark 10-year yield, which hit its highest level since July 16 on Monday of 1.331 percent, was last at 1.317 percent.

In Europe, Germany’s benchmark 10-year Bund yield was a touch lower on the day at -0.46 percent but six basis points above six-month lows hit last week.

“Having swum from a very inflation-better opinion this year to a very disinflation view up to a week or so again, what we are we getting now again is another rotation into some of the reflation trades,” said Sean Darby, a Jefferies strategist in Hong Kong.

“The only thing that is different between now and the last 12 to 19 months is that it is likely to be accompanied by a stronger dollar.”

In addition to US inflation figures due on Wednesday, investors are also eyeing progress on a US$1 trillion infrastructure package that still has to go through the House.

Oil prices rose more than 1 percent on Tuesday, recouping some of the losses in the previous session when prices hit a three-week low.

US crude oil futures were trading at US$66.98 per barrel, up US$0.5 or 0.75 percent. Brent crude was at US$70.09, up 1.54 percent higher. US oil was up 2 percent, at US$67.78 a barrel.