- Euro retreats as Angela Merkel's vote share shrinks; sterling erases post-Theresa May speech losses against the euro, trading 0.3pc higher at €1.1358
- Bank of England warns on "pockets of risk" in the consumer credit market; the central bank told Britain high street lenders to set aside an extra £10bn to cover potential losses
- FTSE 100 under pressure following the pound's gains; banks suffer sharpest fall early on
- Brent crude rallies to an eight-month high after OPEC and Russia say that they are about halfway through shifting the glut of oil on the market
North Korea jitters pull down US stocks
Markets have been spooked by the latest escalation in the war of words between North Korea and the US this afternoon, according to IG chief market analyst Chris Beauchamp.
The Dow Jones has clawed back some of the ground lost immediately after the rogue state's foreign minister accused Donald Trump of declaring war but remains 0.4pc lower.
The markets have largely brushed off provocative comments from North Korea of late, given the frequency of them, but the tensions ratcheting up a few notches this afternoon seems to have grabbed investors' attention.
Mr Beauchamp added:
"US stocks underwent a sharp wave of selling as North Korea decided to respond to the weekend’s events by declaring that it viewed Mr Trump’s comments as a ‘declaration of war’. This looks like a fairly hefty step up in the escalation game, and one that is sure to provoke a US response of some kind.
"Tech stocks were hit hardest, with the Nasdaq already stumbling thanks to the poor debut of Apple’s new phone models. North Korea is clearly rattled; the bomber flights at the weekend remind Pyongyang of its inherent vulnerability and its clear disadvantages when it comes to high-tech weaponry. The risks of miscalculation have now multiplied alarmingly, and markets may well continue to respond negatively."
Indivior fends off first copycat threat to its best-seller opioid addiction treatment
Drugmaker Indivior has fended off the first of six threatened rival products to its best-seller treatment for opioid addiction Suboxone, after a ruling earlier this month paving the way for rivals sliced £1bn from its market value.
The FTSE 250 firm told investors today it had settled out of court with one of the companies planning a copycat version, Nasdaq-listed Mylan, for an undisclosed amount.
Indivior had filed patent lawsuits against Mylan and five other would-be competitors - Actavis, Par, Alvogen, Tava and Dr Reddy’s - with the other cases still ongoing.
Suboxone is a dissolvable film used to treat addiction to both illegal opioids such as heroin and prescription opioid-based painkillers. It is placed under the tongue and tricks the brain into thinking it is still receiving an opioid.
Coalition will have 'little impact on Germany's economy'
Can't remember who said this yday here on twitter. Macron put a bottom in euro and Merkel put cap on Euro. Could prove to be right.
— Uresh Perera (UP) (@UreshP) September 25, 2017
The euro is sinking further on forex markets this afternoon and is now 0.6pc lower against a basket of the leading currencies following Angela Merkel's less than convincing election victory.
Global strategist at Allianz Global Investors Neil Dwane believes that although coalition talks may take several months, the outcome will have "little impact on Germany's economy".
"A weaker euro, on the back of the outcome, could be positive for exporting companies. Germany will continue to be governed by a pro-European, Merkel-led government, and the likelihood remains of a tight Berlin-Paris axis going forward.
"The results won’t, however, entirely calm residual concerns about political risk in Europe, particularly as the region continues its election 'super-cycle'."
Elsewhere, it seems that the bullish swagger that led to multiple all-time highs on the US's major stock indices last week has eased off with the Dow Jones deteriorating sharply this afternoon, dipping 0.4pc.
Sentiment will not have been helped by North Korea's foreign minister this afternoon accusing the US of declaring war on the rogue state.
Outlook for Eurozone inflation is uncertain, warns Mario Draghi
The outlook for inflation in the Eurozone is still uncertain, according to Mario Draghi, president of the European Central Bank.
Recent volatility in exchange rates had made the inflationary picture particularly hard to read, Mr Draghi told the committee on Economic and Monetary Affairs (ECON) at the European Parliament in Brussels.
“Overall, we are becoming more confident that inflation will eventually head to levels in line with our inflation aim, but we also know that a very substantial degree of monetary accommodation is still needed for the upward inflation path to materialize,” Mr Draghi told the parliamentary committee.
The committee meeting came as expectation mounts that the ECB will reduce, or taper, its programme of €60bn (£52.7bn) monthly stimulus spending.
Mr Draghi confirmed that decisions about how the “bulk” of this quantitative easing will be cut back would be made from October onwards.
