A growing tension has surfaced between the major countries of Europe and the European Central Bank (ECB) concerning the regulation of the digital euro, a digital form of currency that the ECB has been developing since 2021.

As reported by Politico, sources close to the situation indicate that several European governments, particularly France and Germany, are pushing back against the ECB’s authority to set limits on how much digital currency individuals can hold in central bank-supported wallets.

What might seem like a technical issue has serious implications; a higher withdrawal limit could allow citizens to take considerable amounts from traditional banks during economic crises, which might threaten financial stability.

According to the report, this dispute extends beyond regulatory problems and touches on the idea of personal financial independence.

A diplomat quoted in the Politico story expressed concern that limiting the digital euro would limit people’s financial independence.

This concern reflects underlying concerns about excessive regulation of financial activities and its potential impact on personal financial decisions.

European countries challenge ECB’s control over digital Euro

A clash is brewing between European countries and the European Central Bank (ECB) that goes beyond just regulatory issues; it raises important questions about the distribution of power within the European Union (EU).

While the ECB claims oversight over the digital euro, several member states, including Germany, France, and the Netherlands, are voicing their concerns and calling for a more collaborative approach to shaping the digital currency’s framework.

Officials from nine countries have come together in their belief that the digital euro shouldn’t be managed solely by the ECB.

They argue that how this digital currency is managed is a critical financial issue that affects daily transactions across Europe.

Their call for a more participatory decision-making process arises from concerns about how ECB-centered laws may damage EU member states’ financial independence.

Globally, the landscape of central bank digital currencies (CBDCs) is fast evolving, with significant interest and exploration occurring all around the world.

According to recent data from the Atlantic Council, a think tank based in the U.S., 134 countries are currently considering CBDCs, reflecting a sharp rise from just 35 countries in May 2020.

This growing enthusiasm for CBDCs highlights how rapidly global monetary systems are evolving and underscores the rising significance of digital currencies in the financial landscape.

Possible outcomes of the ECB and EU governments clash

The growing tension between the European Central Bank (ECB) and EU member nations over how to regulate the digital euro could have significant implications for the future of monetary policy in Europe.

If this disagreement isn’t resolved, it might result in a disjointed approach to the implementation and management of the digital currency.

This lack of consistency could lead to challenges in how the digital euro is adopted and utilized across various EU countries, ultimately undermining its effectiveness as a unified form of central bank money.

Additionally, the ongoing clash between the ECB and European governments regarding the digital euro’s control may put a strain on the relationship between overarching monetary authorities and individual member states.

If they fail to reach a consensus on regulatory issues, it could further escalate tensions and diminish trust, making it harder to collaborate on other crucial economic and financial matters within the EU.

The outcome of this issue could have a considerable impact on future arguments regarding the balance of power between centralized institutions like as the ECB and national governments, impacting debates about sovereignty and decision-making within the European economic framework.

Furthermore, the reluctance of key EU countries such as Germany and France to give the ECB too much power over the digital euro reflects broader concerns about financial independence and sovereignty.

This reluctance may reflect a growing tendency toward decentralization and a demand for greater national participation in crafting monetary policies that directly affect individual countries.

The consequences of this opposition could reach beyond the specific scenario of the digital euro, influencing the overall dynamics of governance and decision-making in the EU.

It may also spark broader arguments regarding the balance of power between centralized authorities and national governments in crafting economic policy.

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Oil remained volatile on Tuesday, with prices falling and rising throughout the session as traders focused on increasing supply and limited demand. 

The US’ plan to purchase up to 3 million barrels of crude oil to fill up its Strategic Petroleum Reserve (SPR) supported sentiments. 

Prices had been volatile on Tuesday after falling 6% on Monday on easing geopolitical tensions in the Middle East.

At one point, oil pared gains from earlier in the day and were trading little changed from Monday’s close.

However, prices rose again after the US stock markets opened on Tuesday.

At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was $67.36 per barrel, up 0.6%. The Brent oil contract on the Intercontinental Exchange was $71.02 per barrel, rising 0.5% from the previous close.

