Updated July 07, 2017 09:18:39

Photo: A sell-off in bonds and weak jobs figures in the US made for an unhappy night's trading on global markets. (Shannon Stapleton: Reuters)

In the lead-up to the G20 summit, most of the world's major stock markets in the US, Asia and Europe finished lower.

Wall Street fell the sharpest as every sector posted losses, with the worst performers being technology, healthcare and energy stocks.

Oil prices lifted, but not enough to recover from their 4 per cent plunge on the previous day.

All this suggests the Australian share market will open lower today.

So why was it so glum for overseas markets?

Geopolitical tensions rising

Firstly, nervousness about international conflict is still weighing on investor sentiment.
At a news conference in Warsaw, US President Donald Trump vowed to confront North Korea "very strongly" following the rogue state's latest missile test.
He also urged nations to show Pyongyang there would be consequences for its weapons program.

This issue presents President Trump with perhaps his biggest foreign policy challenge.

It has also put pressure on his relationship with Chinese President Xi Jinping, whom Mr Trump had pressed to rein in Pyongyang.

On Tuesday, North Korea tested its latest intercontinental ballistic missile, which some experts believe can strike parts of the US, and even northern Australia.

Government bonds surge

There was a sharp rise in sovereign bond yields following the release in recent days of meeting minutes from the US Federal Reserve and European Central Bank, which contained more hawkish rhetoric.

European stocks dropped after the 10-year German Bund yield rose above 0.50 per cent - their highest level in one-and-a-half years.

In the US, the 10-year Treasury yield lifted to 2.38 per cent.

This helped to drive the US and European stock markets down.

Weak US jobs data

Furthermore, the US had some weaker-than-expected jobs data, according to a report jointly developed by Moody's Analytics and payroll company ADP.

One hundred and fifty-eight thousand new jobs were created in the US private sector, which is less than the 184,000 new jobs estimated by economists polled by Reuters.

It is also much less than the 230,000 positions created in May.

The US Department of Labor also released some disappointing job figures overnight.

It revealed that last week applications for unemployment benefits rose for the third straight week, with 248,000 new claims (higher than the 243,000 predicted by economists).

Topics: company-news, currency, stockmarket, australia, european-union, united-kingdom, united-states

First posted July 07, 2017 09:05:19