FirstFT: Israel targets central Beirut

Good morning. Welcome back to the working week and today I’m covering:

But we start with Israel, which has struck deep inside the Lebanese capital Beirut for the first time since the war between Israel and Hizbollah in 2006, as it expands its offensive against adversaries across the region.

It follows days of Israeli strikes on the southern suburbs of Beirut that have killed dozens of top commanders of the Iranian-backed Hizbollah militant group, including its influential leader Hassan Nasrallah.

On Sunday, Israel launched a wave of air strikes against Houthi rebels in Yemen, dramatically widening its offensive against the allied Iranian-backed militants.

The Houthis have launched missiles and drones at Israel, merchant ships and US naval vessels in the Red Sea since Hamas’s October 7 attack on southern Israel triggered the war in Gaza.

Israeli Prime Minister Benjamin Netanyahu said over the weekend that Israel was in the process of “changing the balance of power” in the Middle East. He insisted Israel would continue its offensive against Hizbollah and its allies until the more than 60,000 people displaced from Israel’s north by a year of cross-border fire were able to return home.

Up to 1mn people may have been displaced by Israeli bombings in Lebanon, Prime Minister Najib Mikati said yesterday. For our latest coverage of the conflict go to our live blog.

And here’s more of our extended coverage from today and over the weekend:

• Israel’s intelligence operation: After failing to assassinate Nasrallah in 2006 Israel’s security establishment underwent a fundamental shift to get a better understanding of its arch enemy.

• The future of Lebanon: Hizbollah has been the one the constants in the embers of a failing state but with Nasrallah’s death the future is unclear.

• Netanyahu’s dream: Israel’s prime minister wants to create a new regional order by attacking Iran’s “axis of resistance”, but chaos seems more likely, writes Gideon Rachman.

• Middle East conflict: Nasrallah’s death is a seismic moment for the Middle East, writes former UK ambassador to Lebanon Tom Fletcher, increasing the risk of a conflict between Israel and Iran.

And here’s what else I’m keeping tabs on today:

• Monetary policy: Federal Reserve chair Jay Powell will deliver a speech in Nashville, Tennessee on the economic outlook. Fed governor Michelle Bowman will make public remarks in Charleston, South Carolina. 

• Company results: Cruise operator Carnival is forecast to report a rise in revenue and profit in its third quarter as strong demand for travel and higher ticket prices boost earnings.

• Ports strike: Talks between the International Longshoremen’s Association, which represents 45,000 port workers, and the United States Maritime Alliance employer group appear deadlocked on wage issues ahead of a midnight deadline to reach a new contract deal.

Five more top stories

1. Japan’s incoming prime minister, Shigeru Ishiba, has called a snap election for October 27, in a bid to secure a public mandate after his unexpected victory in last week’s ruling party leadership contest. After a chaotic session the Nikkei 225 ended the day down 4.8 per cent as investors grow nervous of the incoming prime minister’s support for a “new capitalism”.

2. Austria’s far-right Freedom party scored a historic victory in the country’s parliamentary election yesterday, consolidating pro-Russian, anti-establishment forces in central Europe. It is the first time the FPÖ, which has embraced increasingly hardline and extremist policies on immigration in recent years, has come first in a national election.

• Europe’s far-right march: The FPÖ’s victory suggests it is no longer necessary to detoxify your brand to win, writes Europe editor Ben Hall.

3. California governor Gavin Newsom has vetoed a controversial attempt to regulate artificial intelligence, citing concerns that the bill could stifle innovation after intense pressure from tech companies. The bill would have forced those developing the most powerful AI models to adhere to strict rules, including implementing a kill switch. Read the full story.

4. Exclusive: Peter Thiel’s Founders Fund is backing a nuclear start-up aiming to make fuel for the latest generation of reactors. The venture is focused on high-assay, low-enriched uranium for small modular reactors, which tech groups hope can meet their power needs as they rapidly build AI-related data centres. Harry Dempsey has more details.

5. Rescuers are still searching for survivors after heavy rain and wind from tropical storm Helene devastated south-eastern US, leaving nearly 100 people dead, destroying homes and causing power outages for millions. Helene tore through Georgia and the Carolinas over the weekend after making landfall as a category 4 hurricane on Thursday, causing widespread flood damage. Here’s the latest.

Today’s big read

With just over a month until polling day, the race between Kamala Harris and Donald Trump is too close to call. Despite a tumultuous summer that saw a disastrous debate performance by President Joe Biden, an assassination attempt on Trump and Biden’s decision to pass the torch to Harris, the opinion polls appear locked in a virtual tie. Is there anything that could shift voters’ views?

We’re also reading . . .

• Wall Street’s new titans: Here’s how a handful of secretive businesses including Jane Street and Citadel Securities have seized market share from the old guard.

• Women in India: Protests over violence against women in the country have sparked wider questions about female labour’s role in its economy.

• Who’s left at OpenAI: With the exit of his chief technology officer, chief executive Sam Altman is now surrounded by allies, consolidating his power at the ChatGPT maker.

Chart of the day

The Federal Reserve’s preferred measure of US inflation dropped more than expected to 2.2 per cent in the year to August, it was revealed on Friday. The release of the latest personal consumption expenditures price index boosted expectations among investors that the Federal Reserve will go for another half-point cut at its next interest rate-setting meeting on November 6-7.

Take a break from the news

That weight-loss drugs should have proliferated in a sector that has always venerated thinness will hardly come as a surprise, writes Jo Ellison. So why will no one in the fashion industry talk about Ozempic?

Additional contributions from Tee Zhuo and Benjamin Wilhelm