US bond yields, stocks, dollar and oil in focus
Japan's Nikkei 225 eased 0.44 percent, or 100.79 points, to close at 22,717.23 and the broader Topix slipped 0.27 percent as mining and oil shares weighed. Banking stocks also pulled back.
Elsewhere, South Korea's benchmark Kospi finished the day little changed at 2,459.82 after trading both above and below the flat line, a 0.05 percent gain. Gains by heavyweight Samsung Electronics offset declines seen in oil refiners and stocks in the manufacturing sector.
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On the mainland, the Shanghai composite declined 0.7 percent to close at 3,169.71 and the Shenzhen composite shed 0.41 percent to finish the session at 1,832.27. Financials were among the worst-performing sectors in Shanghai, with major insurers and banks downbeat. New China Life Insurance dropped 3.83 percent and China Pacific Insurance fell 4.03 percent.
Over in Australia, the S&P/ASX 200 clung to gains and edged up by 0.15 percent to 6,107. Most of the country's heavily weighted "Big Four" banks carved out gains while the energy sector led gains on the index.
MSCI's broad index of shares in Asia Pacific excluding Japan slipped 0.18 percent in Asia afternoon trade.
North Korea concerns
Earlier, North Korea had suddenly dropped plans for talks with South Korea slated to take place on Wednesday. Joint military drills between South Korea and the U.S. were highlighted as a reason for the cancellation of talks, Reuters reported, citing North Korea's state-run Korean Central News Agency.
In currencies, the dollar index, which tracks the U.S. currency against a basket of rivals, was gave up some overnight gains after firming to its strongest levels since December in the last session. The dollar index last stood at 93.263 at 2:52 p.m. HK/SIN after rising as high 93.457 on Tuesday.
Against the yen, the dollar traded at 110.25 — near levels not seen since February.
The tepid performance in Asia came after U.S. stocks closed lower on Tuesday, with the Dow Jones industrial average snapping eight consecutive days of gains.
The yield on the benchmark 10-year U.S. Treasury note rose to 3.09 percent on Tuesday, its highest level in around seven years. That followed the release of solid data overnight: Retail sales stateside for April were in line with forecasts, rising 0.3 percent.
The 10-year U.S. Treasury yield was at 3.06 percent in Asia afternoon trade.
"Why this is significant, is that if bonds are embarked on a journey to higher yields, then the recent outflows from troubled emerging market countries (Argentina, Turkey, Indonesia) could become even greater," ING Chief Economist Robert Carnell wrote in a note.
Others market participants, however, said rising rates were not necessarily negative for emerging markets.
"Frankly, it's been so much discussed, it is completely priced in. There's no surprise. We all know that these rates are rising. The question has always been about the pace," Karine Hirn, partner at emerging markets manager East Capital, told CNBC's "Squawk Box."
Oil prices traded lower as markets focused on U.S. crude stockpiles along with the potential impact of U.S. sanctions on Iranian oil exports. U.S. crude futures edged down by 0.46 percent to trade at $70.98 per barrel and Brent crude futures shed 0.29 percent to trade at $78.20.
In individual movers, dairy company A2 Milk slumped 13.74 percent in New Zealand after announcing it expected full-year revenue to come in between 900 million New Zealand dollars ($618 million) and NZ$920 million ($631 million). That was below a Thomson Reuters forecast of NZ$940 million.
In Australia, shares of Myer jumped 16 percent after the department store operator reported that its third-quarter sales declined 2.7 percent. That was slower than the 3.6 percent drop in the first half of the year, Reuters reported.
Europe markets close mainly higher but Italian stocks slide on political concerns
The FTSE 100 closed Wednesday provisionally up by 0.26, while Germany's Dax rose 0.18 percent and the French CAC40 ended higher by 0.3 percent.
The Italian right-wing Lega party denied reports that it's seeking a 250 billion euro ($296.16 billion) debt write-off if it becomes part of a power-sharing deal with the anti-establishment Five Star Movement (M5S). But those efforts were not enough to dampen concerns over its economic future.
Late afternoon London time, Italian yields bond yields spiked while the euro shed around half a percent against the dollar. The 10-year bond yield rose 16 basis points, its biggest daily rise since November 2016.
Across the European index, Saipem bucked the struggle of fellow Italian companies to finish up by almost 12 percent. This followed a rating upgrade. Micro Focus lost some of its initial strength at the open to trade just above 6.2 percent by the end of the session. This was also after a positive trading update.
Alstom also rose across the day, up by 3.8 percent. The company reported that net profit rose by around 60 percent for its fiscal year.
On the other hand, French firm Elior recorded its worst one-day percentage fall since November 2017, according to Reuters. The shares fell near 14 percent after the firm issued a profit warning.
Is the recent volatility seen in EM FX the start of ...
Not a Scientific Survey. Results may not total 100% due to rounding.
At the same time, investors were monitoring the bond market after the yield on the 10-year sovereign rose to 3.09 percent on Tuesday, the highest in seven years. Higher yields mean higher borrowing costs for companies and thus fewer margins for dividends.
In terms of data, inflation numbers in Germany fell by 0.1 percent in April from the previous month, creating more headaches for the European Central Bank.
The IEA said in its latest oil market report that potential oil supply disruptions in Iran and Venezuela have led traders to shift their attention to geopolitics rather than fundamentals.
Stocks close higher, Macy's surges more than 10% as retail rallies
The Dow Jones industrial average closed 62.52 points higher at 24,768.93, with Nike as the best-performing stock in the index. The S&P 500 gained 0.4 percent to 2,722.46 as the consumer discretionary sector climbed 0.8 percent. The Nasdaq composite advanced 0.6 percent to 7,398.30. The small-cap Russell 2000 index, meanwhile, climbed 1 percent and posted a record close.
Macy's shares rallied 10.8 percent on stronger-than-expected quarterly earnings. The company's same-store sales, a key metric for retailers, rose 4.2 percent last quarter versus an estimate of 1.4 percent.
The retailer's surge boosted the broader retail sector. The SPDR S&P Retail ETF (XRT) jumped 1.6 percent on Macy's move, its best day since April 10.
Macy's CEO Jeff Gennette said Wednesday in a statement the company saw "continued healthy consumer spending," noting it contributed to the company raising its fiscal full-year guidance for earnings and revenue.
Pressuring equities on Tuesday was a surge in interest rates. The benchmark 10-year note yield hit 3.095 percent on Tuesday, its highest level since 2011, while the two-year note yield traded around levels not seen in a decade.
Tom Essaye, founder of The Sevens Report, said in a note that the rise in yields coupled with a surging dollar caused "causing a natural digestion given the near-6% straight-line rally in stocks over the past two weeks."
The major indexes are up sharply this month, with the S&P 500 and Dow having gained more than 2 percent through Tuesday's close. The Nasdaq, meanwhile, was up 4 percent in that period.
Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said the market's bias remains flat-to-higher, but it will be a choppier ride for investors as inflationary pressures have become "more prevalent."
Elsewhere in corporate news, Teva Pharmaceutical rose nearly 3 percent after Warren Buffett's Berkshire Hathaway revealed it increased its stake in the company.