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.
0617 ET - The 1.1% drop in German industrial output in July defies the solid order intake and noticeable recent improvement in business sentiment, KfW chief economist Dirk Schumacher says. "The decline in industrial production can therefore be explained primarily by production changes in the automotive industry," he says. German data agency Destatis noted that a multi-week shutdown at a car plant was likely one of the main drivers of the fall. In August and September, the low water levels of the Rhine likely further dampened production, Schumacher says. However, the signals from orders and sentiment indicators point to the underlying improving trend, even if that will probably only be reflected in the figures for the fourth quarter, he says. (edward.frankl@wsj.com)
0554 ET - Cathay Pacific's share liquidity has picked up in recent months, supporting broader investor participation, HSBC analysts say in a note. Shareholder-level activities such as buying back shares held by Qatar Airways, have helped realign Cathay's shareholding, expanding its share free float to 31% from 25% previously. This has helped to alleviate the historical overhang from Cathay's concentrated ownership structure, they add. The recent share-price pullback is largely due to renewed concerns over higher fuel prices rather than a deteriorating underlying passenger or cargo outlook, HSBC says. Passenger outlook remains supported by resilient premium travel demand, and Cathay should continue capturing cargo tailwinds from high demand for AI and tech-related goods. HSBC retains a buy rating with a target price of HK$16.50. Shares closed at HK$14.51. (kimberley.kao@wsj.com)
0444 ET - Short-term fund flows are unlikely to favor Chinese automakers, including BYD, as Beijing could reduce export tax rebates, Citi analysts write in a note. Potential European tariff increases on China EV makers and higher requirements on auto parts localization are weighing on sentiment, they say. Uncertainties on domestic demand and orders in the high season in September and October also weigh, they add. Rising investor sentiment on artificial intelligence might hurt BYD's share price, they add. The market consolidation theme favors opportunities with long cycle of returns, while the market is likely to remain volatile in the short term, Citi says. BYD expects domestic sales to rise by roughly 20,000 units a month on coming flash-charging battery technology, while monthly overseas sales should hold at 180,000 to 200,000 units.(jiahui.huang@wsj.com; @ivy_jiahuihuang)
0434 ET - China's artificial-intelligence strategy is accelerating investment in infrastructure and broadening AI adoption across related sectors, according to Moody's Ratings in a research note. Infrastructure companies are increasingly participating in China's AI ecosystem as investors, developers and users of AI technologies, it points out. "Applications in power grids, power generation, ports, airports and toll roads are already improving forecasting, dispatch, maintenance and asset utilization, generating measurable operational benefits," it says. (tracy.qu@wsj.com)
0434 ET - China's auto market is likely to continue seeing slow momentum due to reduction in government subsidies and a 5% purchase tax hike on EVs, Bernstein analysts write in a note. This follows strong demand that had been pulled forward into 2024 and 2025 and a high comparison base, even as macro headwinds and weak consumer sentiment persist, they say. The industry could also face pressure from material cost inflation headwinds. Industry wholesale volumes in 2026 is forecast to reach 28 million-29 million units, falling 4%-8% on year. Bernstein maintains a cautious outlook for the sector this year. Bernstein forecasts 2026 domestic retail demand at 21 million-22 million units, declining 5%-9% on year. Exports should remain a growth driver this year, projected at 6.5 million-7 million units. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
0412 ET - European natural-gas prices climb more than 2%, trading just shy of 74 euros a megawatt-hour as supply flows from Qatar remain severely disrupted. "LNG has not been flowing out as much as crude oil, leaving the gas market increasingly vulnerable as we near the 2026/27 heating season," ING analysts say. Qatar, one of the world's largest LNG exporters, recently extended force majeure on liquefied natural gas shipments for Edison--one of its largest European customers--through early November. Meanwhile, gas storage levels across the EU are currently 66% full, below the seasonal average. In early European trading, the benchmark Dutch TTF contract is up 2.4% to 73.73 euros a megawatt-hour.(giulia.petroni@wsj.com)
0331 ET - Oil prices extend gains in early European trading, with Brent crude topping $97 a barrel after the U.S. and Iran exchanged a series of fresh strikes over the weekend. The global oil benchmark is up 0.8% to $97.05 a barrel, while the U.S. gauge WTI rises 0.6% to $91.99 a barrel. "The oil market remains well-supported with little sign of peace between the U.S. and Iran," analysts at ING say. According to the firm, speculators became more bullish on Brent crude last week as renewed U.S.-Iran tensions heightened concerns over prolonged supply disruptions. But the increase in net-long positioning was driven mainly by short covering, suggesting traders were largely closing bearish bets rather than making aggressive new wagers on higher oil prices. (giulia.petroni@wsj.com)
0318 ET - European energy majors start the week higher as attacks on vessels in the Strait of Hormuz escalate. Brent crude is up 1.1% to $97.37 a barrel and WTI rises 1% to $86.29 a barrel after the U.S. hit three Iranian oil tankers over the weekend. "With tanker traffic increasingly exposed to direct military action and restrictions around the strait potentially widening, risks to Gulf energy exports remain elevated, keeping a substantial geopolitical premium embedded in oil prices," MUFG's Soojin Kim writes. Spain's Repsol and Italy's Eni both rise around 1.2%. In London, BP gains 0.9% and Shell rises 0.45%. (adam.whittaker@wsj.com)
0243 ET - Share prices of Japanese energy suppliers are likely to reflect high shipping rates, Nomura's Masaharu Hirokane says in a research report. The market hasn't priced in structural change in energy suppliers, namely ships having to travel longer distances, caused by deterioration in the Middle East situation, the analyst says. Nippon Yusen K.K. will likely see profit growth in its energy business this fiscal year, as some of its crude oil tankers are poised to reflect higher contract rates for the Middle East to Far East route. Contract rates on this route have risen the most in crude oil tanker transport contracts, the analyst notes. Nomura raises the stock's target price to 8,800 yen from Y7,100 with an unchanged buy rating. Shares closed 3.7% higher at Y7,420. (ronnie.harui@wsj.com)
1854 ET - ARB's bull at Ord Minnett looks beyond the latest snapshot of new car sales in Australia, which featured a faster decline in the 4x4 parts retailer's key vehicles. New vehicle sales rose by 0.4% in August compared to a year ago. The rise was underpinned by record sales of electric vehicles. Analyst James Casey notes that most models relevant to ARB stayed weak. Toyota HiLux sales were broadly flat, while Ford Ranger sales fell by 51%. "That said, supply of Toyota vehicles appears to be improving with exports to Oceania increasing, consistent with management's expectations of improved supply in 2H 2026," Ord Minnett says. It expects ARB's earnings to grow in FY27, helped by the improved supply, strong gross profit margins and continued offshore expansion.
Comments