MARKET MOVEMENTS:
–Brent crude oil is down 1.7% to $74.77 a barrel
–European benchmark gas is up 1.5% to 41.31 euros a megawatt-hour
–Gold futures are flat at $2,760.00 a troy ounce
–LME three-month copper futures are down 1.5% at $9,470.50 a metric ton
TOP STORY:
Starbucks Suspends Guidance as Sales Slump Persists
Starbucks’s new chief executive called for a dramatic overhaul of the business after disclosing steep quarterly setbacks in its biggest markets.
The world’s largest coffee chain missed expectations on earnings and sales for its fourth quarter and suspended its financial guidance for its next fiscal year.
“We need to fundamentally change our strategy so we can get back to growth,” Chief Executive Brian Niccol said Tuesday.
Niccol said the brand needs to review its prices, change its marketing and make sure its cafes have the amenities that customers look for in a coffee shop, even if they don’t plan to linger.
OTHER STORIES:
Gas Station Stunts and Tech Billionaires: The High-Stakes Battle Over Washington’s Climate Law
Voters often blame politicians for high gas prices. In Washington, backers of a ballot initiative to repeal the state’s signature climate law are taking things further with “gas-price rollback” campaign events to draw attention to the purported impact of the program.
With average Washington gas prices hovering at around $3.91 a gallon, the $2.99 price on offer is an attention-grabbing discount, even if it is only for a few hours at select locations. A political-action committee advocating to repeal the 2021 Climate Commitment Act, a law aimed at reducing greenhouse gas emissions, is paying for the discounts.
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This Little-Known Private-Equity Firm Booked a 79-Fold Return
Patience paid off in a big way for Lime Rock Management.
The private-equity firm recently sold the shares it received as part of the August sale of its majority stake in oil-and-gas producer CrownRock, notching what is perhaps one of the buyout industry’s biggest scores.
Energy-focused Lime Rock grossed 79 times the $96.5 million it had invested in Midland, Texas-based CrownRock since forming the oil patch operator some 17 years ago, according to fund investors and people familiar with the matter. The return includes dividends representing roughly 15 times Lime Rock’s outlay that were paid from CrownRock’s cash flow over the life of its investment, the people said.
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Iberdrola Profit Surges as Record-High Investments Boost Results
Spain’s energy giant Iberdrola on Wednesday booked a 50% surge in net profit for the first nine months of the year after record-high investments in the U.S. and U.K. drove strong performances.
Shares in Iberdrola rose 2.0% on the results in morning trading in Europe, taking the $96-billion company close to an all-time high market capitalization.
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NextEra Energy Partners Swings to Loss in 3Q
The clean-energy management company, which is a limited partnership linked to NextEra Energy, reported a net loss of $40 million, or 43 cents a share, from a profit of $53 million, or 47 cents a share, in the year-prior period.
Analysts were expecting earnings per share of 69 cents.
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Air Liquide Revenue Hit by Lower Energy Prices
Air Liquide reported a drop in revenue for the third quarter and missed analysts’ expectations due to lower energy prices and negative currency effects.
The French industrial-gas supplier said Wednesday that it reported revenue of 6.76 billion euros ($7.30 billion) for the third quarter, down 0.7% on the same period last year.
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SSAB Earnings Drop on Lower U.S. Steel Prices and Weak European Demand
SSAB earnings beat forecasts despite dropping sharply on the year as U.S. plate steel prices continued to fall while European steel demand was weak.
The Swedish steelmaker posted a net profit of 1.05 billion Swedish kronor ($99.6 million) from 3.51 billion kronor a year earlier as revenue fell 17% to 24.37 billion kronor.
