Stocks are a little softer in Europe today as traders digest the German election, and brace themselves for more political uncertainty in the coming weeks

The North Korean situation is still rumbling away in the background, the Kurdish region of Iraq is holding an independence referendum today, and Catalonia’s independence referendum will be held on Sunday. Adding to the political mix, Japan is to hold a snap general election next month.

Angela Merkel secured a fourth term as Chancellor, but the wide split in the voting breakdown has made it unclear what sort of government will be formed. All things considered, the DAX is doing fairly well given the outcome of the general election. The German equity market is the only one of the major European indices that is actually in positive territory – marginally all be it.  

Shares in Tullow Oil are up 6.6% this morning after a territorial dispute went in their favour, which will allow them to resume drilling in Ghana. Tullow Oil has been one of hardest hit oil companies by the downturn in the energy market, and striking an empty well in Kenya this summer made matters worse. The legal verdict gave them a much needed boost. The oil company hopes to ramp up production by 60% next year. Tullow Oil shares gapped higher this morning and hit their highest level since May, and should the bullish sentiment continue, it could target 200p.

The EUR/USD is lower on the session due to the German election and even though we saw a small dip in the German IFO business climate report, there was little reaction to it. The reading was 115.2, which missed economists’ expectations of 116, and August’s reading was 115.9.

European Central Bank (ECB) President, Mario Draghi is due to speak in Brussels at 2.30pm, and dealers will be listening out for clues about the bank’s potential changes to monetary policy.

We are expecting the Dow Jones to open 18 points lower at 22,331, and we are calling the S&P 500 down 2 points at 2500.

Federal Reserve members William Dudley and Charles Evans will be speaking at 1.30pm and 5.40pm respectively.

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