Global stocks flatline after surge in bond yields drives equity sell-off

investing.com:

By Harry Robertson and Julie Zhu

LONDON/HONG KONG (Reuters) — Global stocks were little changed on Wednesday after a sharp sell-off the previous day, while U.S. Treasury yields dipped after hitting their highest level since 2007.

Meanwhile, the index tracking the U.S. dollar against its peers rose for the fourth straight session to its highest since November.

Stocks and bonds have dropped in recent weeks as investors come to terms with the idea that central bankers will hold interest rates «higher for longer» than previously expected, to try to squeeze inflation out of economies.

MSCI's index of global stocks was down 0.06% on Wednesday after falling 1.2% the previous day. The index has fallen 4.5% since the start of September.

The Europe-wide STOXX 600 index was up 0.05%, after dropping 0.6% in the previous session in its fourth consecutive daily fall.

Germany's Dax index was flat while Britain's FTSE 100 fell 0.1%.

«The latest catalyst has been the increase in bond yields, so if that stabilises then maybe the equity market stabilises as well,» said Jan von Gerich, chief analyst at Nordea.

«The big picture outlook is that we're probably close to the peak (in bond yields) but the near-term momentum is still upwards.»

On Wednesday, the yield on the 10-year U.S. Treasury note was down 5 basis points to 4.509%, after touching its highest level since October 2007 on Tuesday at 4.566%. A bond's yield rises as its price falls, and vice versa.

U.S. equity futures picked up, with contracts for the benchmark S&P 500 stock index 0.38% higher. Dow Jones futures were up 0.32% and Nasdaq futures rose 0.35%.

The S&P 500 dropped 1.47% on Tuesday, falling to its lowest since June.

Also on investors' minds is a looming U.S. government