The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
0840 ET - European stock indexes are set to hit a raft of new records as positive earnings stories, a tech rally and low oil prices buoy the continent's stocks. The Europe-wide Stoxx 600 is on pace for its first record close in over a month. In Paris, the French CAC 40 gains 0.3%, on track for its first record close since February. Gains for index heavyweight Schneider Electric--up 2.9%--and chip maker STMicroelectronics--up 3.8%--lift the index. The German DAX trades up 0.8%, extending Monday's record close. The Dutch AEX jumps 1% to a new high as ASML climbs 3.5%. Spain's IBEX 35 and the Italian FTSE MIB are also poised for new records. London's FTSE 100 is a laggard, rising 0.35% to hover slightly below its own record. (josephmichael.stonor@wsj.com)
0838 ET - Oil futures retreat after U.S. Treasury Secretary Scott Bessent says on CNBC that "we may have a deal today or tomorrow," to reopen the Strait of Hormuz. He tells CNBC that quite a few ships are making it through the strait and that many are waiting to leave, "so I'd expect the energy prices to settle back down." WTI is down 2.9% at $77.99 a barrel, and Brent falls 2.2% to $81.92. Prices are adding to yesterday's losses after the U.S. suspended planned strikes on Iran in favor of talks. (anthony.harrup@wsj.com)
0838 ET - Record-low water levels along Germany's Rhine river could shave 0.3 percentage points off the country's economic growth this year, Carsten Brzeski at ING says in a note. Water levels along the Rhine--which carries around 80% of Germany's inland waterway freight--have fallen to a record low. This threatens supply chains and industrial production, as ships are operating with sharply reduced loads, he says. Research from the Kiel Institute found that the 2018 drought cut inland shipping by about 25%, reduced industrial output by roughly 1%, and shaved around 0.3 percentage points off German GDP growth. "The risk is high that this time around, the economic impact will be larger," although the country should avoid recession, Brzeski says. (don.forbes@wsj.com)
0711 ET - The global oil-supply shock caused by the Iran war has removed more than 2.6 billion barrels from the market, says Saudi Aramco CEO Amin H. Nasser. Emergency stock releases and alternative export routes reduce the net supply loss to about 1.8 billion barrels, he says. Even if Hormuz reopens immediately, replenishing depleted commercial inventories and strategic reserves would take up to 18 months at an average rate of 2.1 million barrels a day, materially adding to crude demand through 2027 and likely beyond, Nasser says. The war between Iran and the U.S. and its regional allies is in its sixth month, with shipping through the Strait of Hormuz still largely disrupted. (farhan.rafid@wsj.com)
0708 ET - Yields on U.K. government bonds rise as oil prices rise. Reports that a vessel was struck in the Strait of Hormuz contribute to higher oil prices. Iran also on Monday said there were no planned talks with the U.S., after President Trump's announcement that the U.S. and Iran were due to hold negotiations. Uncertainty is high surrounding the direction of the Middle East conflict and the full impact of the war. Ten-year gilt yields rise 2 basis points to last trade at 4.972%, Tradeweb data show. (miriam.mukuru@wsj.com)
0640 ET - Middle Eastern investors are turning toward domestic priorities amid the conflict in the region, reducing financing sources for governments outside the region, BlackRock Investment Institute says in a note. "Greater sovereign borrowing and persistent fiscal deficits, alongside a shift in Middle Eastern investment toward domestic priorities, have reduced capital available for overseas investment and further intensified competition for capital," it says. Scarcity-driven inflation, amplified by the Middle East energy and commodity shock, has driven a sharp repricing of markets' Federal Reserve rate expectations from easing to tightening, prompting a global rise in bond yields, BlackRock says. Market uncertainty about the Fed's reaction function under the new Chairman Kevin Warsh has also pushed the term premium higher, the asset manager says. (emese.bartha@wsj.com)
0614 ET - BP's new CEO Meg O'Neill wastes no time putting her stamp on the business, AJ Bell's investment director Russ Mould writes. She has put BP's U.S. biogas business Archaea up for sale just days after doing the same for its U.K. North Sea assets. O'Neill will be aware she can't rely on oil and gas prices remaining high forever and will need to ensure the company can prosper when the backdrop isn't as supportive, he adds. BP shares rise 1% to 557.70 pence. (adam.whittaker@wsj.com)
0609 ET - Palm oil closed higher, supported by overnight gains in rival soy oil and improving demand prospects ahead of India's festive season, Kenanga Futures analysts say in a note. However, softer crude prices amid renewed U.S.-Iran talks that may lead to a partial reopening of the Strait of Hormuz for energy shipments may weigh on biodiesel demand expectations and limit further price gains. Kenanga Futures sees support and resistance for the October futures contract at 4,600 ringgit a metric ton and 4,700 ringgit a ton, respectively. The Bursa Malaysia Derivatives contract for October delivery rose 65 ringgit to 4,694 ringgit a ton. (jason.chau@wsj.com)
0535 ET - U.S. Treasury yields and the dollar rise in European trade as oil prices increase. Iran on Monday said there were no planned talks with the U.S., creating uncertainty after the U.S. recently cancelled planned attacks against Iran in order to allow discussions to proceed. Discrepancy between U.S. and Iranian messaging could sustain safe-haven demand and keep oil prices supported, feeding inflation concerns, says BankPro's Paolo Broccardo in a note. Geopolitical uncertainty is providing the dollar with underlying support, he says. The 10-year Treasury yield rises 2.2 basis points to 4.705%, according to Tradeweb. The DXY dollar index increases 0.1% to 100.013. (emese.bartha@wsj.com)
0519 ET - The cost of insuring euro-denominated credit against default stays steady due to uncertainty around the Middle East conflict. The U.S. cancelled planned attacks against Iran and said the two nations would hold talks to end the conflict. However, Iran on Monday said the were no planned talks with the U.S., creating uncertainty around the possible end to the conflict. The iTraxx Europe Main index of euro investment-grade credit default swaps is unchanged at 52 basis points, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)
0516 ET - AI investment is among a number of factors that are accelerating a rise in long-term bond yields, BlackRock Investment Institute says in a note. AI adds to the impact of prolonged supply shocks and heavy government borrowing, it says. "The structural forces behind higher bond yields have been building for several years but intensified this year." In this environment, government bonds provide less ballast--implying that they act as less of a stabilizing asset--but provide more income, "expanding the opportunity for durable income," the asset manager says. (emese.bartha@wsj.com)
0502 ET - BP's results show new CEO Meg O'Neill's approach is starting to work, research director at XTB Kathleen Brooks writes. O'Neill got a boost from supportive market conditions that pushed oil and gas prices higher, but she has refocused the business around hydrocarbons, Brooks says. She has also had to navigate internal volatility after the ousting of the company's chairman in May, she adds. BP shares rise 1% to 557.70 pence.
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