US plans to buy oil for SPR

According to a Reuters’ report, the US government is planning to purchase up to 3 million barrels of crude oil for its SPR. 

The news comes on the heels of the US Presidential election next week.

The US had authorised the sale of 180 million barrels of crude oil from its SPR in 2022 to cool down domestic fuel prices. 

Prices had spiked with Brent nearing $140 per barrel in early 2022 after Russia invaded Ukraine. 

The US’ plan to purchase more oil for the SPR could generate some demand in the country, and support prices in the coming weeks. 

Since the massive sale in 2022, the US government had bought back 55 million barrels of oil at a price of $76 per barrel, significantly lower than the $95 per barrel level it had sold the oil.  

Easing tensions in the Middle East

Oil prices had plunged on Monday after Israel’s attack against Iran over the weekend avoided oil and nuclear sites. 

As the threat to oil supply from Iran and the Middle East diminished, prices fell sharply. 

“Israel’s retaliatory strike against Iran over the weekend is apparently being interpreted defensively by the market, as only military targets such as missile launchers were hit,” Carsten Fritsch, commodity analyst at Commerzbank AG, said in a report. 

As a result, market participants believe that the risk of a spiral of escalation and supply disruptions in the oil market has decreased, which is reflected in the noticeable decline in the risk premium.

Iran produces about 3.2 million barrels per day of crude oil, according to data from the Organization of the Petroleum Exporting Countries. Though exports remain under sanctions from Iran, the country has found a way of supplying oil to several countries, especially China. 

The limited strike by Israel also eased concerns over further escalation of tensions in the region.

Iran reportedly said the attack by Israel should not be “exaggerated’ or “downplayed”. 

Oil prices are at appropriate levels

According to Commerzbank AG, the Brent oil price is appropriately placed in the low $70 per barrel at present. 

Fritsch noted:

From a purely fundamental perspective, Brent oil in the low 70s is appropriately priced, since the oil market is sufficiently supplied and there is a looming oversupply in the coming year.

Oil supply is likely to increase from December as OPEC+ is scheduled to reverse some of their voluntary production cuts.

Saudi Arabia, the de-facto leader of the cartel, has recently hinted that it is prepared for lower oil prices to regain market share. 

The desired oil price level for OPEC countries is above $80 per barrel, which is the breakeven price for production. 

However, Brent is currently $9 lower than the $80 per barrel level.

The market remained focused on whether OPEC would go ahead with its plan of increasing production from December. 

Moreover, even if Saudi Arabia wants to increase output, the question remains whether other members of the group would concur with the existing plan. 

Oil price forecast

Experts at Fxempire.com believe that the immediate support for WTI oil price is around $67.50 per barrel. 

Christopher Lewis, author at Fxempire.com, said in a note:

After all, the $67.50 level is where we’ve seen a lot of support over the last two years or so, and although oil looks very weak, sooner or later it gets cheap enough that people start to buy into it. 

For Brent, the psychological support remains at $70 per barrel. 

Traders are likely to buy oil if prices fall below these levels as it would be attractive to them. 

Moreover, next week’s US election presents a lot of uncertainties, while geopolitical tensions also ebb and flow. 

Traders will also monitor the policy meeting of the US Federal Reserve next week.

The Fed is likely to cut interest rates by 25 basis points, which could support demand.

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Donald Trump’s recent threats to impose sweeping tariffs on European imports, citing the EU’s insufficient purchases of American exports, have revived anxieties around a potential trade war.

With a bold promise to enforce up to 20% tariffs on foreign goods if re-elected, Trump argues this approach will protect American industry and reduce the trade deficit.

However, economists warn that a trade rift with Europe could push the EU into an economic downturn, potentially leading to job losses and intensified supply chain disruptions.

This analysis examines whether the EU is truly at risk of paying “a big price” or if Trump’s claims are more about political leverage than economic reality.

EU’s vulnerability to tariffs

The EU and the US share a highly valuable trade relationship, with an exchange of goods and services valued at around €1 trillion annually.

