European stocks slide as Brent crude tops $100 a barrel

European shares dropped sharply as investors headed for the exits.

Pressure mounted on European equity markets as the close approached, with traders in London and across Europe reducing positions. Concerns over rising energy costs, higher bond yields and the economic fallout from heightened Middle East tensions drove the selling.

Brent crude climbed above $100 a barrel, fuelling worries that elevated energy prices will keep inflation high while weighing on economic growth. Europe's reliance on imported energy leaves its economies especially exposed to a prolonged increase in oil costs.

The sell-off comes before the ECB's interest-rate decision on Thursday. Higher inflation risks together with uncertainty about the central bank's next policy move gave investors another reason to cut their exposure.

France's CAC 40 recorded the steepest fall, while Germany's DAX and the UK's FTSE 100 also fell sharply. Italy fared somewhat better, supported by gains in energy stocks.

Provisional closing levels:

• Germany's DAX: -1.66% at 25,576.46

• France's CAC 40: -1.94% at 8,156.68

• UK's FTSE 100: -1.31% at 10,670.07

• Spain's IBEX 35: -1.51% at 19,695.31

• Italy's FTSE MIB: -0.58% at 51,875.23

Technically, France's CAC dropped below its 200-day moving average of 8,239.88, accelerating the selling pressure. That moving average was tested and found buyers in early September, but the rise to the 100-day moving average at 8,326.58 stalled the rally on Monday and Tuesday before turning lower in Wednesday's session. Sellers hold the upper hand below those two key moving-average levels.

As European traders head home, US equities are also trading lower. The broad risk-off mood is reinforced by another leg higher in Treasury yields.

The major US indices currently show:

• Dow Industrial Average: -411.06 points or -0.78% at 52,380.23

• S&P 500: -43.58 points or -0.57% at 7,629.95

• Nasdaq Composite: -213.09 points or -0.81% at 26,208.32

• Russell 2000: -36.58 points or -1.24% at 2,923.62

• Nasdaq 100: -140.24 points or -0.48% at 29,367.46

US Treasury yields rose after Treasury Secretary Scott Bessent announced that Thursday's long-dated Treasury buyback would amount to as much as $6 billion. While that was above the previously indicated minimum of $4 billion, the market had been looking for something closer to $8 billion to $10 billion.

That disappointment triggered selling in Treasuries, pushing yields higher. Bond prices and yields move in opposite directions: when bonds are sold, their prices fall and yields rise.

The yield curve currently shows:

• 2-year yield: 4.427%, up 2.9 basis points

• 5-year yield: 4.618%, up 4.5 basis points

• 10-year yield: 4.847%, up 4.3 basis points

• 30-year yield: 5.297%, up 3.3 basis points

The Treasury will use the buyback to purchase older and less-liquid securities in the 10- to 20-year maturity sector. However, the $6 billion amount was not large enough to satisfy traders hoping for a more aggressive effort to support the bond market and contain long-term borrowing costs. Reuters

Meanwhile, commodities and Bitcoin are all trading higher:

• Crude oil futures: +$3.30 or 3.55% at $96.33

• Gold: +$45.23 or 1.04% at $4,399.83

• Silver: +$1.70 or 2.58% at $67.43

• Bitcoin: +$241 or 0.31% at $78,690

The rise in oil is adding to the inflation concerns that are pressuring both stocks and bonds. Gold and silver are benefiting from safe-haven demand, while Bitcoin is holding onto a modest gain despite the broader decline in risk assets.

The market message as Europe goes home is one of caution. Stocks are lower, bond yields are higher and hard assets are moving to the upside. That combination suggests investors are increasingly concerned about inflation, geopolitical risk and the prospect that interest rates may need to remain higher for longer.