Bank of England 'fired a warning shot' over consumer credit
The Bank of England's Financial Policy Committee "fired a warning shot to banks over consumer credit" this morning after asking them to increase the amount of capital they hold to protect themselves from losses by £10bn, according to Capital Economics' UK economist Ruth Gregory.
She added that while the FPC does "not appear to be too concerned" about bloating consumer credit, today's statement "goes further than the red-flag waving we've seen from the FPC up until now".
Ms Gregory argued that concerns should ease soon, however:
"With inflation likely to fall back after peaking around October, and some acceleration in wage growth in prospect, the foundations for spending growth next year should be stronger, so concerns about consumer credit are likely to diminish, rather than build further."
Unilever bets £2bn on booming Korean beauty trend
Unilever is splurging €2.3bn (£2bn) on a South Korean beauty business in the latest sign that the consumer goods giant is turning its focus towards its personal care division rather than its food business.
Unilever announced that it is buying Carver Korea, one of the fastest growing skincare brands in South Korea and maker of the AHC brand which sells moisturisers, face masks and sun creams.
The Anglo-Dutch company, which makes products ranging from Marmite to Dove soap, has recently stepped up its efforts to acquire upmarket beauty brands which offer higher growth and profit margins than its more mature food brands.
Fracking fires up BP’s largest project of the year
BP has started production at the Khazzan project in Oman, the largest of the new projects it has scheduled for this year, as the oil major attempts to export its US fracking experience around the world and bolster is relatively meagre portfolio.
The $16bn gas project uses the same controversial drilling technique that has unleashed an energy revolution in the US. Fracking has been used to prepare around 200 wells that will tap gas three miles below the earth’s surface in extremely hard, dense rock.
The project is expected to produces one billion cubic feet of gas a day. BP believes the daily volumes could rise to 1.5 billion cubic feet in the project’s second phase, which will include an additional 100 wells.
BP has used horizontal well-drilling and hydraulic fracturing, known as fracking, for years in the US. But the Khazzan project will be its biggest unconventional gas project outside of the US, and the largest of seven new projects the company was planning for this year.
Brent crude hits eight-month high after bullish OPEC and Russia statement
Brent crude has hit an eight-month high today after oil cartel OPEC and major producer Russia said that they are about halfway through shifting the oil glut that has put oil prices and producers under considerable pressure in recent years.
Sentiment has also been lifted by Turkey threatening to shut off a pipeline ahead of a Kurdish independence vote, squeezing supply on the oil market. After a strong summer, Brent has risen 1.3pc today to $57.50 per barrel, a 26pc increase from its June low.
Mid-cap oil producers, whose shares are wedded to crude prices, are dominating the FTSE 250 leaderboard today with Tullow Oil, Petrofac, Amec Foster Wheeler and Wood Group all rallying.
It's worth noting that Tullow has also been lifted by the end of a border dispute between Ghana and the Ivory Coast, meaning that drilling will soon be able to begin again.
German election result could shift the balance of power at the ECB
Angela Merkel's narrower-than-expected victory in Germany's federal election and the prospect of uncertainty created by long, complex rounds of negotiations in Europe's engine room have punctured the euro today.
While a month ago some were warning that the pound could hit parity with the euro, the trend is now firmly in sterling's favour.
Since hitting a low of €1.0758 in late August, sterling has rallied just under 6pc against the currency to its highest level since July, trading 0.5pc higher today at €1.1380.
M&G Investments bond fund manager Wolfgang Bauer believes this result could shift the balance of power at the ECB and ruin Ms Merkel's rumoured plan to install Jens Weidmann, president of the Deutsche Bundesbank, as the new ECB president after Mario Draghi steps down.
"She might get challenged by French president Emmanuel Macron for the unofficial leadership role within the EU. If he is able to seize the moment, this would make Eurozone debt mutualisation and the creation of a European finance minister more likely, at least in the medium term.
"Merkel’s rumoured plan to install Jens Weidmann, the current President of the Bundesbank, as new ECB President after Draghi’s term ends in 2019, seems less realistic today. This increases the odds of a continuation of the ECB’s expansive policy stance."
Kingfisher beer boss looks to a new brew to pep up sales
The European boss of Kingfisher beer is eyeing the launch of an Indian pale ale to complement the growing range of global brews it sells in a bid to appeal to a younger audience.
