The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
1054 GMT - The Polish zloty would probably only temporarily recover if the Middle East conflict de-escalates in coming months and risk appetite improves, Commerzbank's Tatha Ghose says in a note. Some gradual depreciation in the zloty should resume next year as Poland's central bank could switch back to signalling interest-rate cuts quite quickly if the geopolitical impasse ends, he says. Political uncertainty also looks set to return with the 2027 general election and there's a risk the Law and Justice party or broader right-wing bloc wins, he says. Commerzbank expects the euro to fall to 4.25 zloty by December before rising to 4.40 a year later, compared to 4.2967 currently. (renae.dyer@wsj.com)
1043 GMT - Palm oil closed lower, as market sentiment remains subdued ahead of key industry supply and demand data from Malaysian Palm Oil Board, Kenanga Futures analysts say. Expectations of higher palm oil inventories are also weighing on prices, they add. Kenanga Futures sees support and resistance for the October futures contract at 4,650 ringgit a metric ton and 4,740 ringgit a ton, respectively. The Bursa Malaysia Derivatives contract for October delivery fell 8 ringgit to 4,678 ringgit a ton. (jason.chau@wsj.com)
1010 GMT - Inflation-linked bonds look favorable as inflation pressures could be more prevalent than markets expect, RBC BlueBay Asset Management's Mark Dowding says in a note. Supply disruptions from the Middle East conflict could keep energy prices elevated and push up inflation, Dowding says. Long-dated bonds look less appealing over the medium term due to inflation concerns, he says. (miriam.mukuru@wsj.com)
1008 GMT - Climate change is becoming a key economic risk, Berenberg analysts say in a note. Still, while drought in Germany has created supply disruptions, the European Central Bank is likely to look through this for now, they say. The Rhine's low water levels mean ships can only pass through carrying very little cargo, if at all, creating supply bottlenecks, the analysts say. The situation is driving up costs and could hit growth by up to 0.2 percentage points in the third quarter, they say. However, only a fraction of German freight passes along the Rhine, while companies have already begun adapting. The Middle East conflict overshadows these temporary supply bottlenecks and the ECB is unlikely to attach much importance to them, they say. (don.forbes@wsj.com)
1006 GMT - The euro could rise modestly against the dollar if markets trim U.S. interest rate-rise expectations and Middle East tensions ease, Commerzbank's Thu Lan Nguyen says in a note. Markets continue to expect one rate rise by the Federal Reserve this year. This looks "overly optimistic" and a reassessment of the rate outlook over the coming quarters is likely, she says. Rate-rise expectations for the European Central Bank also appear somewhat stretched, although the euro should benefit more than the dollar if U.S.-Iran tensions ease by year-end due to potentially lower energy prices supporting the eurozone economy, she says. Commerzbank expects the euro to rise to $1.17 by December and $1.19 a year later, from $1.1524 currently. (renae.dyer@wsj.com)
1002 GMT - The U.S. has resumed crude imports from the Middle East after a 50-day pause, with August arrivals expected to reach their highest levels in months, says Richard Ro from Kpler. Tracking data shows the supertanker Maran Mira delivered nearly 1.5 million barrels of Kuwaiti crude to the Louisiana Offshore Oil Port. "The U.S.-Iran war has redirected crude flows, where the U.S. saw its last import of Middle East crude in mid June and where imports in July were zero," Ro says. Kpler is tracking eight additional VLCCs carrying Middle Eastern crude to the U.S., which could lift August imports above 600,000 barrels a day. Most cargoes are heading to the Gulf Coast, while a Murban crude shipment is awaiting discharge in Los Angeles, according to the data provider. (giulia.petroni@wsj.com)