MARKET TALKS:
Chinese Electric Vehicle Exports Shrug Off EU Tariffs — Market Talk
1142 GMT – China’s exports of electric vehicles to Europe has surged despite the recent European Union tariffs, and a strong performance by the country’s green-technology exports should continue over the coming months, Capital Economics analysts say in a note. More than 60,000 Chinese EVs were exported to the EU in September, a rise of over 60% from the average in the year to date, they say. While the tariffs clearly hit the profits that Chinese manufacturers make on European sales, they don’t yet appear to have reduced export volumes. The tariffs of up to 45% were provisionally applied in July and approved by the European Commission earlier this month, despite some opposition including from Germany. (edward.frankl@wsj.com)
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Palm Oil Rises Amid Expectations of Weak Production, Lower Stock Levels — Market Talk
1008 GMT – Palm oil rallied to a two-year high amid expectations of weak production and lower stock levels in Malaysia and Indonesia, said David Ng, a trader at Kuala Lumpur-based proprietary trading company Iceberg X. Higher soybean oil prices also supported sentiment in the market, he added. Ng sees support at MYR4,400 and resistance at MYR4,580. The Bursa Malaysia Derivatives contract for January delivery rose MYR100 to MYR4,486 a ton. (tracy.qu@wsj.com)
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Europe’s Gas Prices Gain on Near-Term Risks — Market Talk
0927 GMT – European natural-gas prices continue to rise in late morning trade, boosted by geopolitical risks, production outages and prospects of a potentially tighter liquefied-natural-gas market. Demand for the fuel is still relatively low and storage levels are high, but concerns over supply disruptions in the Middle East and a production halt at one of Equinor’s gas platforms in the North Sea are providing support. Meanwhile, dry weather conditions in Brazil have reduced hydropower generation, leading the country to rely more on LNG imports for power. “A continuation of this in the months ahead would leave the global LNG market tighter than expected over the Northern Hemisphere winter,” ING analysts say in a note to clients. The benchmark Dutch TTF contract currently trades 1.6% higher at 41.38 euros a megawatt hour. (giulia.petroni@wsj.com)
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Goldman Sachs Expects Brent at Around $76 a Barrel in 2025 — Market Talk
0914 GMT – Brent crude is forecast to average $76 a barrel next year, based on a moderate supply surplus and high spare capacity from OPEC members, Goldman Sachs says. “We still see the medium-term risks to our $70-$85 a barrel range as two-sided, but skewed moderately to the downside,” analysts at the U.S. bank say in a note. Goldman says spare capacity in OPEC+ countries is currently high at 6 million barrels a day. The geopolitical risk premium to oil is limited, as tensions between Israel and Iran haven’t materially affected supply in the region. Brent trades 1% lower at $75.26 a barrel in late morning trade in Europe. (giulia.petroni@wsj.com)
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Oil Slips Amid U.S. Crude Stocks Build Report, Middle East Uncertainties — Market Talk
0821 GMT – Oil prices slip in early European trade on reports of a U.S. crude stockpiles build and as markets monitor developments in the Middle East. Brent crude is down 0.6% at $75.59 a barrel, while WTI falls 0.7% to $71.26 a barrel, after both benchmarks settled higher in the previous session. U.S. crude stocks rose 1.64 million barrels last week, according to reports citing figures from the American Petroleum Institute ahead of official data later on Wednesday. “As concerns about Iran oil supply have eased, market focus is shifting back to the risks of oversupply in 2025,” Goldman Sachs analysts say in a note to clients. Meanwhile, the market continues to wait for Israel’s response to Iran’s missile barrage, leaving speculators hesitant to be “too short” on oil, according to ING. (giulia.petroni@wsj.com)
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Gold Futures Rise to New High on Safe-Haven Demand, Political Uncertainty — Market Talk
0813 GMT – Gold futures rise 0.3% to $2,768.40 a troy ounce. They set a fresh record of $2,769.50 an ounce earlier in the session. The new high reflects safe-haven demand on geopolitical uncertainty, international tensions and shifting monetary policies, says XS.com’s Antonio Ernesto Di Giacomo. As the U.S. presidential election approaches, speculations about potential changes in the country’s economic policy are prompting investors to seek out more stable assets like gold, Di Giacomo says in a note. Geopolitical tensions, especially the war in the Middle East, have also raised uncertainty levels, he says. Given the continued tensions and potential shifts in monetary policies, gold is likely to remain an attractive option, he adds. (joseph.hoppe@wsj.com)
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Fuel Could Push Eurozone Inflation Higher Even as Core Inflation Eases — Market Talk
0736 GMT – Easing services prices should reduce core inflation in the eurozone, even as rising energy prices lift the headline inflation rate higher, Barclays’ Balduin Bippus and Mark Cus Babic write in a note. Consumer prices should continue to rise by less than central bankers’ 2% target in October, before rebounding above that level around the turn of the year, Barclays estimates. That increase will be due to higher fuel prices that drag energy bills higher, the economists say. But core inflation should be lower than previously forecast as services prices rose less strongly in the most recent inflation data. For 2024 as a whole, Barclays forecasts headline eurozone inflation at 2.3%, falling to 1.9% next year. (joshua.kirby@wsj.com; @joshualeokirby)
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Gold’s Bullish Momentum Appears to Be Picking Up, Chart Shows — Market Talk
(MORE TO FOLLOW) Dow Jones Newswires
10-23-24 0911ET