The appearance of a gap before the letter T has nothing to do with kerning per se, but with my use of smallcaps and kerning.
I solved my problem by defining a font feature and applying it with the \setff command as described on the wiki.
\setuplayout[header=0pt, footer=0pt]
\setupstretched[width=6.25cm]
\definefontfeature[smallcapitals] [smcp=yes]
\starttext
\setuphead[subject][style=\setff{smallcapitals}, textstyle={\kerncharacters[.40]}]
\startsubject[title={Properties of Blood}]
\stopsubject
\setuphead[subject][style=\setff{smallcapitals},deeptextcommand={\kerncharacters[.40]}]
\startsubject[title={Properties of Blood}]
\stopsubject
\setuphead[subject][style=\setff{smallcapitals},deeptextcommand={\stretched}]
\startsubject[title={Properties of Blood}]
\stopsubject
\stoptext