Equities build up positive momentum

Stock markets have made some gains, with the FTSE 100 20 points higher as the close looms.

• Absence of weekend crises helps stocks
• More weaker US data supports dovish argument
• Sterling still falling as Boris holds his lead 

In such a busy week for central banks, today may be as good as it gets for equities. But the lack of major disruption over the weekend has helped risk appetite. Key flashpoints in the shape of the Hong Kong protests and the attack on tankers in the Middle East failed to develop, and the Deutsche Bank plan to create a bad bank (some might wonder what would be left of DB) has helped finance stocks to post some gains. Today’s weaker Empire State index has bolstered the case for a softer Fed outlook on Wednesday, although it will be something of a shock if the central bank does move this week; a general acknowledgement of the need to err on the side of caution is probably all investors will
 get. Those hoping for a rate cut will have to wait until later in the year, when recent weakness in some data may have morphed into something more concrete. 

Earlier strength in sterling is slipping away as further leadership polls point towards Boris reaching Number 10 in a short space of time. At this point, it is more of question of whether there will be anyone left to oppose the Blonde Bombshell – last night’s debate revealed the weaknesses of the other candidates, especially when compared to Twitter favourite Rory Stewart. Not appearing may prove to be a masterstroke by Boris – allow support to head towards the media darling, while knowing that, in a crunch, the membership itself will plump for the favourite.