FTSE reverses course

After an unsteady morning, the FTSE is heading towards the close having recovered all its opening losses.

-       FTSE income stocks clamber higher
-       FBI testimony dominates the news
-       US stocks enter another quiet period

Dividend stalwarts are behind the steady recovery in the FTSE 100 today, as the index consolidates above the 7400 level. While racy sectors like mining and banks are out of favour, it is firms like Reckitt Benckiser, Unilever and others that are steadily pushing higher. The primary driver of this move has been the continuing decline in the US 10-year bond yield, a key benchmark for global markets and a handy indicator of risk appetite. After a brief uptick over the past couple of weeks, the yield is now turning lower, making income stocks like National Grid and Aviva much more attractive. While the business prospects of these firms will have changed little, their relative attractiveness has increased. It is this, rather than any other narrative that is driving markets this afternoon.

Much attention has been lavished on the FBI hearings in Congress. While the revelations have been fascinating, the market impact thus far is limited. So far, investors do not appear to be reaching for the smelling salts, or worrying that this pro-business president is about to be unseated. An otherwise quiet day for markets has meant that it has been hard for either buyers or sellers to take control; on the evidence of the recent past, this is probably just another breathing space before a lurch higher, but so far the absence of steady, broad-based activity in the S&P 500 should incline many towards caution.