Damon Swarbrick said the company’s big challenge had been the decline of popularity of curry - a dish its beer famously accompanies - as the millennial generation turned its back on the 1990s/early 2000s favourite in favour of other global cuisine, including Asian dishes from Vietnam.
The company has responded to this by signing deals to distribute drinks made by other companies such as Indonesian lager Bintang in the UK, as well as China’s Pearl River beer, brewed by Guangzhou Zhujiang Brewery. It will also begin distributing Sri Lanka’s biggest beer brand Lion here next month.
Uber boss says sorry to all Londoners as he commits to fight Transport for London for licence
The chief executive of Uber has apologised for mistakes that led to Transport for London withdrawing its operating licence, as he affirmed his commitment to fight the ban.
In an open letter to all Londoners Dara Khosrowshahi said the transport technology company has to change if it is to survive in the capital.
He said Uber, which he took control of four weeks ago, wanted to "make things right" for its 3.5m London customers and 40,000 drivers.
The open apology comes three days after TfL decided to strip Uber of its operating licence, criticising its safety record and raising concerns over the US tech giant’s business methods.
Tullow rallies as border dispute ends; Imagination soars after agreeing deal with private equity firm
Given the later start to our coverage today, let's have a quick overview of what's moved in London and why this morning.
Tullow Oil has jumped over 5pc after a border dispute between Ghana and the Ivory Coast was cleared up, meaning the Africa-focused oil producer will soon be able to resume drilling at its fields in Ghana.
Microchip designer Imagination Technologies has soared 31pc after agreeing a takeover deal with Beijing-backed private equity fund Canyon Bridge while housebuilder MJ Gleeson has advanced 4.1pc after continuing the sector's trend of brushing aside political and economic uncertainty to post strong figures.
Banks and insurers have created a difficult start to the week for the FTSE 100, according to LCG head of research Jasper Lawler.
"A downturn in bank and insurance company shares meant a difficult start to the week for the FTSE 100. The Bank of England is sounding the alarm on rising consumer debt levels.
"Any restriction on lending, particularly unsecured lending like credit cards and car loans would be a direct hit to a big profit centre for banks and insurers."
Bank of England warns of 'pockets of risk' to growing £200bn consumer debt pile
The Bank of England has warned that British high street banks risk losing as much as £30bn from defaults on credit cards and personal loans credit were the economy to take a turn for the worst.
The Old Lady of Threadneedle Street cautioned that the UK's growing £200bn consumer debt pile threatens some to damage the capital positions of some of Britain's biggest banks should a sharp downturn in the economy take place.
In a sombre statement from the central bank's Financial Policy Committee, the burgeoning consumer credit market was described as a "pocket of risk."
Although the Bank, led by Governor Mark Carney, asserted that rising consumer debt defaults would be unlikely to materially damage economic growth, it did warn that they would not be without cost.
Britain's banks need to set aside an extra £10bn to cover possible lossess on personal loans, credit cards and car loans, the Bank confirmed.
Agenda: Euro retreats as the AfD spoils Merkel's victory party
Welcome to our live markets coverage.
The pound has rallied against a euro feeling the heat on currency markets this morning after German far right party the AfD gatecrashed Angela Merkel's election victory party.
While the German chancellor secured a fourth term, her disappointing vote share and the prospect of a 'Jamaica' coalition has weakened the euro, which is trading 0.4pc lower against the pound and 0.6pc down against the dollar. Sterling's gains this morning have put the FTSE 100 under pressure early on, the blue-chip index dipping 0.1pc.
No Merkel rally. Germany's Dax starts 0.2% lower to the week following fed elections as German chancellor faces tricky task to build govt. pic.twitter.com/dDxcl4Kwim
— Holger Zschaepitz (@Schuldensuehner) September 25, 2017
Elsewhere, the Bank of England has described bloating consumer credit as a "pocket of risk" in a glum statement from its Financial Policy Committee this morning. It warned that banks could lose up to £30bn from defaults on consumer credit if the economy suffered a "severe downturn".
It added that the UK's banks need to set aside an extra £10bn to cover losses on personal loans, credit cards and car loans.
Interim results: SimiGon, Nasstar, Amerisur Resources, Sprue Aegis, Trinity Exploration & Production, Osirium Technologies, Elecosoft
Full-year results: MJ Gleeson
Trading statement: Pennon Group
AGM: Zoo Digital Group, Clipper Logistics, Hidong Estate, Associated British Engineering, Lucky Cement
Economics: Ifo Business Climate (GER)