Global markets slide as bond yields surge and Middle East tensions flare

Global equity markets extended losses on Tuesday as surging US Treasury yields and escalating tensions in the Middle East drove oil prices to multi-month highs, with investors awaiting the Federal Reserve's policy decision. Iranian-backed Houthi rebels targeted Saudi Arabia in a recent attack, fueling supply concerns that pushed November-delivery Brent crude oil up 1.7% to $107.4 a barrel, while the US 10-year Treasury yield climbed to 5.03% — its highest level since July 2007 — as markets priced in persistent inflation risks. US President Donald Trump said oil prices would fall when the Iran conflict ends, though the benchmark has climbed steadily amid regional hostilities.

AI fears batter technology sector

Technology shares led declines on Wall Street as calls to slow artificial intelligence development weighed on semiconductor stocks, with Trump calling claims that AI will spiral out of control "a hoax" despite uncertainty over coordination between Washington and Beijing. The New York Stock Exchange closed lower Monday as Nvidia dropped 3.4%, AMD fell 4.4%, Broadcom declined 4.8%, Intel decreased 5.6%, and Marvell Technology was down 7.3%, dragging the Dow Jones Industrial Average down 0.29%, the S&P 500 down 0.48%, and the Nasdaq down 0.56%.

Fed meeting awaited

The Federal Reserve commenced its two-day policy meeting on Tuesday, with markets expecting a rate hike — the first since July 2023 — amid concerns that high inflation could become permanent, while the US Treasury Department added Russia's VTB Bank to its sanctions list under Operation Economic Outcast. The US dollar traded up 0.1% at 99.6, while gold rose 0.1% to $4,305 per ounce despite the stronger greenback, with American indexes opening Tuesday on a negative trend.

Europe and Asia follow lower

European stock markets traded lower across the continent except in the UK, where rising oil prices supported energy stocks, with Germany's 10-year bond yield reaching 3.55% — its highest since 2009 — while Italy's FTSE MIB fell 1.68%, France's CAC 40 dropped 0.76%, and Germany's DAX 40 declined 0.5%. Dutch tech firm ASML fell 6.1% and Germany's Infineon Technologies declined 7.7%, while Asian equities also retreated as China's retail sales rose a weaker-than-expected 0.4% annually in August alongside a 7.2% drop in fixed-asset investment and unemployment at 5.3%, with South Korea's Kospi falling 0.6%, Hong Kong's Hang Seng declining 0.2%, China's Shanghai Composite dropping 0.1%, and Japan's Nikkei 225 down 0.1% near Monday's close.