Investing.com - Here are the top five things you need to know in financial markets on Monday, September 25:
1. German election results rattle euro
The euro started the week on the back foot, as investors digested elections in Germany over the weekend, which showed surging support for a far-right party that left Chancellor Angela Merkel scrambling to form a governing coalition.
Despite winning a fourth term in office, Merkel's bloc slumped to its worst result since 1949 and her current Social Democrat coalition partners said they would go into opposition after tumbling to a post-war low of 20.5%.
The nationalist Alternative for Germany (AfD) won around 13% of the vote, above what polls had predicted. They will become the first far-right party to enter the German parliament since the 1950s.
The euro fell as much as 0.7% against the dollar to an intraday low of 1.1881 and last stood at 1.1890, down around 0.6%.
2. Japan's Abe calls for snap election
Politics were also in the spotlight in Japan, with Prime Minister Shinzo Abe announcing at a press conference that he plans to dissolve parliament on Thursday and call a snap election for next month.
The move comes as Abe seeks to take advantage of improved ratings and opposition disarray, despite criticism that he is creating a political vacuum amid worries over North Korea.
A weekend survey by the Nikkei business daily survey showed 44% of voters planned to vote for Abe's Liberal Democratic Party (LDP) versus 8% for the main opposition Democratic Party.
The yen was a touch weaker against the U.S. dollar at 112.05 (USD/JPY).
3. Global stocks move lower amid political uncertainty
Global stock markets were mostly lower in cautious trade, as investors mulled elections in Germany and New Zealand over the weekend, while focusing on developments in Japan.
Asian shares closed on a relatively mixed to negative note, with benchmarks in greater China remaining on the back foot following S&P's downgrade of the Asian nation's sovereign rating late last week. Japan's Nikkei bucked the trend to end higher.
In Europe, shares were in the red in mid-morning trade, with financials leading losses.
Meanwhile, U.S. stocks pointed to a modestly lower open on Wall Street, with the Dow futures pointing to a loss of around 0.1% when the market opens.
4. Fed's Dudley, ECB's Draghi ahead
Investors awaited fresh comments from key central bank officials on both sides of the Atlantic for further signs that the era of easy money may be coming to an end.
In the U.S., three Fed speakers are on tap: influential New York Fed President William Dudley is due at 8:30AM ET (1230GMT), Chicago Fed President Charles Evans at 12:40PM ET (1640 GMT) and Minneapolis Fed President Neel Kashkari at 6:30PM ET (2230GMT).
Last week, the Fed announced it would begin trimming down its $4.5 trillion in assets and signaled it will likely raise rates again this year.
Meanwhile, European Central Bank President Mario Draghi is due to testify about the economy and monetary developments before the European Parliament Economic and Monetary Affairs Committee in Brussels at 1300GMT (9:00AM ET).
Draghi indicated last month that the ECB could start tapering its massive stimulus program as early as October.
5. Brexit talks resume in Brussels
Brexit negotiators are set to resume talks in Brussels, with Britain's Brexit secretary David Davis and chief European Union negotiator Michel Barnier scheduled to hold a fourth round of talks.
The renewed talks come three days after a closely watched speech by British Prime Minister Theresa May gave few new indications on how Brexit will proceed. May proposed a transition period of around two years after the U.K. leaves the EU, during which time access to the single market will continue on current terms.
Barnier said that May's speech was "constructive", but he wanted to hear firm offers.
The pound was a shade higher against the dollar at around 1.3530, recovering from moderate losses posted on Friday after ratings agency Moody's downgraded Britain's credit rating to Aa2.