Stocks experienced a decline as European yields jumped to an 8 -year high after the European Central Bank (ECB) decided to raise 25 basis points next month.
It further confirmed expectations of an additional 50 basis points in September, dampening sentiment as the European economy remained struggling with slowing growth and soaring inflation.
Lombard Odier economist Bill Papadakis projected the ECB would raise policy by 2% and cause growth to remain slow.
In addition, investors' expectations for US consumer price index (CPI) data also affected sentiment until major indices eased.
According to Jack Ablin of Cresset Asset Management LLC, the CPI data will be a marker of a surge in inflation that could lead to an interest rate hike by 50 basis points by the Federal Reserve (Fed) next week.
As a result, the Dow Jones Industrial average index fell 1.94%, the S&P 500 lost 2.38%and the Nasdaq Composite fell 2.75%.
The MSCI global stock benchmark closed 2.02% weaker and the pan-European STOXX 600 index fell 1.36%.
The MSCI Asia-Pacific broad index of stocks outside Japan lost 0.5% overnight.
As equities declined, yields continued the surge momentum with German 10 -year government bond yields peaking to an 8 -year high of 1.47%.
The yield on the US 10 -year Treasury note also jumped 1.6 basis points at 3.046%.
Currency movements saw the Euro fall 0.93% to $ 1.0616 despite the ECB moving hawkishly in a rate hike following the dollar index strengthening 0.73%.
The Japanese yen slipped to a 10 -year low against the US dollar at 134.55, following widening policy differences with the Bank of Japan (BOJ) remaining neutral so far.
As for commodities, US crude futures fell 60 cents to $ 121.51 a barrel while Brent oil fell 51 cents to $ 123.07 after the easing of new restrictions in Shanghai.
Gold futures fell 0.2% to $ 1,852.80 with the dollar and strong Treasury yields dampened interest in the safe-haven asset.
