The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
1122 GMT - The dollar is undervalued against eight of the nine other G-10 currencies, suggesting some additional risk premium is priced in, MUFG Bank's Derek Halpenny says in a note. The dollar has potentially priced in the prospect of a new ceasefire deal in the Middle East conflict more quickly than other markets, he says. Another factor weighing on the dollar's performance is the joint U.S.-Japan intervention to strengthen the yen last week. Moreover, the WSJ reports that President Trump has spoken to Federal Reserve Chair Kevin Warsh repeatedly. This reinforces the impression of greater political influence undermining Fed independence, he says. The DXY dollar index rises 0.1% to 99.784 but remains near a seven-week low of 99.413 reached Monday. (renae.dyer@wsj.com)
1025 GMT - The cost of insuring euro-denominated credit against default remains steady as focus is on potential U.S.-Iran talks. There is "growing optimism that the United States and Iran could reach a peace deal allowing the Strait of Hormuz to reopen," ActivTrades' Ricardo Evangelista says in a note. The iTraxx Europe Main index of euro investment-grade credit default swaps is unchanged at 51 basis points, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)
0941 GMT - U.S. Treasury yields are slightly higher across the curve, although more so for short-dated yields as investors bet on Federal Reserve rate hikes to tame inflation. Middle East developments are also watched as a proposed agreement between Oman and Iran could lead to a deal between the U.S. and Iran to reopen the Strait of Hormuz. Uncertainty remains, however, as the potential deal between Oman and Iran could leave the latter controlling traffic in the Strait of Hormuz, Kudo.com's Konstantinos Chrysikos says in a note. The two-year Treasury yield rises 1.9 basis points to 4.197%, while the 10-year yield increases 0.6 basis points to 4.622%, according to Tradeweb. The DXY dollar index rises 0.1% to 99.755. (emese.bartha@wsj.com)
0914 GMT - The increase in German manufacturing orders is encouraging, though it's still too early to declare a turnaround in the economic trend, the DIHK German Chamber of Commerce and Industry's Jupp Zenzen says. Factory orders grew 3.1% on month in June, their highest levels since the start of the year, driven by larger orders in machinery and electrical engineering. However, without these volatile large orders, the order intake stagnated in the second quarter, Zenzen says. "The fundamental structural problems in Germany have not yet improved." The international environment continues to be uncertain, and reforms to the industry are necessary for a long-term growth path, he says. (edward.frankl@wsj.com)
0908 GMT - The euro could struggle to rise meaningfully unless U.S. nonfarm payrolls data on Friday are weaker than anticipated, ING's Francesco Pesole says a in a note. The recent decline in oil prices isn't feeding through to lower U.S. front-end rates, leaving economic data as the key driver needed to lift the euro versus the dollar, he says. With no major eurozone specific catalysts on Thursday, ING is neutral on the euro. "The [euro] can stabilize in the $1.1530-$1.1550 area ahead of tomorrow's U.S. payrolls report." The euro falls 0.1% to $1.1543. (renae.dyer@wsj.com)
0857 GMT - Harbour Energy's second-half free cash flow will be hit by Norway and U.K. tax payments, J.P. Morgan analysts Alejandra Magana and Riddhi Agarwal write. The company has guided for free cash flow of around $1.8 billion over the year but delivered this in the first-half. This means cash flow over the remainder of the year will be broadly neutral, they write. Shares rise 7% to 248.4 pence.(adam.whittaker@wsj.com)
0825 GMT - Harbour Energy investors will want to know if there is further upside to returns, Jefferies analysts write. The company upgrades its free cash flow guidance to around $1.8 billion but already delivered this over the first half of the year. The company plans to return a minimum of $800 million to shareholders over 2026. This comes after it was able to capture the higher oil and gas prices with a strong operational performance, they write. Shares rise 7% to 248.4 pence. (adam.whittaker@wsj.com)
0757 GMT - Gold prices hold above the $4,300-an-ounce mark after Wednesday's rally amid growing optimism that a deal to reopen the Strait of Hormuz will ease inflationary pressures and interest-rate hike expectations. "The market is increasingly focusing on the disinflationary implications of lower energy prices," analysts at ING say. "Expectations for Federal Reserve tightening have eased, improving the outlook for non-yielding assets such as gold." Oil prices are headed for a weekly loss of more than 8%, with Brent crude trading below $80 a barrel as investors grow optimistic about negotiations between Iran and Oman on reopening of the Strait of Hormuz. In early trading, New York gold futures rise 0.2% to $4,314 a troy ounce, up nearly 4% on the week. (giulia.petroni@wsj.com)
0749 GMT - Oil prices tick higher in early trading, but Brent crude remains below $80 a barrel as investors await the outcome of Iran-Oman talks to reopen the Strait of Hormuz. The two parties were finalizing a draft agreement on Wednesday that would give Tehran oversight of ships entering the Persian Gulf but wouldn't let it levy tolls or service fees, The Wall Street Journal reported. "Markets have seen plenty of false dawns throughout this conflict," analysts at Deutsche Bank say. "Nevertheless, [they] continue to lean towards a positive outcome, although much of the good news now appears priced in." Meanwhile, the latest U.S. data showed domestic crude oil stocks rose by 2.5 million barrels last week, contrary to market expectations for a moderate withdrawal. Brent is up 0.5% to $79.84 a barrel, while WTI futures rises 0.2% to $75.38 a barrel. (giulia.petroni@wsj.com)
0746 GMT - Harbour Energy posts a positive first-half update as integration of the LLOG portfolio in the U.S. helps deliver record production, Berenberg analysts write. Production growth coincides with a supportive macroeconomic backdrop that is driving cash flow and cutting net debt, they write. The energy company is also making good progress on longer-term growth projects, especially in Mexico and Argentina, they say. Harbour bought Louisiana-based LLOG Exploration in a $3.2 billion deal last December. Shares rise 3.7% to 241 pence.(adam.whittaker@wsj.com)
0738 GMT - Yields on U.K. government bonds, or gilts, rise as markets price in the possibility of the U.S. Federal Reserve raising rates in the coming months. Recently-released U.S. economic data, including the ADP labor market data and PMI data, show resilient activity, raising concerns that inflationary pressures could force the Fed to raise rates. Investors also eye developments in the Middle East. Iran and Oman are finalizing a draft agreement to reopen the Strait of Hormuz which would allow the U.S. and Iran to return to the negotiating table, The Wall Street Journal reports. Ten-year gilt-yields climb 1.1 basis points to 4.893%, Tradeweb data show. (miriam.mukuru@wsj.com)
0734 GMT - Bitcoin rises slightly on hopes for a resolution to the Middle East conflict, although the cryptocurrency continues to trade in a narrow range. Iran and Oman are finalizing a draft agreement to reopen the Strait of Hormuz which would allow the U.S. and Iran to return to the negotiating table, The Wall Street Journal reports. Investors are balancing optimism over the reopening of the Strait against a "messier U.S. macroeconomic picture," Tickmill Group's Patrick Munnelly says in a note. Oil has softened, giving risky assets some relief, but U.S. services prices are still high, labor market data are cooling and Federal Reserve policymakers aren't fully aligned, he says. Bitcoin rises 0.1% to $64,877, LSEG data show.
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