European and Asian stock markets were largely downbeat Tuesday on uncertainty over the US Federal Reserve’s plans for interest rates next year.With traders fully confident of a US rate reduction Wednesday, observers said they would be keeping a close eye on the central bank’s so-called “dot plot” of projections for monetary policy into 2026.They will pore over its post-meeting statement and Fed boss Jerome Powell’s news conference, looking for clues about the debate taking place among decision-makers.Wall Street closed lower Monday, while the dollar traded mixed Tuesday.”We expect solid growth, above-target inflation, and a slowing labour market to increase internal divisions at the (Fed policy board) and make 2026 a particularly challenging year for policymakers,” noted Xiao Cui, senior US economist at Pictet Wealth Management.”Downside risks to the labour market should lead the Committee to cut once more in December, before shifting to a quarterly pace of cuts in March and June.”She pointed also to “risks that Fed cuts are delayed into the second half of 2026”.Bets on a third successive cut — and more in 2026 — had surged on data pointing to a weakening jobs market, which has offset concerns about stubbornly high inflation.That optimism was boosted last month by reports that President Donald Trump’s top economic aide Kevin Hassett — a proponent of more cuts — was the frontrunner to take the Fed’s helm when Powell’s term ends.However, the excitement has calmed in recent days following slightly higher-than-expected US inflation.Bloomberg reported that markets are pricing two more rate reductions next year, down from the three expected last week.On the corporate front Tuesday, chipmakers traded mixed after Trump said he had reached an agreement with Chinese counterpart Xi Jinping to allow Nvidia to export advanced artificial intelligence chips to China.The announcement marks a significant shift in US export policy for advanced AI chips, which Trump’s predecessor Joe Biden had heavily restricted over national security concerns.Biden’s administration required chip companies to create modified, less powerful versions specifically for the Chinese market.Investors kept a close watch also over the bidding war for Warner Bros. Discovery after Paramount on Monday launched an all-cash tender offer for the Hollywood giant, in a challenge to Netflix’s offer.Paramount’s bid of $108.4 billion trumps Netflix’s offer of nearly $83 billion which targets, however, a smaller part of the company.Ahead of Wall Street reopening, Google meanwhile hit out at a European Union antitrust probe launched Tuesday into the tech giant’s use of online content to train and provide AI services. The aviation sector was in focus after a trade association for airlines said carriers expect to transport a record 5.2 billion passengers in 2026 despite global headwinds affecting the sector.Carriers are also now expecting higher profits than previously forecast for 2025, and predict earnings to come in at a comparable level next year, the International Air Transport Association (IATA) added.- Key figures at around 1045 GMT -London – FTSE 100: UP 0.1 percent at 9,657.41 pointsParis – CAC 40: DOWN 0.3 percent at 8,083.12Frankfurt – DAX: UP 0.4 percent at 24,148.76Tokyo – Nikkei 225: UP 0.1 percent at 50,655.10 (close) Hong Kong – Hang Seng Index: DOWN 1.3 percent at 25,434.23 (close)Shanghai – Composite: DOWN 0.4 percent at 3,909.52 (close)New York – Dow: DOWN 0.5 percent at 47,739.32 (close)Euro/dollar: UP at $1.1642 from $1.1640 on MondayPound/dollar: UP at $1.3332 from $1.3328 Dollar/yen: UP at 156.09 yen from 155.86 yenEuro/pound: UP at 87.35 pence from 87.34 penceBrent North Sea Crude: UP 0.3 percent at $62.68 per barrelWest Texas Intermediate: UP 0.3 percent at $59.05 per barrelburs-bcp/jh