The dominant theme across global financial markets on Wednesday shifted back to "rising oil prices, inflation worries, and climbing interest rates." US Treasuries resumed their selloff and notched fresh multi-year highs, the dollar strengthened, gold came under pressure, and US stocks pulled back from a string of record closes as investors awaited the US 10-year note auction and the Federal Reserve meeting minutes.

International oil prices extended the gains seen after Tuesday's intraday V-shaped reversal, with Brent crude reclaiming the $100 mark and pushing higher. The rally in oil rekindled inflation concerns and became one of the key drivers pushing long-dated Treasury yields higher on the day.

At the same time, US Treasury yields continued to climb, with both the 10-year and 30-year yields hitting their highest levels since 2002. Media reports noted that investors are not only worried about energy prices fueling inflation, but are also demanding greater compensation for holding long-term bonds, while government spending and corporate financing needs tied to AI infrastructure investment are adding further pressure on long-end rates. US stocks were squeezed by both high rates and rich valuations, cooling a run of consecutive record highs.

Broadly speaking, the core change in Wednesday's market was not weakness in any single asset, but rather that rising oil prices reignited inflation fears and transmitted that pressure to equities, gold and other assets through higher long-end Treasury yields. With US stocks having just set all-time highs and Treasury yields sitting at 24-year peaks, the market will now watch closely the Fed meeting minutes and the US Treasury's auction of 10-year notes due around midday in New York to judge whether high oil prices are merely a short-term disturbance or will further reshape the pricing of the future rate path.

US Stocks: Pressure at Highs, Dow Falls More Than 1% Early

The three major US equity indexes opened lower, with the Dow briefly dropping more than 1% in early trade, the Nasdaq falling over 0.9%, and the S&P 500 down nearly 0.7%, with both the S&P and Nasdaq retreating from the intraday record highs set on Tuesday. If losses hold through the close, the Dow and S&P 500 would fall after four straight sessions of gains, the Nasdaq would snap a five-day winning streak, and the S&P 500 and Nasdaq would pull back from the record closing highs just set on Tuesday.

Most mega-cap technology shares declined, with Apple the only member of the "Magnificent Seven" not lower early in the session, while Meta fell more than 2% at one point to lead the group's losses. AI tech stocks had been driving the US market to repeated records, but the rapid rise in long-end Treasury yields is now placing greater valuation pressure on high-multiple growth shares.

European stocks also came under pressure, as higher energy prices and rising bond yields weighed on risk appetite.

Bonds: 10-Year Treasury Yield Breaks Above 5.36%, Long Bonds Sold Off Again

The US Treasury market came under renewed selling pressure. The 10-year yield rose above 5.36% in pre-market trading, up about 8 basis points on the day and surpassing the roughly 5.35% level touched on Monday, which had been the highest since April 3, 2002. The 30-year yield climbed above 5.73% before the open, setting another high since 2002 after just one day.

As long-end yields rose rapidly, the market awaited the results of the US Treasury's $39 billion 10-year note sale and the minutes from the Fed's September meeting. Bloomberg cited institutional views saying that persistently elevated energy prices put inflation, policy rates and benchmark Treasury yields at risk of moving higher, and that even if the Fed pauses adjustments to its policy rate, that may not be enough to push long-end yields down.

European bond markets also came under clear pressure, with the French 10-year yield rising more than 10 basis points intraday. France's own fiscal strains, combined with the global rise in long-end rates, drew greater attention to its government bonds.

FX: Dollar Index Nears 18-Month High

The US Dollar Index (DXY) strengthened again after pulling back on Tuesday, rising to around 102.50 during European hours, up nearly 0.7% on the day and approaching Monday's 102.535, the highest since April 2025.

The euro remained under pressure against the dollar, falling to around 1.1165 intraday, down more than 0.8% on the day and near Monday's low, the weakest since May 2025.

Higher Treasury yields and expectations that US rates will stay elevated provided support for the dollar.

Commodities: WTI Back Above $90, Gold Futures Drop More Than 2% Intraday

International crude oil extended Tuesday's intraday V-shaped reversal on Wednesday, avoiding another intraday turn lower like the one seen on Tuesday. US WTI crude rose to as high as $90.98 in early US trading, up more than 1.7% on the day and back above $90; Brent crude climbed to $102.59 at one point, up about 2% on the day. If gains hold through the close, both benchmarks would post a second straight daily advance after two consecutive sessions of declines.

