9.15am: UK to cap non-domestic energy prices
The UK government has announced plans to help businesses and other non domestic energy users with their bills amid escalating costs.
Electricity prices will be capped at £211 per megawatt hour with gas capped at £75, for businesses, charities and public sector bodies.
The new Energy Bill Relief Scheme will cut energy prices for businesses, charities and public-sector organisations such as schools and hospitals.The scheme will run for 6 months covering energy used from 1 October 2022 to 31 March 2023.
Find out more ????
— Dept for BEIS (@beisgovuk) September 21, 2022
Walid Koudmani, chief market analyst at financial brokerage XTB said: "The cap on wholesale energy prices was desperately needed for businesses with the high street especially facing a cold and dark winter ahead. In this sense, it will give businesses some much needed relief.
"There are two immediate question marks however. First, how much will it cost and what is the impact on UK borrowing? Remember this comes on top of the announced £150bn package for households in the next two years.
"With the treasury refusing to publicise the latest OBR forecasts in this week's mini budget, it's no wonder that investors are selling the pound yet again this morning. Secondly, is six months really enough? I can foresee that being extended but nevertheless, this is a good first step."
9.03am: Oil price on the rise
With the escalating tensions in Ukraine, the oil price is moving higher again.
Brent crude is 2.87% better at US$93.22 a barrel while West Texas Intermediate is up 2.97% to US$86.43.
So BP PLC (LON:BP.) has climbed 2.28% and Shell (LON:RDSa) PLC (LSE:SHEL, NYSE:SHEL) has added 2.37%.
Elsewhere Flutter Entertainment PLC (LSE:FLTR) has fallen 2.38% after a downgrade by Citi from buy to neutral, while rival Entain PLC (LON:ENT) is off 1.54%.
But overall the market is taking all the various negatives in its stride, with the FTSE 100 up 29.86 points or 0.42% at 7222.52.
The same cannot be said of European markets, in the wake of President Putin's comments, with Germany's DAX 30 down 0.58% and France's CAC 40 0.52% lower.
Victoria Scholar, head of investment at interactive investor said, “Nervousness towards a potential reescalation of military tensions in Ukraine combined with rising interest rates from the Federal Reserve have rattled European markets this morning..
"Russian President Vladimir Putin is mobilising more troops for Ukraine and said the West wants to destroy Russia ahead of announced referendum plans on Ukraine joining Russia in the coming days. His speech sent the Russian rouble lower and oil prices sharply higher amid escalating tensions after a partially successful counterattack by Ukraine."
8.28am: Builders and defence in demand
Housebuilders are dominating the risers in the leading index, boosted by reports that the UK government is planning a cut to stamp duty to boost the housing market.
Leaving aside whether this is a good idea or not, investors in the sector will be pleased.
Persimmon (LON:PSN) PLC has put on 4.53%, Taylor Wimpey (LON:TW) PLC is up 3.79%, Berkeley Group Holdings PLC is 3.76% better and Barratt Developments PLC (LON:BDEV) has climbed 3.26%.
Meanwhile the bellicose comments from Russia's President Putin have helped push up defence company BAE Systems PLC by 4.77%.
8.19am: Footsie surprises at the open
Leading shares have confounded expectations and are on the rise at the open as investors prepare for a US rate rise tonight, a UK one tomorrow and a mini-budget on Friday.
Despite Britain borrowing more than expected in August and worries about the war in Ukraine after a speech from Russian president Putin, the FTSE 100 is up 17.94 points at 7210.6.
A fall in the pound to a new 37 year low has helped the dollar earners in the blue chip index, while Aveva Group (LSE:LON:AVV) is up 2.3% after agreeing a full takeover by France's Schneider Electric (EPA:SCHN)
8.02am: Putin speech spooks currency markets, pound drops
Despite the prospect of a hefty UK rate rise tomorrow, the pound has hit a new 37 year low.
Against the dollar it fell as low as US$1.1305 but has recovered slightly to US$1.1338, down 0.358%.
On Friday it hit US$1.1351, which was then the lowest since 1985.
The dollar is benefiting from its status as a haven for investors at times of uncertainty, and markets which are already worried about rising rates and the cost of living have been additionally spooked by a speech by Russian president Putin.
He announced the partial mobilisation of forces in Russia, backed referendums in four Russian-controlled regions in Ukraine and said the West "had crossed all lines" in its "aggressive anti-Russian policy."
7.41am: UK public sector debt hits £11.82bn
UK government borrowing came in higher than expected in August, with rising inflation pushing up the deficit.
Public sector borrowing excluding state owned banks came in at £11.82bn, much higher than the £8.45bn forecast by economists.
Public sector net borrowing excluding public sector banks was £11.8 billion in August 2022.This was £2.6 billion less than in August 2021 but £6.5 billion more than in pre-COVID August 2019, when it was £5.3 billion https://t.co/42s1SHr9Lq pic.twitter.com/jPtHGoZglI
— Office for National Statistics (ONS) (@ONS) September 21, 2022
Britain spent £8.2bn on interest payments on central government debt, which includes £4.7bn from the impact of higher inflation.
This will put further pressure on the UK goverment as it prepares to unveil more of its energy plans today and a mini-budget on Friday, notably how it will pay for it all.
7.00am: FTSE seen slightly lower at the open
FTSE 100 expected to open slightly lower following falls in the US overnight with attention focused on the Fed’s interest rate call later today.
Spread betting companies are calling London’s blue-chip index down by around 10 points.
US markets endured another dismal session as investors braced themselves for a large interest rate increase tomorrow and as Ford Motor (NYSE:F) Co. slumped 12.3% after warning of a US$1bn hit from inflationary pressures together with supply chain issues.
At the close the Dow Jones Industrial Average was down 313 points, or 1.01%, to 30,707.08, the S&P 500 fell 44 points, or 1.13%, to 3,856 and the Nasdaq Composite slipped 110 points, or 0.95%, to 11,425.
Michael Hewson, chief market analyst at CMC Markets UK, said: "The main question today is whether we see the Fed move by 75bps today, or by 100bps which some started to call for in the middle of last week, after US core prices turned out to be much stickier than expected.
"This shift in the market thinking probably has more to do with what happened the last time we got a hotter than expected rise in US CPI during a blackout period, which prompted the Fed to shift to a much more aggressive hike by way of leaking to friendly journalists over the weekend in a move that saw the Fed come under heavy criticism. This begs the question as to whether they would go down this route again and hike by 100bps instead of 75bps.
"This still seems an outlier especially as rates are much higher now than they were then, along with the lack of any briefing to the contrary over the weekend."
In the UK, results are due from Alphawave IP Group PLC and Pendragon PLC amongst others.