Heading into the close, the FTSE 100 is 14 points lower, while Wall Street’s final trading session this week is beginning in a quiet fashion. 

The morning’s initial gains for the FTSE 100 have faded away, while apart from the Dow US markets are mostly flat on the day. A sense of exhaustion pervades markets, after a week that has seen wild swings in expectations for the upcoming Fed meeting, while the imminent arrival of earnings season will also prompt some understandable caution with US indices at record highs. But it has been another strong week on Wall Street, thanks to Jerome Powell. The question is now whether equities can survive an earnings season that at present is forecast to show the second quarter of declines in earnings – previous instances have often led to a period of sustained weakness, so investors will be hoping that the current truce in the trade war and a more dovish Fed will help burnish the outlook for the next few months and help reduce the focus on a weaker quarter just past. 

There are other problems facing the global economy, which could yet US markets hard. Singaporean GDP fell heavily, and a second profit warning from a German firm shows that outside of the US all is not well with the global economy. In the UK, the clock is ticking down to the end of the Tory leadership contest, but there seems little hope that the EU will budge from its current position in order to bolster the position of the new prime minister, particularly if it is their old antagonist, Boris Johnson. 

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