Rising Long-Term Yields and Oil Spike Reverse Recent Equity Rally

The shift raises inflation risk and makes prolonged central-bank tightening more likely.

Overview

Global stocks turned lower on Wednesday as rising long-term government bond yields and a jump in oil prices eroded investor appetite for risk.
The pan-European STOXX 600 fell about 1 percent with banking and technology shares leading losses and BE Semiconductor plunging after UBS downgraded the stock to sell.
U.S. Treasury yields climbed sharply, with the 30-year reaching its highest level in 24 years, increasing pressure on equity valuations that had recently hit records.
Brent crude briefly topped $100 a barrel on supply worries tied to the war in Iran and regional attacks, reviving inflation fears that feed expectations for higher interest rates.
Widening French sovereign spreads ahead of next year’s presidential vote and firm-level downgrades are prompting more cautious positioning that could push investors toward safer assets and affect corporate funding costs.