The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
1606 GMT - The further widening of Canada's merchandise-trade surplus in June suggests trade momentum continued to hold up at the end of 2Q, with monthly exports up 0.4% to a fresh record and imports rising more modestly, KPMG Canada's Daniel Hyun says. Nominal trade figures continue to be heavily influenced by volatility in commodity prices, though real volumes of energy and metals exports remain robust, the economist notes. And he adds the most tariff-exposed sectors held up well in June, with strong growth in motor vehicle and parts exports and in steel and iron products. Aluminum exports contracted, but this was a reversal of strong May exports to European countries. (robb.stewart@wsj.com; @RobbMStewart)
1238 GMT - 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)
0842 GMT - Continental's second-quarter beat could trigger low-single-digit percentage consensus EBIT upgrades, UBS analyst David Lesne writes. The tires EBIT margin in the first half is above the full-year guidance range of 13%-14.5%, so not raising or narrowing the guidance in tires is a bit disappointing, but there is a chance the outlook could be raised later on this year, the bank adds. "In any case, Conti will return to shareholders circa 12 euros/share over the coming quarters (related to ContiTech disposal) and is delivering metrics significantly above some peers while trading on an unjustified valuation discount, in our view." Shares fall 1.2%. (dominic.chopping@wsj.com)
0817 GMT - Continental's decision not to upgrade full-year guidance will probably be viewed as conservative, Bernstein analysts write. The German tire maker reported an EBIT beat in the second quarter, taking margins above 15%. The main debate ahead of earnings was on guidance, with many investors expecting an upgrade on the back of the second-quarter strength. This is understandable since tire margins were 14.9% in the first half versus the existing full-year guidance of 13.0-14.5%, Bernstein says. Management may point to the upper end of the guidance range on the analyst call, but with consensus margin expectations already at 14.0% for 2026, any estimate upgrades may be limited, the bank adds. Shares fall 0.6%. (dominic.chopping@wsj.com)
0802 GMT - Current oil prices include only a modest geopolitical risk premium despite persistent uncertainty in the Middle East, analysts at Goldman Sachs say. The U.S. bank estimates that Brent crude, the global oil benchmark, is fairly valued at around $80 a barrel based on oil inventories, expected demand from OECD countries, its estimate of the long-term value of oil and historical trading patterns linking inventories to prices. Goldman expects Brent to remain in its $80-$90 range until either a new U.S.-Iran deal is reached or the conflict escalates significantly. Still, the physical market is getting tighter amid lower flows from the Persian Gulf and the Red Sea, lower Russian oil exports, and stronger Asian imports. "Our estimated Persian Gulf flows edged down to 36% of prewar levels versus nearly 80% of prewar levels in the first half of July," they say. (giulia.petroni@wsj.com)
0738 GMT - Oil prices rebound after Monday's selloff, with Brent crude up 1.3% to $84.82 a barrel and WTI up 0.6% to $80.78 a barrel. The benchmarks settled 4.7% and 5.1% lower, respectively, in the previous session after Iran rejected President Trump's suggestion that talks were under way. "Oil sold off sharply yesterday on optimism that a Middle East deal might be within reach," analysts at ING say. "However, markets may be getting ahead of themselves once again [...] We've been in this situation multiple times before, only to see things unravel." Meanwhile, shipping traffic in the Gulf remains dangerous, with the U.K. Maritime Trade Operations agency saying Monday that a cargo vessel off the Omani coast was struck by an unknown projectile. (giulia.petroni@wsj.com)
0734 GMT - Investor sentiment toward Lufthansa has been mixed as of late, especially with a second-quarter miss and full-year lowered guidance, analysts at J.P. Morgan say. Some investors remain cautious as the unwinding of pricing in Asia begins, they say. The lower guidance is due to recent volatility in fuel prices and lower capacity, they say. Further, shorter booking cycles in the passenger airline business are making forecasting more difficult for Lufthansa, they add. Shares fall around 7%. (aimee.look@wsj.com)
0340 GMT - Sime Darby's fiscal 4Q earnings could be sequentially stronger on seasonally higher car sales, potential rebates for its China division and stronger BYD demand ahead of Malaysia's new electric vehicle policy, RHB IB analyst Iftaar Hakim Rusli says in a note. He tips 4Q core net profit at 300 million ringgit-330 million ringgit, up 15%-25% from the previous quarter. Looking ahead, he expects FY2027 earnings to recover, driven by stronger industrial demand and a turnaround in the China automotive business, although weakness in Australia's mining sector may remain a drag. RHB raises Sime Darby's target price to 2.40 ringgit from 2.27 ringgit, while maintaining a buy rating on the stock. Shares are unchanged at 2.20 ringgit. (yingxian.wong@wsj.com)
0314 GMT - South Korean carmaker Kia remains on track to achieve its second-half sales target, Nomura's Angela Hong says. Robust demand for Kia's recreational vehicles, hybrid vehicles and electric vehicles is positioning the company for sustained outperformance in 2H, the analyst says in a research note. Hong points to Kia's July global wholesale vehicle sales, which surged 13% from a year earlier, exceeding the company's 2H target of 10% growth. She expects Kia to continue to benefit from its expanding global hybrid and electric-vehicle lineup. She highlights Kia's Telluride and Seltos sport utility vehicles, along with its compact EV2 electric vehicle. (kwanwoo.jun@wsj.com)
0124 GMT - Singapore depository receipts of Grab are higher following the ride-hailing company's stronger 2Q profit and upward revision to its annual adjusted Ebitda guidance. Grab's overall results appear solid to Citi analysts, who describe the deliveries segment's performance as particularly strong. They expect the company to offer more clarity on its revised guidance during its post-results briefing. Grab could also comment on its mobility segment's 2H Ebitda margin trend after it added a commission cap for two-wheeler rides, the analysts say. The SDRs are up 7.5% at 2.44 Singapore dollars, their largest gain since listing on July 22. Grab's Nasdaq-listed shares closed 4.9% higher at US$3.67 overnight. (megan.cheah@wsj.com)
0121 GMT - Transurban gets "a big tick" from UBS analysts for avoiding radical reform to road tolls in Australia's most populous state. The analysts tell clients in a note that significant changes in New South Wales state could have materially reduced the ASX-listed toll-road operator's value. As it is, they hail the company's resolution of complex, multistakeholder negotiations and removal of a long-running overhang on the stock. They acknowledge some uncertainties over traffic impact, but don't think Transurban is unreasonable to suggest that the changes are neutral for valuation. UBS has a last-published neutral rating on the stock and a target price of 14.50 Australian dollars. Shares are up 0.1% at A$14.975. (stuart.condie@wsj.com)
0106 GMT - Analysts at Jefferies remain bullish on Qantas Airways despite the potential for fuel prices to stay high due to the U.S.-Iran conflict. Analysts Anthony Moulder and Amit Kanwatia tell clients in a note that they are raising their expectations for December-half oil and refinery margin trends, pointing to a lack of a clear pathway to conflict de-escalation and pressure on Russian oil production. Also, Australia's inflation remains above the central bank's target range and more interest-rate rises remain likely. Nonetheless, travel demand seems resilient, they say, and remind clients that near-term fuel-cost challenges are only temporary. Jefferies keeps a buy rating but lowers its target price by 6.9% to 11.91 Australian dollars. Shares are flat at A$10.32.
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