Europe relies significantly on this trade, particularly in high-value sectors like machinery, vehicles, and chemicals, which comprise nearly 70% of its exports to the US.

Trump’s proposed tariffs could make these exports more costly for American companies, potentially reducing demand and cutting EU exports to the US by as much as one-third in certain sectors, according to economic forecasts.

Source: Eurostat/euronews

Germany, which relies heavily on US demand for its manufactured goods, could face a particularly steep impact, potentially losing up to 1.6% of its GDP due to such tariffs.

1% drop in the eurozone’s GDP?

Economists largely agree that the imposition of tariffs could have severe repercussions for the European economy, already under strain from other geopolitical challenges.

For instance, Goldman Sachs projects a 1% drop in the eurozone’s GDP if a universal 10% tariff is imposed.

Some estimates suggest even more drastic outcomes, including a recessionary scenario where eurozone growth might decline by 1.5% by 2028.

Given that transatlantic trade directly supports around 9.4 million jobs across the US and EU, a downturn could lead to widespread job losses, especially in trade-sensitive sectors like manufacturing and export-driven industries.

US could engage in broader trade conflicts

Beyond immediate economic impacts, Trump’s rhetoric suggests that the US could engage in broader trade conflicts.

His threats of a 60% tariff on Chinese goods could lead to an influx of redirected products to Europe, compelling the EU to impose protective tariffs on those goods.

According to André Sapir of the Bruegel think tank, this shift would put Brussels in a tough spot, likely prompting retaliatory measures to defend its market.

The EU has already been fortifying its trade defense policies in response to Trump-era tariffs on steel and aluminum, but an all-out trade war would test these defenses significantly.

Negotiating for Stability or Political Advantage?

In response to Trump’s tariff threats, the EU may seek a negotiated exemption, similar to the approach it took during Trump’s previous presidency.

Zach Meyers from the Centre for European Reform told Euronews that the EU could look to offer Trump concessions that allow him to declare a trade “win” without the economic fallout a full-scale trade war would entail.

Past interactions saw both European and Chinese leaders agreeing to increased purchases of American goods, a compromise that could potentially placate Trump without escalating tensions.

As Trump’s campaign rhetoric intensifies, his approach to trade policy raises questions about long-term EU-US relations.

While his tariffs are framed as protective measures for American jobs and businesses, they risk upending one of the world’s most lucrative trading partnerships.

Analysts caution that Trump’s proposed tariffs might appeal to his base, but the potential repercussions—a weakened EU economy and retaliatory tariffs—could backfire, increasing costs for US consumers and impacting American jobs reliant on the transatlantic supply chain.

In the end, while the EU may seek to negotiate or offer economic concessions, the “big price” Trump warns about could ultimately be felt on both sides of the Atlantic.

If both economies find themselves ensnared in tit-for-tat tariffs, the global trade landscape could face significant instability, affecting not just the EU and the US but global markets dependent on their economic partnership.

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Lucid Group Inc (NASDAQ: LCID) expects its upcoming Gravity SUV to deliver a significant boost to sales, narrows losses, and orchestrate a stock price recovery in 2025.

Customers will be able to place orders for the Gravity Grand Touring from November 7th. Lucid will sell this model for $94,900 but will roll out a lower-priced ($79,900) entry-level trim by the end of this year as well.

Ahead of launching the Gravity SUV, Lucid stock is down more than 40% versus its year-to-date high in late August.

Here’s what Gravity could mean for Lucid stock?

Lucid currently has only one vehicle in its portfolio – the Air sedan and even that has failed to drive particularly strong sales volume since its launch in 2021.

But that’s slated to change with mass production of Gravity that is expected to commence before the start of next year, as per the company chief executive Peter Rawlinson.

“I’m confident we’ll enjoy significant step change in demand for our products.

There’s about a 6-to-1 ratio … for the SUV over sedan, and that’s going to put us in a very strong position, he told CNBC in an interview on Tuesday.

