Global Markets Slide as Energy Prices Lift Bond Yields

On Wednesday, September 23, broad selling swept across international equities. Across the board, 0 of 8 tracked country funds gained ground during the New York trading session. The whole-world fund closed -1.2%, moving in step with the US S&P 500 fund, which finished -0.7%. The best performer was India -0.5%, while South Korea -3.6% dropped the furthest. The most unusual session belonged to Germany, roughly twice the size of its usual day.

These figures come from US-listed funds, so Japan is how Japan looked to a US investor at the New York close, and Tokyo has since traded again. Because these funds trade during New York market hours, their prices reflect both overseas trading and subsequent reactions to US economic developments, currency shifts, and global news.

The broad retreat came as stalled diplomatic efforts lifted crude oil above $100 per barrel and pushed bond yields higher. In the US, rising bond yields and higher oil prices applied pressure across equity markets.

In Europe, Germany -1.8% experienced outsized pressure amid higher oil prices, rising yields, and Middle East uncertainty. Elsewhere on the continent, Eurozone -1.6% and United Kingdom -1.2% also lost ground. In Asia, South Korea -3.6% saw the deepest decline among US-listed country funds, even though the local market in Seoul had finished modestly higher earlier in the day as traders took a cautious stance before the Chuseok holiday. China -2.0%, Japan -1.8%, and broad Emerging Markets -2.0% closed lower as well.

Looking ahead, investors have several scheduled central bank decisions and economic reports to track. In Europe, monetary policy announcements are due from the Swiss National Bank and Sweden's Riksbank. In the United States, economic releases include weekly initial jobless claims, quarterly international transactions, and August new home sales.