0923 GMT - Saudi Arabia's decision to further lower the price of its flagship crude grade for Asia comes as buyers face higher shipping costs, with Red Sea disruptions forcing some tankers onto longer routes around southern Africa, analysts at ING say. "There has been a push by Asian buyers for the Saudis to cut their official selling prices amid the escalation in the Red Sea," they say. "It means that some tankers are taking the longer and more expensive shipping route around Africa." Saudi Arabia on Thursday lowered the official selling price for September shipments of its Arab Light crude to Asia--the largest market for Middle Eastern oil--by $0.50 a barrel to a discount of $2 a barrel to the Oman/Dubai benchmark. Prices for grades sold to Northwest Europe and the Mediterranean were reduced by $3 a barrel, respectively, while U.S. customers saw a $1-a-barrel decrease. (giulia.petroni@wsj.com)
0855 GMT - Global investors grapple with high uncertainty as several economic shocks unravel, Rabobank strategists say in a note. Businesses and households around the global face "an overlapping set of disruptions." These include trade disputes, geopolitical conflict, policy uncertainty, financial market volatility, technological disruption and natural disasters, which all increase economic uncertainty, the strategists say. "Uncertainty can paralyse decision-making, delay investment, encourage precautionary saving and ultimately amplify the effects of whatever shock triggered it in the first place," they say. (miriam.mukuru@wsj.com)
0829 GMT - Hong Kong's investment is likely to see a lift from large infrastructure projects, according to HSBC in a research note. "There has been a notable push to accelerate the development of large infrastructure projects, namely the Northern Metropolis," the bank says. Northern Metropolis is a massive planning and development area in Hong Kong's New Territories. This should lift public investment, which will be backed by infrastructure bond issuance, HSBC says. The government may also push policies to drive up the private sector involvement in the development, the bank adds.(tracy.qu@wsj.com)
0752 GMT - Oil prices extend the previous session's gains as markets await the outcome of Iran-Oman talks on managing traffic in the Strait of Hormuz while closely monitoring risks in the critical waterway. In early trading, Brent crude rises 0.9% to $83.27 a barrel, while WTI futures are up 0.6% to $77.79 a barrel. Mediators say the main negotiators quickly embraced a proposal to divide traffic into an inbound lane near Iran and an outbound lane near Oman, The Wall Street Journal reported. However, while an agreement would ease a key geopolitical risk, the broader conflict would remain far from settled, according to analysts. "Despite clear signs of progress in recent days, the tenor of the rhetoric and growing distrust between the U.S. and Iran mean things could go from bad to worse once again," according to ING. "There's plenty of risk and uncertainty to this view." (giulia.petroni@wsj.com)
0741 GMT - European indexes largely edge higher in cautious trade as investors hold ground ahead of U.S. jobs data and news on talks in the Middle East. The Europe-wide Stoxx 600 adds 0.2% as software and healthcare sectors lead. London's FTSE 100 edges up 0.2%, with oil majors gaining as oil ticks higher. A Diageo rally continues into a second day, with the stock up 1.5%. The German DAX gains 0.4%. Software giant SAP gains 3.5%, though Daimler Truck Holding slips 2.9% after posting earnings. In Paris, the CAC 40 is 0.3% up as Dassault Systemes adds 2.4%, while Thales gains 1.9%. Italy's FTSE MIB is flat, while the Spanish IBEX 35 slips 0.3% as banking stocks weaken. The AEX edges 0.1% lower in Amsterdam.(josephmichael.stonor@wsj.com)
0739 GMT - High oil prices from the Middle East conflict present a challenge for major central banks due to inflation concerns, Tickmill Group's Patrick Munnelly says in a note. Media reports indicate that a potential agreement to reopen the Strait of Hormuz could include restrictions on U.S. and Israeli ships, which could prolong the energy supply shock and keep oil prices elevated. U.S., eurozone and U.K. government bond yields climb as investors raise bets on central banks raising interest rates in the coming months. Ten-year gilt yields climb 2.3 basis points to 4.943%; ten-year German Bund yields increase 2.5 basis points to 3.146%; while ten-year U.S. Treasury yields are up 0.2 basis points at 4.672%, Tradeweb data show.
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