The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
0849 GMT - Legrand's new data-center offering will be key to deliver on its growth plans, UBS analysts say in a research note. The French supplier of electrical equipment outlined its plans to transition to so-called low voltage direct current architectures to enable the next generation of AI data centers. Legrand showcased its offering at an industry fair in Singapore, which seemed credible, and the company expects to be able to take orders for the equipment in the second half of next year, UBS says. While its demonstration seemed credible, a fully commercialized offering by the end of 2027 is now key, the analysts say. Shares jump 7.6%. (adria.calatayud@wsj.com)
0833 GMT - Legrand's higher merger-and-acquisition ambitions, paired with its first explicit asset-sale program, suggest the French electrical-equipment maker is taking a more active approach toward reshaping its portfolio, Jefferies analysts say. This should come as little surprise given that the company has stepped up dealmaking activity over the past couple of years, the analysts say. The company now expects deals to contribute around 5% to sales on average through the end of the decade, up from between 3% and 5% previously, and to clean up its portfolio by shedding businesses that generate between 500 million and 1 billion euros in sales. Moreover, its new sales growth targets should be taken well given that the company tends to be conservative in its guidance, the analysts add. Shares rise 6.9%. (adria.calatayud@wsj.com)
0821 GMT - Legrand's upgraded targets point to strong growth in data-center sales and details on this segment look reassuring, Bernstein analysts say in a research note. The French electrical-equipment maker raised its organic sales growth guidance more than expected and it also lifted its adjusted operating margin goal, which was unanticipated given its typical conservatism, the analysts say. The new targets signal confidence in the company's data-center offering, they add. Assuming all other business area targets are unchanged, Legrand's new sales guidance implies data-center sales growth at about 15% annually, which should be taken well, according to Bernstein. Shares jump 7%. (adria.calatayud@wsj.com)
0821 GMT - Eurozone government bond yields decline, taking a breather from recent steep rises as the oil-price rise slows. Eurozone bond yields are helped, on the margin, by a slightly lower-than-expected Spanish inflation data. Although flash estimate Spanish inflation for September came in at a three-and-half-year high of 5.0% this was below analyst expectations of 5.1% in The Wall Street Journal's poll. Tuesday's supply comes from the Netherlands and Italy. The 10-year German Bund yield falls 2.7 basis points to 3.619%, according to Tradeweb. Declines in peer eurozone 10-year bond yields are of a similar magnitude. Front-month Brent crude rises 0.6% to $105.89. (emese.bartha@wsj.com)
0723 GMT - The polarization of trade and artificial-intelligence development between China and the U.S. is likely to continue for the foreseeable future, says Eastspring Investments in a note. The meeting between President Trump and Chinese leader Xi Jinping "delivered much pageantry, but essentially no tangible economic results," says Eastspring. The continuing divergence between the two economic powers suggests investment in China has to be centered on earnings streams supported by government policy and specific areas of local demand, Eastspring adds. Meanwhile, elevated oil prices stemming from the U.S.-Iran conflict and a potential ban on U.S. diesel exports could push diesel prices in certain parts of Asia higher, bleeding into inflation and likely pressuring regional currencies including the Korean won, Indian rupee and Thai baht, the asset manager says. (megan.cheah@wsj.com)
0713 GMT - Oil prices rise as a lack of progress in U.S.-Iran talks outweighs signs of recovery in Gulf exports. In early European trading, Brent crude futures for November rise 1.7% to $107.05 a barrel, while the December contract is up 1.7% to $99.49 a barrel. The U.S. oil gauge WTI gains 1.5% to $94.01 a barrel. Saudi Arabia has resumed oil exports via its East-West pipeline after repairing drone-strike damage, restoring a key route around the Strait of Hormuz. However, steepening backwardation--when near-term oil prices exceed longer-term prices--and higher fuel prices signal persistent supply tightness. "Challenges in oil product markets show no signs of easing, with the risk of a U.S. diesel export ban looming, while Russia is preparing to extend its diesel export ban for producers by another month," analysts at ANZ say. (giulia.petroni@wsj.com)