The oil rally was driven by Middle East supply risks and disruptions in the US Gulf of Mexico. The Wall Street Journal said Houthi attacks, shipping risks near the Strait of Hormuz and storms in the US Gulf of Mexico have combined to increase uncertainty on the supply side of crude.

Gold, by contrast, fell sharply. New York gold futures' front-month contract weakened again after ending a two-day slide on Tuesday, dropping to $4,091.2 intraday during European hours, down nearly 2.3% on the day and marking a fresh intraday low since August 3. Spot gold fell below $4,170 intraday, down more than 1.4% on the day and hitting its lowest intraday level since August 5.

A stronger dollar and rapidly climbing Treasury yields weighed jointly on gold. With the 10-year Treasury yield rising to its highest since 2002, gold faces added pressure from real rates and the cost of holding the metal.

The following was published at 14:41 Beijing time:

In contrast to the record-setting rally in US stocks overnight, Asian equities weakened on Wednesday, as optimism over strong US corporate earnings has yet to spill over into Asian markets. At the same time, rising oil prices weighed on Treasury prices.

On Wednesday, the MSCI Asia-Pacific index fell 0.6%. Japan's Nikkei 225 closed down 0.9%, while the Topix ended 0.7% lower. The Topix had risen as much as 0.4% intraday to 4,201.34, breaking above the record closing high of 4,197.20 set on August 14. As sentiment soured, US stock index futures gave back earlier gains and European stocks opened lower.

The Hang Seng Index closed down 0.62%, and the Hang Seng Tech Index fell 0.68%. Semiconductor shares declined, with Hongguang Semiconductor down about 5% and Hua Hong Semiconductor down about 3%. Large-model stocks fell, with MINIMAX down about 4% and Zhipu down about 3%. Property shares surged, with R&F Properties up about 32% and Shimao Group up about 23%.

In commodities, Brent crude rose as much as 1% to $101.34 a barrel. Traders were weighing increased crude shipments through the Strait of Hormuz against the impact of escalating geopolitical conflict. Treasury prices erased Tuesday's gains, with the 10-year yield up 3 basis points to 5.31%; the dollar strengthened against all G10 currencies.

Tim Waterer, chief market analyst at KCM Trade, said Asia's earlier relative strength is fading. After a period of outperformance, the market lacks fresh catalysts, while persistently high oil prices and bond yields are also weighing on Asian equities.

Key market moves were as follows:

Nasdaq 100 futures fell 0.2%.

The Euro Stoxx 50 opened down 0.7%, Germany's DAX fell 0.7%, the UK's FTSE 100 dropped 0.4%, and France's CAC 40 declined 0.6%.

The Nikkei 225 closed down 0.9% at 70,035.71. Japan's Topix ended down 0.7% at 4,154.11.

The Hang Seng Index closed down 0.62%, and the Hang Seng Tech Index fell 0.68%.

WTI crude rose 51 cents a barrel within five minutes to $90.28; Brent crude rose 54 cents within five minutes to $101.66.

The 10-year Treasury yield rose 3 basis points to 5.31%.

Spot silver extended its intraday loss to 1%, trading at $60.69 an ounce.

Hong Kong Stocks Close Lower, Semiconductors and Large-Model Shares Fall

The Hang Seng Index closed down 0.62%, and the Hang Seng Tech Index fell 0.68%.

Semiconductor shares declined, with Hongguang Semiconductor down about 5% and Hua Hong Semiconductor down about 3%. Large-model stocks fell, with MINIMAX down about 4% and Zhipu down about 3%.

Property shares surged, with R&F Properties up about 32% and Shimao Group up about 23%.

Geopolitical Conflict Persists, Oil Prices Rise

WTI crude rose 51 cents a barrel within five minutes to $90.28; Brent crude rose 54 cents within five minutes to $101.66. Reports said EU countries broadly believe they will not be asked to release any new oil beyond the 100 million barrels of crude and diesel announced under last week's G7 agreement.

On the geopolitical front, according to Xinhua, Yahya Saree, a military spokesman for Yemen's Houthi group, said in a statement on social media on the 7th that the group launched a new round of attacks with ballistic missiles and drones on multiple airports and military facilities inside Saudi Arabia. The statement said several drones attacked King Khalid International Airport in the Saudi capital Riyadh, hitting targets "precisely" and affecting air traffic at the airport.