Fed's Waller: Forward Guidance Can Be Valuable Tool — Market Talk

1109 ET - Federal Reserve governor Christopher Waller says forward guidance could be a valuable tool that at times significantly strengthened policymaking. Speaking at a conference in Rome, Italy, Waller says forward guidance "will continue to be useful," for the central bank, although there have been times when it has hindered, rather than helped policymaking. "When it works, forward guidance can change economic conditions more quickly than adjusting the policy rate alone," according to published text of his remarks. Waller's comments come as Fed chairman Kevin Warsh has a preference for no forward guidance from the central bank.(jessica.coacci@wsj.com)

0939 ET - Oil futures are hovering around their pre-conflict level with the market still optimistic about continued flow of oil through the Strait of Hormuz as the U.S. and Iran seek a long-term peace agreement. "I still think a lot of people are sitting on the sidelines, and they're not willing to do much risk at the moment," says Neil Crosby, head of research at Sparta Commodities. Oil appears to have reached its most bearish point as trapped tankers have left through the strait, Chinese imports are low, U.S. exports high, and there's still access to oil from strategic reserves. There's also a lot of Russian crude on the market because of attacks on their refineries, he says. WTI is down 0.1% at $68.62 a barrel and Brent is off 0.1% at $72.08. (anthony.harrup@wsj.com)

0852 ET - Treasury yields are mixed and the dollar edges higher as U.S. markets come back from the holiday without a Middle East peace deal and following last week's disappointing labor indicators. Oil prices decline as OPEC+ agrees to raise output. Fed minutes are due Wednesday, in a relatively calm week on the data front. The WSJ Dollar Index rises 0.2%. The 10-year yield is at 4.459%, up from Thursday's settle of 4.447%. The two-year slips to 4.108% from 4.130%. (paulo.trevisani@wsj.com; @ptrevisani)

0704 ET - Castlelake taking easyJet private could give management greater flexibility by reducing the pressure of public markets and quarterly reporting, Interactive Investor's Victoria Scholar says in a research note. Castlelake's experience in aircraft leasing and airline investments, together with easyJet's valuable landing slots at major airports such as London Gatwick, makes the acquisition strategically attractive, the analyst says. Scholar also believes the bidder is seeking to capitalize on recent weakness in the aviation sector, with easyJet's shares pressured by higher fuel costs, geopolitical disruption and weaker performance than some rivals. However, she cautions that regulatory approvals, particularly EU ownership requirements, remain a key hurdle before any deal can be completed. Shares trade 9.7% higher at 612.4 pence. (nina.kienle@wsj.com)

0555 ET - Castlelake's proposed acquisition of easyJet could ultimately lead to the breakup of the budget carrier rather than its continued operation as a single airline, Bernstein analysts say in a note. The buyer's aircraft-leasing business is a key driver of the deal, with easyJet's owned fleet, aircraft orderbook, airport slots and profitable holidays division viewed as valuable standalone assets, they add. While Castlelake has publicly backed easyJet's growth strategy, the analysts expect these assets could eventually be sold separately, potentially reducing airline capacity across Europe. A smaller supply of seats would likely support ticket prices and benefit rival carriers, particularly low-cost airlines, the analysts say. The transaction could therefore be seen as potentially reshaping the European aviation market, with competitors emerging as the biggest long-term winners, they add. Shares trade 10.5% higher at 617 pence. (nina.kienle@wsj.com)

0546 ET - Artificial intelligence is still key to U.S. equity gains, according to Capital Economics' Thomas Mathews in commentary. The past few weeks have seen concerns raised about the health of the AI rally, says the head of markets, Asia Pacific. "We don't think the AI rally has run out of steam," he says. One reason not to panic is that tech earnings, which have driven the rally so far, are "showing little sign of wobbling," he says. In fact, the tech sector's earnings estimates have risen at "an almost unprecedented rate," he says. Investors will be closely watching the coming U.S. earnings season, as well as Samsumg's earnings in South Korea this week, CE says. (tracy.qu@wsj.com)RBC Capital Markets analyst Ruairi Cullinane expects easyJet shares to rise after the budget carrier agreed in principle to Castlelake's sweetened takeover offer. "EasyJet Shares to Rise on Takeover Agreement With Castlelake — Market Talk," at 0702 GMT, incorrectly cited Citi analysts.

0452 ET - ITV selling its media and entertainment business to Comcast's Sky for up to about $2.14 billion is positive, Bernstein analysts write. It will leave ITV with its crown-jewel studio business, they add. The unit is highly sought-after and has been growing revenue in recent years, they add. Shares rise 1% to 82.55 pence. (adam.whittaker@wsj.com)

0411 ET - Continental's agreement to sell ContiTech has come in at the top end of the 3.5 billion-euro to 4 billion-euro range that was expected, JPMorgan analysts Jose M Asumendi and Piyush Singla write. The company has agreed to sell the unit to Lone Star Funds at an agreed enterprise value of 4 billion euros plus a potential performance-based component of up to 250 million euros in subsequent years. JPMorgan sees it as a positive step for investors, further focusing the group's attention on the tire division, allowing the stock's multiple to rerate as it delivers higher margins over the next 12 months. The bank rates Continental stock at overweight with a 78 euro price target. Shares fall 1.4% to 74.94 euros. (dominic.chopping@wsj.com)

0302 ET - RBC Capital Markets analyst Ruairi Cullinane expects easyJet shares to rise after the budget carrier agreed in principle to Castlelake's sweetened takeover offer. The latest proposal significantly increases the likelihood of a successful takeover, RBC says. Castlelake's fifth indicative offer, valuing easyJet at around $7 billion, has received a favorable initial response from the board. While the proposal remains conditional on regulatory approvals and other requirements, the deadline has been extended to Aug. 3. The analysts expect the shares to rise as investors assign a higher probability to the deal, noting that the previous share price implied only a roughly even chance of a takeover being completed. (nina.kienle@wsj.com) Corrections & Amplifications

This article was corrected at 05:15 a.m. ET to clarify that RBC Capital Markets analyst Ruairi Cullinane expects easyJet shares to rise after the budget carrier agreed in principle to Castlelake's sweetened takeover offer. An earlier article incorrectly cited Citi analysts.