THE Australian share market has edged higher as investors react to positive news out of China and uncertainty in the US.

The S&P/ASX 200 dropped off in afternoon trade today, which Stock Report analyst Benny Sada said reflected market uncertainty about a key US Federal Reserve meeting.

The Federal Open Markets Committee (FOMC) is expected to make an announcement tomorrow about the tapering of its stimulus measures to the world's largest economy.

"There's just that uncertainty," Mr Sada said.

"A lot of market participants are looking towards that meeting for clues on how the US central bank intends to scale back its monetary easing policy."

He said he believed the local market had rallied during the day on the back of positive comments from the Chinese government on economic growth.