As earnings season kicks into high gear this week, investors are keeping a close eye on the performance of companies across both the US and Eurozone. With 18% of the Stoxx Europe 600 set to report earnings, including heavyweights like LVMH, ASML, and SAP, as well as four members of the Mag7 in the US, the stage is set for some exciting developments. However, the key pair to watch remains the US vs Eurozone exposure basket, which has seen a significant decline of 80 basis points on Monday alone due to the rally in EURUSD.

The dollar index has also come under pressure, down 55 basis points even after last week’s steep declines. Reports of rate checks by the Japan authorities and the New York Fed on Friday may be a trigger for this sell-off. Meanwhile, gold has broken the $5000 mark, a significant milestone in the ongoing shift towards safe-haven assets.

In domestic UK equities, the outperformance of {UBXEUKEX} can be attributed to the thwarted coup attempt by Manchester Mayor Burnham against Prime Minister Starmer. The former is seen as a key voice of the party’s Left, and the news has been widely interpreted by the UK press as a boost for the incumbent leader. Last week’s data was also positive, with stronger retail sales and composite PMIs climbing to a 21-month high.

On the upside, renewables are the top performer on Monday, with {UBXERNEW} up 1.1%, driven by upgrades for Neste Oyj and Vestas Wind Systems elsewhere. These sectors, alongside Electrification {UBXEVOLT}, are currently the two highest ranking European baskets on UBS Equity Strategist’s quant-amental scorecard.

Overall, this week’s earnings season is shaping up to be a critical one for investors and analysts alike, with the US vs Eurozone exposure basket and the performance of renewable energy companies likely to be major focal points. Stay tuned for more updates and insights from UBS S&T!