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On November 10th, UBS strategists stated in a report that European corporate earnings are expected to grow slightly above 8% in 2026, following minimal growth in previous years. With the headwinds of strong currencies and high energy prices fading, and companies gaining a better understanding of tariff risks, we are seeing European earnings growth. The banks analysts predict the pan-European Stoxx 600 index will rise to 650 points by the end of 2026.On November 10th, it was reported that Grab, Southeast Asias largest ride-hailing service provider, is investing $60 million in remote-driving service company Vay to increase its bet on driverless car technology. In a joint statement on Monday, the two companies said that if Vay reaches certain milestones, the initial investment, pending regulatory approval, could increase to a total of $410 million within a year. The deal is expected to close in the fourth quarter. Vays service model lies between traditional human-driven taxis and fully autonomous vehicles. It allows users to order a car, which is then remotely operated and delivered to the customer by a remote operator. Once the vehicle arrives, the remote operator disconnects, and the customer takes over driving the vehicle to their desired destination. Grab is not the only ride-hailing platform preparing for a future where driverless travel is commonplace. Its US counterparts, Uber (UBER.N) and Lyft (LYFT.O), are similarly partnering with technology providers and fleet operators for global deployments.The German DAX index rose 2.00% on the day.Sources say Lukoil has terminated the positions of its non-Russian foreign employees at the West Khurna-2 oil field. Iraq has frozen crude oil and cash payments to Lukoil in an effort to find legal means to ensure the continued operation of the West Khurna-2 field.Iraqi official sources say Lukoil has declared force majeure on its West Kuna-2 project in Iraq. Lukoil warned Iraq that it may withdraw from the project if the force majeure situation continues.

The 1.1250 level provides resistance for the GBP/USD as hawkish Fed bets rise

Daniel Rogers

Oct 17, 2022 14:49

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The risk-on attitude has started to wane in the Tokyo session, which has reinforced the GBP/USD pair's bids. The start of the US quarterly results season sparked a rise in the S&P500 on Monday after a down Friday, but it has since faded.

 

The US dollar index (DXY) has attempted a recovery after dropping below the critical support level of 113.00. While US 10-year Treasury yields have been doing poorly. Strong bets on the Federal Reserve (Fed) raising interest rates by 75 basis points (bps) have helped to maintain the current downward tendency in rates. The likelihood of a 75 bps rate hike has increased to 99.4%, according to CME FedWatch.

 

Political unrest in the UK, where Prime Minister Liz Truss last week ousted Chancellor Kwasi Kwarteng, has also contributed to volatility in the sterling area. UK Finance Minister Kwarteng's resignation from his position appears to be the result of preparations for the reversal of the anticipated hike in corporate taxes to 25% starting in 2023.

 

Earlier, a sell-off on the UK bond market was sparked by the decision to freeze corporate tax rates at 19%. Significant bids were made on the UK stock exchanges, and the yields on government bonds shot through the roof. This forced the Bank of England (BOE) to step in and announce a plan to buy bonds in order to shield pension funds that were exposed to gilts.

 

Goldman Sachs predicts a dismal economic outlook for the UK, thus the pound bulls may experience volatility. The bank stated, "We have reduced our UK growth projection and now predict a more severe recession, taking into consideration weaker growth momentum, significantly tighter financial conditions, and the hike in corporate tax beginning in April of next year." Additionally, the bank downgrades its earlier forecast of a 0.4% fall in the UK's Gross Domestic Product (GDP) for 2023 to one of 1%.


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