Global equity markets gave up recent gains on Wednesday, while U.S. Treasury yields fell to a two-week low as traders weighed continued positive corporate results and a resurgence in U.S.-China tensions that could compound supply-chain worries.

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Major U.S. companies, including tech giants Microsoft Corp and Google parent Alphabet Inc, have been reporting stronger-than-expected earnings, helping to lift the S&P 500 and Dow Industrials to record closing highs this week, while the tech-heavy Nasdaq is 1% off its record peak.

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But the U.S. telecoms regulator voted on Tuesday to revoke the authorization for China Telecom`s U.S. subsidiary to operate in the United States, opening up a new front in the already tense relationship between the world`s two biggest economies and exacerbating investor concerns about supply chains.

"This is obviously one of the most intense reporting weeks for tech stocks, and companies that have been real darlings are still reporting significant numbers," said Tom Plumb, portfolio manager at the Plumb Balanced Fund.

"There’s been a dichotomy between those companies that have reacted proactively to supply chain issues compared with those that were waiting for a thaw in the U.S. relationship with the Chinese government."

The MSCI world equity index, which tracks shares in 50 countries, dropped 0.55%, while the pan-European STOXX 600 index fell 0.36%.

On Wall Street, the Nasdaq was unchanged on Wednesday, while the Dow and the S&P 500 closed lower, dragged down by cyclical sectors including financial, healthcare, energy and industrials.

The Dow Jones Industrial Average fell 0.74% to 35,490.69, the S&P 500 lost 0.51% to 4,551.68 and the Nasdaq Composite was unchanged at 15,235.84.

U.S. benchmark 10-year Treasury yields dropped to a two-week low while the 2-year Treasury yields hit 19-month highs, further flattening the yield curve, as the possible timing of the Federal Reserve`s first interest rate rise came into sharper focus.

U.S. 10-year yields dropped to 1.552%, while the 2-year yields spiked to 0.515%, the highest since March 2020.

The U.S. dollar lost value against major currencies on Wednesday after the Bank of Canada started off a series of awaited central bank policy comments with a hawkish tone.

The moves broke a calm that had settled over the currency markets this week and took the U.S. dollar index down 0.101% to 93.858.

Prices of safe-haven gold rose in seesaw trading, buoyed by a fall in U.S. bond yields and a softer dollar, although strong risk appetite in equity markets kept bullion`s gains in check.

Spot gold was up 0.21% at $1,796.48 per ounce, after a sharp fall in the previous session.

Oil prices fell after U.S. crude oil stockpiles rose more than expected, even as fuel inventories dropped and tanks at the nation`s largest storage hub emptied further.

Brent oil futures ended down 2.1% to $84.58 a barrel, while U.S. West Texas Intermediate (WTI) crude settled down 2.4% to $82.66 a barrel.