The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
0650 GMT - Investors' reaction to the escalating situation in the Middle East remains contained so far. U.S., Japanese and German 10-year Bund yields are up no more than 3 basis points, suggesting that investors aren't in a hurry to buy traditional safe havens. The 10-year Bund yield is up 3 basis points at 2.555% in early trade, according to Tradeweb. The 10-year U.S. Treasury yield is up 2.8 basis points at 4.403%, while the 10-year Japanese yield is up 1 basis points at 1.401%. Over the weekend, the U.S. struck three Iranian nuclear sites. There has been no broad flight to safe havens for now as investors await Iran's next move and hope the situation could deescalate, IG analysts say. (emese.bartha@wsj.com)
0642 GMT - Markets will probably shift into risk-off mode after the U.S. struck Iran's nuclear infrastructure and oil prices might stay elevated for a while, Berenberg's Holger Schmieding says in a note. However, a protracted disruption to energy flows seems unlikely, he says. The key economic risk to watch is a closure by Iran of the Strait of Hormuz--the crucial conduit for about a fifth of global oil-and-gas shipments, the economist says. The country's long coastline means it has various ways to disrupt shipping, Schmieding adds. Oil prices and geopolitical risks might stay elevated in the near term, he says. However, Berenberg still expects energy prices to return to close to preconflict levels by the fall, and possibly before that. (adria.calatayud@wsj.com)
0632 GMT - European equities are expected to open lower after the U.S. carried out attacks on Iranian nuclear sites over the weekend. Danske Bank described the events as a "major escalation" of the conflict, although investors will wait to see what happens from here. Germany's DAX index is expected to open down 0.7%, or 156 points, according to IG. France's CAC 40 is expected to fall by 0.8%. The U.K.'s FTSE 100 index is expected to open down 0.5%. Falls in the FTSE 100 might be limited due to likely gains for heavyweight oil stocks as crude oil prices rise sharply. Brent crude rises by 1.6% to $78.25 a barrel. (jessica.fleetham@wsj.com)
0631 GMT - The dollar rises following news of U.S. strikes against Iranian nuclear sites at the weekend. The dollar's gains are more likely driven by the rise in oil prices resulting from the news as opposed to the currency's safe-haven status, Commerzbank's Thu Lan Nguyen says in a note. Higher oil prices improve America's terms of trade as the U.S. is one of the world's most important oil suppliers, she says. The Federal Reserve could also respond to the inflationary impact of an oil price increase with more restrictive monetary policy, she says. The DXY dollar index rises 0.3% to 98.966, having reached a one-and-a-half-week high of 99.163 late Sunday.(renae.dyer@wsj.com)
0620 GMT - PTT Exploration and Production stands to gain from higher oil prices amid the Israel-Iran war, Thanachart Securities' Yupapan Polpornprasert says in a research report. Amid this war and other global conflicts, the brokerage sees its previous Brent oil forecasts as being too low and lifts them to $70/bbl from $65/bbl for 2025 and to $65/bbl from $60/bbl for both 2026 and 2027. The brokerage's earnings sensitivity analysis suggests that each $5/bbl oil-price increase would boost its target price for the Thai oil-and-gas giant's stock by THB14. The brokerage upgrades the stock to buy from sell and raises the target price to THB125.00 from THB93.00. Shares are 1.4% higher at THB111.50. (ronnie.harui@wsj.com)
0603 GMT - Long USD/JPY positions serve as a hedge against escalating geopolitical risks in the Middle East with positive carry, five members of the BofA Global Research team say in a research report. They point to the U.S. being largely energy-independent. Japan, on the other hand, imports nearly all of the petroleum it needs. The members note that more than 90% of Japan's petroleum imports come from the Middle East, the highest dependency among G-10 economies. Hence, they recommend a long USD/JPY position, with a target of 152.00 and a stop-loss order at 142.00. USD/JPY rises 0.7% to 147.14, LSEG data shows. (ronnie.harui@wsj.com)
0603 GMT - Countries with high oil import dependency--including India, Thailand, the Philippines and much of Europe--face multiple headwinds, says Charu Chanana, chief investment strategist at Saxo Markets, in a note. These include rising energy costs, weaker currencies and capital outflows, she says. Their growth concerns could become more pronounced if energy prices remain high. The U.S. could be relatively more insulated from rising oil prices in economic terms. However, as a net energy exporter, the U.S. isn't immune to broader market volatility, she says. (amanda.lee@wsj.com)
0553 GMT - A sustained 20% rise in oil prices over the next three months should result in a 7.8% increase in sector returns, Panmure Liberum analysts Susana Cruz and Joachim Klement write. U.S. involvement in the conflict between Iran and Israel means an increase of 20% or more in oil prices seems likely, they write. Cruz and Klement analyze returns and earnings expectations for the European oil sector after Russia's invasion of Ukraine. The conflict caused oil prices to climb 22% and the energy sector rallied 12%, they write. Currently, analysts are expecting earnings-per-share growth of 18% over the next 12 months across the sector, they say. Though upward revisions are likely if oil prices remain elevated, they add. (adam.whittaker@wsj.com)
(END) Dow Jones Newswires
June 23, 2025 02:50 ET (06:50 GMT)
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