Such a massive potential increase in sales would be material for Lucid stock that has been struggling due to disappointing demand.

The EV company delivered 7,142 vehicles in total in the first three quarters of this year that, nonetheless, translates to a significant increase versus the same period last year.

Is Lucid stock worth buying at current levels?

Lucid will accelerate output at its Arizona factory to meet demand for Gravity that it expects will initially outpace production.

The automaker has recently raised $1.75 billion to secure “cash runway well into 2026.”

Together, these developments offer at least some confidence when it comes to investing in Lucid stock.

In fact, the Nasdaq-listed firm is “one of the most attractive among the universe of start-up electric vehicle automakers,” as per Bank of America analyst John Murphy.

He’s convinced that LCID has “more pieces of the puzzle in place and in process than most of its peers” and has immense confidence in its leadership as well. Still, Murphy has a “neutral” rating only on Lucid Group at writing.  

That’s because the company may take until 2027 (at least) to breakeven on operating and cash flow basis and “would need to raise a substantial amount of capital over the next few years.” BofA expects the EV company to raise over $10 billion before it hits self-sustenance.  

All in all, Lucid stock remains a high-risk investment but it may as well offer high returns to ones with patience.

Our analyst Crispus Nyaga also sees a bright future for this electric vehicle maker.

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In October, foreign institutional investors (FIIs) pulled out a staggering $12 billion from Indian equities, surpassing the previous record set in March 2020.

Yet, despite these heavy withdrawals, India’s equity indices displayed resilience, thanks to unprecedented investments by domestic institutional investors (DIIs).

These domestic players stepped up in the face of FII outflows, taking local markets by storm.

With their buying momentum, DIIs may have become the largest holders of Indian equities for the first time this century, marking a shift in the ownership balance of Indian assets, a report by The Economic Times said.

The gap between FIIs and DIIs narrows

By the end of September, the gap between FII and DII ownership in NSE-listed companies had shrunk to just 109 basis points, marking a historic low.

Although full ownership data for October through December won’t be available until January, preliminary signs suggest that the trend of rising domestic ownership continued through October.

“There has been a dramatic shift in ownership in Indian capital markets over the past few quarters, with local investors taking the lead and FIIs losing influence,” commented Pranav Haldea, MD of Prime Database Group in the report.

This shift points to an evolving landscape where Indian equities are increasingly supported by local capital, which has gained resilience and scale in recent years.

Record SIPs fuel domestic market power

The growth of Systematic Investment Plans (SIPs) has been a crucial factor in the rise of DIIs.

Monthly SIP inflows surpassed ₹20,000 crore in April and reached a new peak of ₹24,508.73 crore by September, underscoring a growing commitment from Indian retail investors.

Each month saw an increase, with the number of new SIPs registered hitting nearly seven million in September.

The country’s mutual fund industry’s Asset Under Management (AUM) reached Rs 66.70 lakh crore in August.

This steady inflow has provided DIIs with additional resources to counterbalance FII sales, bringing stability to the market.

Prateek Agrawal, MD and CEO, of Motilal Oswal AMC, said,

Over time, domestic money has indeed shifted from other asset classes to stocks as expected amid a rising per capita disposable income.

Empowered role of DIIs in making markets more resilient

Historically, significant FII outflows would send shockwaves through the Indian stock market, often leading to sharp corrections.

However, the dynamics have changed in recent quarters as DIIs have started playing a more substantial role.

“In the past, when FIIs sold, the market would collapse, and LIC and other domestic institutions would step in to prevent further damage. Now, things have changed,” Haldea noted.

In the September quarter, DIIs invested nearly ₹1.03 lakh crore in Indian equities, compared to the ₹55,629 crore bought by FIIs, demonstrating the capacity of domestic funds to anchor market stability.

With DIIs outpacing FIIs in October, the Indian market may be witnessing a long-term shift in ownership.

As domestic capital continues to grow, bolstered by record SIP contributions and investor interest, India’s financial markets are likely to become increasingly resilient against global volatility.

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