Israel steps up Lebanon offensive as Middle East braces for retaliation on Iran | Invesloan.com

Today’s agenda: OpenAI wants exclusive investors; Trump trial update; LVMH to sponsor F1; Labour’s Budget traps; and Gideon Rachman’s top politics books

Good morning. The Middle East is braced for Israel’s response to Iran’s missile barrage as fears of an all-out war intensify.

Israel has stepped up its offensive against Hizbollah, bombing the militant group’s strongholds in southern Beirut. Israeli troops faced fierce resistance as they breached the Lebanese border, with the military reporting eight soldiers killed yesterday. Here’s what to expect.

How Israel could retaliate against Iran: Given the scale of Iran’s barrage, Israel is widely expected to respond by striking Iranian sites directly. Current and former officials say targets include missile launchers or oil infrastructure to hit Tehran economically, with some calling for the more extreme scenario of strikes against its nuclear facilities — which the US and G7 allies have warned against.

Israel could also focus on senior figures instead. One expert doubted Israel would aim for Ayatollah Ali Khamenei, but advisers to the supreme leader or high-ranking members of Iran’s Revolutionary Guard could be targets.

Can Israel ‘defeat’ Hizbollah on land? While the Israeli military has devastated the Iran-backed group from the air, one expert said a ground offensive would need to be “deeper, harder and longer” than in the 2006 war, which resulted in a stalemate. A land invasion of any scale also puts Israel’s forces in Hizbollah’s home turf, which would negate some of Israel’s air superiority. Other analysts and officials say even taking and controlling a limited buffer zone in southern Lebanon will be a hard and bloody slog.

• Iran’s hardliners: Fearful of looking weak, Tehran’s military leaders prevailed over the reformists and took a huge risk.

• Palestine: Prince Faisal bin Farhan, Saudi Arabia’s foreign minister, argues for a two-state solution and a stop to the region’s “dangerous escalatory cycle” in a Financial Times op-ed.

Here’s what else I’m keeping tabs on today:

• Economic data: France, Germany, Italy, the UK, Canada and the US have services purchasing managers’ indices.

• Holidays: Germany celebrates Unity Day, marking the reunification of East and West. Markets are closed in Israel for Rosh Hashana, the Jewish New Year.

• G20: The group’s climate and environment ministers meet in Rio de Janeiro.

Five more top stories

1. Exclusive: OpenAI has asked investors to avoid backing rival start-ups such as Anthropic and Elon Musk’s xAI as it secures $6.6bn in new funding and seeks to shut out challengers to its early lead in generative artificial intelligence. George Hammond and Stephen Morris have more from San Francisco.

• Opinion: OpenAI’s emergence has transformed the tech landscape, but the company is feeling competitors breathing down its neck, writes Richard Waters.

2. Donald Trump engaged in a “private criminal effort” to overturn the 2020 US election result, the prosecutor appointed to lead federal cases against the former president has alleged. In a 165-page court document unsealed yesterday, special counsel Jack Smith said Trump and his allies “pursued multiple criminal means to disrupt” the vote.

• More Trump: The Republican candidate touted his pro-fossil fuel agenda at a private fundraiser with oil barons in Texas, where tickets sold for up to $1mn.

3. Exclusive: UK ministers have made contingency arrangements to fund the Sizewell C nuclear power project in case a final agreement with potential private investors is delayed by as much as two years, officials have admitted. Read the full story.

• Nuclear power and AI: After decades of stagnation, the sector has been given a boost by the rise of energy-guzzling artificial intelligence.

4. Exclusive: LVMH will become a top sponsor of car-racing franchise Formula One as the leading luxury group pushes further into the world of sport. The agreement will start in 2025 and run for a decade. According to people with knowledge of the arrangement, the deal is worth just under €100mn a year.

5. UK house sales rose in September at the fastest rate since the post-lockdown rebound as lower mortgage rates fuelled a rise in demand among home buyers, according to Zoopla. Buyers’ inquiries to estate agents have also risen at the fastest pace in more than three years. Here’s more from the latest data.

The Big Read

Britain is waiting eagerly for what is building up to be a politically momentous Budget this month. UK chancellor Rachel Reeves is already facing a country with low economic growth, high debt and creaking infrastructure. But in trying to convince voters to trust her with the economy before the July 4 election with self-imposed red lines, Reeves may have made her job even more difficult.

We’re also reading . . . 

• Europe’s economy: With falling inflation, the tailwinds for a European consumer recovery are building, writes UBS’s Gerry Fowler.

• Chinese stimulus: Beijing’s measures to boost the country’s depressed stock markets were eagerly received by domestic investors. What about foreign investors?

• Market reaction: Recent escalations in the Middle East have not shifted the good vibes awash around global markets by much, writes Katie Martin.

Chart of the day

Recent profit warnings from some of Europe’s leading carmakers highlight the challenges facing the sector, including intense competition from China and the region’s slowing shift to electric vehicles.

Take a break from the news

The US foreign policy machine in action, origins of the new cold war and Russia’s invasion of Ukraine as viewed from Washington: Gideon Rachman selects some of the best recent politics books.

Additional contributions from Gordon Smith and Benjamin Wilhelm