Middle East Crisis Drags Down Global Stock Markets

Stock markets in the US and Europe fell on Tuesday as concerns over the Middle East crisis and rising energy prices grew. The tech-heavy Nasdaq dropped by about 1.3%, with Nvidia down more than 2% and Intel around 7%. The increased attention to bond yields and oil prices has reversed the fortune of the stock market for now.

The chances of an agreement between Washington and Tehran appear slim after US President Donald Trump said he would not extend a 60-day truce, while Iran called it 'irrelevant' because of what it sees as early US violations. This has driven up inflation worries, pushing government bond yields to their highest levels in almost two decades.

The US 10-year Treasuries are yielding more than 4.7%, a level not seen since June 2007, just before the global financial crisis exploded. Neil Wilson, investor strategist at Saxo UK, said 'A sharp rise in government bond yields around the world may start to pose a threat to equity valuations and make life even trickier for deeply indebted nations and policymakers.'

In France, the 10-year government bond yield reached its highest level since 2008 on Tuesday as European borrowing costs surged. Frankfurt and Paris both closed almost a percent lower, while London's main index gained 0.1% due to higher oil prices.