The latest Market Talks covering Energy and Utilities. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
1109 ET - Expanding AI data centers have a growing impact on municipal bond markets, spurring issuance while presenting new risks, LPL Financial's Lawrence Gillum and Brian Booe say in a note. Power-hungry data centers require grid upgrades, leading to an increase of more than 25% in electric power issuance so far this year. "The gas prepayment sector, long a niche, has grown to more than 5% of the municipal index with roughly $100 billion outstanding," Gillum and Booe say. Host communities can benefit from an increased tax base. However, backlash against higher utility bills associated with data centers represents a risk, they say. (paulo.trevisani@wsj.com; @ptrevisani)
0941 ET - Oil futures move lower after Pakistan's defense minister tells Bloomberg that the U.S. and Iran are nearing some sort of agreement. Yemen's Houthis continue attacks on shipping in the Red Sea and the U.S. fired on a ship attempting to evade its blockade of Iranian ports. "It seems the details of a peace deal have become more complicated with Iran demanding the U.S. repay for war damages, and President Trump countering, stating Iran should make financial compensation to the people they have harmed in the past including their own citizens," Dennis Kissler of BOK Financial says in a note. "The reality remains that the Strait of Hormuz traffic remains extremely light, and global fuel supplies (especially diesel) are tightening further." WTI is off 0.6% at $81.62 a barrel and Brent is down 0.8% at $87.02.(anthony.harrup@wsj.com)
0859 ET - Treasury yields lose some of their overnight momentum but remain elevated as rising oil prices rekindle inflation fears. The U.S.-Iran standoff shows no signs of abating and Brent crude approaches $90 a barrel. U.S. forces fired on a Panama-flagged ship that attempted to run the American blockade of Iranian ports early Tuesday, a U.S. official says. July CPI inflation is due tomorrow and a hot reading would likely spur bets on a Fed hike next month. The U.S. Treasury will auction $58 billion in three-year notes this afternoon. July existing home sales are expected to shrink 1%, following June's 2.4% contraction, in data due at 10 a.m. ET, according to WSJ consensus. The 10-year yield is at 4.697%, after reaching 4.735% overnight. The two-year slips to 4.228% from 4.262%. (paulo.trevisani@wsj.com; @ptrevisani)
0330 ET - European energy stocks rise in opening trade as oil continues to gain. Brent extends a four-day rally as tougher U.S. and Iranian demands slow progress toward an agreement that could resume normal shipping through the Strait of Hormuz, MUFG's Soojin Kim writes. In New York, Brent futures rise 1.5% to $89 a barrel and WTI gains 0.8% to $79.13. Norway's Equinor rises 2.4%. In London, BP gains 1.43% while Shell rises 1%. Italy's Eni is up 1.7% and Spain's Repsol ticks 1.5% higher. France's TotalEnergies is up 1.3%. (adam.whittaker@wsj.com)
2041 ET - Jarden pares its medium-term dividend outlook for Contact Energy as it adjusts to it possibly becoming involved in data centers. Contact has agreed with CDC Data Centres to assess a potential data center at Stratford, New Zealand. The companies plan to seek resource consent for a 250-megawatt data center near the site of Contact's closed Taranaki Combined Cycle gas power plant. Jarden notes Contact's FY 2027 dividend guidance of NZ$0.42/share represents a 101% payout on a trailing cash flow basis. "To account for potential equity co-investment in large-scale digital infrastructure, we have prudently reduced our dividend payout assumption from FY28 onwards to 80% of four-year trailing per-share cash flow, at the bottom end of Contact's 80-100% target range," analyst Grant Swanepoel says. (david.winning@wsj.com; @dwinningWSJ)
1455 ET - Oil futures post gains as Iran's latest demands on the U.S., including a military withdrawal, unfreezing of Iranian assets and payment of reparations, are seen prolonging the closure of the Strait of Hormuz. "This list of demands seems more like a child's wish list to Santa Claus than anything grounded in reality," Phil Flynn of the Price Futures Group says in a note. While Iran tries to give the impression it's calling the shots, lower oil prices at the back of the curve suggest the market is unconvinced the strait will be a lasting problem, he adds. "The near-term risk is tight diesel and heating oil supplies heading into winter." WTI settles up 5.1% at $82.13 a barrel, and Brent rises 5% to $87.72. (anthony.harrup@wsj.com)
1418 ET - Diesel futures are outpacing gains in crude oil as attacks on refineries in Russia by Ukraine and in Saudi Arabia by Houthis add to concerns about the continued closure of the Strait of Hormuz. "The refinery attacks have taken substantial amounts of diesel off the market with global benchmarks rallying strongly," Mizuho's Robert Yawger says in a note. "Unless there are big breakthroughs in the peace process around both conflicts, large amounts of diesel will remain shut in." ICE gasoil is up 9.9% at $1,316 a metric ton and Nymex diesel is up 7.2% at $4.1817 a gallon.(anthony.harrup@wsj.com)
1349 ET - Treasury yields and the dollar keep rising as markets see nearly equal chances of a Fed hike or hold in September. The dollar strengthens nearly 1% against the yen, despite officials' efforts to prop up the Japanese currency. The lasting U.S.-Iran standoff over the Strait of Hormuz pushes Brent crude up 4% to $87, rekindling inflation fears that could bolster the case for an interest rate increase. The 10-year yield reaches 4.701% and the two-year is at 4.239%. The WSJ Dollar Index rises 0.2%. (paulo.trevisani@wsj.com; @ptrevisani)
1313 ET - Oil futures extend gains as Iran's latest demands, seen as unacceptable to the U.S., reduce hopes for a quick reopening of the Strait of Hormuz. "Most traders feel near term, tighter supplies are more probable for longer," Dennis Kissler of BOK Financial says in a note. "Still, the economic pressure of the U.S. blockade, if it's enforced, could squeeze the hardliners of the regime possibly more than U.S. strikes on their military infrastructure." WTI is up 4.2% at $81.43 a barrel and Brent is 4.1% higher at $87.01 a barrel.
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