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European and US stock markets moved lower Wednesday as investors focused on company earnings, bond yields and the outlook for the US and Chinese economies.
The dollar rose against major rival currencies and oil prices retreated.
"Rising Treasury yields continue to be a major topic of conversation mainly because the market isn't entirely clear about why they are going up like they are," said market analyst Patrick O'Hare at Briefing.com.
The yield on 10-year US government bonds has risen to 4.24 percent from 3.73 percent one month ago.
"A more market-friendly explanation suggests they are a byproduct of an improved growth outlook that bodes well for earnings," said O'Hare.
"A less market-friendly explanation is that rising Treasury yields reflect burgeoning concerns about the budget deficit and inflation heating up again," he added.
With the US economy in rude health, bets on another bumper cut to interest rates at the Federal Reserve's next meeting have dwindled, supporting the dollar.
"Another key factor has been the Trump Trade," said Daniela Sabin Hathorn, senior market analyst at Capital.com.
- Trump Trade -
The Trump Trade describes investors acting in expectation of the economic and political policies of a potential second Trump administration.
"Betting odds now show a 60-38 advantage for Donald Trump and markets are clearly agreeing with this with yields and the dollar pushing higher as traders expect a rise in public spending and inflation if he is elected," said Sabin Hathorn.
US bond yields are at their highest since July, with analysts arguing that a Trump win could see a renewed rise to inflation as the former president favours tax cuts.
Independent analyst Stephen Innes said the Trump Trade "has shaken the bond market, forcing some bond traders to pull their heads out of the sand as real jitters emerge about the fiscal landscape post-election."
Investors were also keeping tabs on corporate earnings reports.
Shares in Boeing dropped 2.1 percent after the aerospace giant reported a whopping $6.2 billion quarterly loss as a nearly six-week labour strike weighed on its commercial plane division and costly problems dragged down its defence and space business.
About 33,000 IAM workers in the US Pacific Northwest walked off the job on September 13. The union is slated to vote on a new contract that could end the stoppage later Wednesday.
Tesla reports after the US markets close.
Away from company results, shares in Tokyo Metro rocketed 45 percent in Japan's biggest initial public offering for six years.
Gold struck yet another record high with the precious metal profiting from its haven status as markets struggle to nail down a winner in the upcoming US presidential election and owing to fears of an escalating crisis in the Middle East.
Crude futures slid more than one percent having shot higher Tuesday on an indicator pointing to increased demand in China which is taking measures to stimulate its flagging economy, the world's second biggest after the United States.
- Key figures around 1330 GMT -
New York - Dow: DOWN 0.6 percent at 42,662.13 points
New York - S&P 500: DOWN 0.4 percent at 5,830.29
New York - Nasdaq Composite: DOWN 0.5 percent at 18,478.03
London - FTSE 100: DOWN 0.5 percent at 8,262.44
Paris - CAC 40: DOWN 0.5 percent at 7,501.02
Frankfurt - DAX: DOWN 0.1 percent at 19,395.84
Tokyo - Nikkei 225: DOWN 0.8 percent at 38,104.86 (close)
Hong Kong - Hang Seng Index: UP 1.3 percent at 20,760.15 (close)
Shanghai - Composite: UP 0.5 percent at 3,302.80 (close)
Euro/dollar: DOWN at $1.0780 from $1.0800 on Tuesday
Pound/dollar: DOWN at $1.2956 from $1.2977
Dollar/yen: UP at 152.94 yen from 151.02 yen
Euro/pound: UP at 83.20 pence from 83.14 pence
West Texas Intermediate: DOWN 1.3 percent at $70.84 per barrel
Brent North Sea Crude: DOWN 1.3 percent at $75.09 per barrel
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(T.Burkhard--BBZ)