Stock markets open lower as bond yields near pre-Great Recession levels

North American stock markets opened lower Thursday as oil prices rose and treasury yields resumed their climb amid the ongoing stalemate between Iran and the U.S.

High yields slow economies and weigh on prices for stocks, cryptocurrencies and all kinds of other investments. Besides driving up rates for mortgages, they could also curtail companies’ borrowing to build the artificial-intelligence data centers that have been supporting the U.S. economy’s growth recently.

The 30-year Treasury bond’s yield US30YT=RR, which is seen as a barometer of geopolitical and fiscal risk, was last up 1.7 bps at 5.139 per cent. It briefly touched 5.197 per cent on Tuesday, its highest since July 2007 before the global financial crisis.

The S&P 500, Dow Jones Industrial Average and  the Nasdaq each retreated roughly half a per cent shortly after market opened.

Meanwhile, the Toronto Stock Exchange was in the red by about a quarter of one per cent.

Walmart shares slid more than six per cent after the retail giant delivered another quarter of impressive sales but offered up a weaker outlook than analysts were hoping for. Walmart has resonated with Americans who have grown increasingly cautious about where they spend their money with inflation taking a bigger bite out of paychecks, particularly since the start of the Iran war in late February.

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Nvidia flipped between small gains and losses overnight after the artificial intelligence chipmaker latest quarterly results surpassed Wall Street’s expectations once again.

Massive demand for its high-end AI chips pushed revenue up 85 per cent in the period while profits more than tripled, the company said after markets closed Wednesday.

Oil prices pushed higher early Thursday, a day after falling five per cent. Brent crude, the international standard, gained nearly US$4 to almost $109 per barrel, while U.S. benchmark WTI crude added $4 to $102 per barrel.

Brent remains well above its roughly $70 level from before the war with Iran. Prices have been yo-yoing on rising and falling hopes that the United States and Iran can reach an agreement to end their conflict and allow oil deliveries to fully resume from the Persian Gulf to customers worldwide.

Treasury yields also resumed their climb after easing a day earlier and giving markets a lift. The yield on the 10-year Treasury inched back up to 4.60 per cent early Thursday after sliding to 4.57 per cent a day earlier. They were as high as 4.67 per cent earlier this week.

The 10-year Treasury yield had been rising from less than four per cent before the war with Iran began, along with other government bond yields around the world, because of worries that the fighting will keep oil prices high, among other factors.

Yields fell on Wednesday after U.S. President Donald Trump said that peace talks with Iran were in their final stages, following a selloff in U.S. and global bond markets earlier this and last week.

– With files from Reuters and Global’s Ariel Rabinovitch