0654 GMT - Bitcoin recovers only marginally after reaching a one-week low on Monday as lingering worries over the Iran war and expectations for further U.S. interest-rate rises curtail risk sentiment. President Trump's rejection of Iran's proposal for a seven-day ceasefire lifts oil prices and strengthens inflation concerns, making the rate backdrop less supportive for bitcoin, Zaye Capital Markets analyst Naeem Aslam says in a note. Trump's later comments that the conflict could end very soon while further action remains possible leave bitcoin exposed to fast changes in geopolitical risk, he says. Bitcoin rises 0.4% to $83,873 after hitting as low as $82,516 Monday, according to LSEG. It has pulled back from the near eight-month high of $87,315 reached last week.(renae.dyer@wsj.com)
0653 GMT - The dollar appreciates as oil prices rise on persistent concerns over supply disruptions stemming from the Middle East conflict. The U.S. is a net oil exporter while the dollar also benefits from its safe-haven role. The prospect of the Federal Reserve raising interest further in response to price pressures brought about by the conflict is also supporting the dollar. Investors will be assessing U.S. labor market data this week to gauge the outlook for rates. The Job Openings and Labour Turnover Survey will be released at 1400 GMT while the key nonfarm payrolls report is due Friday. The DXY dollar index rises 0.1% to 101.275, close to the eight-week high of 101.398 reached Thursday. (renae.dyer@wsj.com)
0645 GMT - TotalEnergies gave near-unprecedented visibility of its growth plan, Barclays analyst Lydia Rainforth writes in a note after the French energy major's capital markets day. The plan through 2035 is supported by projects across its upstream business and growth in its integrated power unit, she says. The free cash flow growth that the plan will deliver is not reflected in the share price, she adds. The company is targeting upstream production growth of more than 3% a year to 2030 and then between 2% and 3% growth over 2031 to 2035. Shares closed Monday at 80 euros. (adam.whittaker@wsj.com)
0559 GMT - Legrand is sending a positive message on the opportunities in the data-center market with its upgraded midterm guidance and mention of potential stock buybacks ahead of an event with investors, J.P. Morgan analysts write in a note. The French electrical-equipment maker expects annual organic sales growth of 6% to 8% through 2030. Investors probably had lower expectations of around 6%, so the new guidance seems better than anticipated, JPM says. A reference to selective buybacks and more focus on portfolio pruning look positive as well, the analysts say. "We expect the company to do a solid job of addressing the relative competitive positioning in the data center space during the [capital markets day], but the important piece is that the financial guidance now backs up the narrative," the analysts add. (adria.calatayud@wsj.com)
0520 GMT - The rise in the 10-year U.S. Treasury yields to approximately 5.25% reflects higher oil prices and a strong U.S. economy more than AI debt issuance or fiscal concerns, according to Capital Economics' James Reilly. Capital Economics sees the Treasury selloff as overdone, and continues to forecast that the 10-year yield will fall this year and drop all the way to 4.25% by the end of 2027 as the Fed fails to tighten by as much as investors are discounting. "The selloff mainly seems to reflect changes in near-term expectations," he says, adding that these rate expectations have largely been driven by energy prices. The other key driver has been investors pricing in stronger U.S. economic growth and more persistent inflation. (emese.bartha@wsj.com)
0516 GMT - UBS upgrades its long-term forecast on iron ore to US$93/metric ton, from US$85/ton before. As a result, the bank raises share-price targets on miners including BHP, Rio Tinto, Vale and Fortescue. Its long-term price forecast--which is 12% above consensus--reflects a new phase for iron-ore demand, as China pivots to manufacturing and exports from construction, and steel demand from the Global South rises, UBS says. "The rise of the Global South and China's manufacturing [and] export industries should more than offset China's construction steel demand decline, resulting in global steel demand growing through 2035," it says. UBS raises its target on BHP to A$61/share from A$59/share prior. Its target on Rio Tinto increases to A$178/share from A$177/share.
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