Higher oil prices typically translate into astrong showing for the UK market due to BP and Shell’s heavy weighting in the index and so it proved again on Monday.
AJ Bell investment director Russ Mould said: “Saudi Arabia’s pledge to cut output suggests it wants to see an oil price above $80 per barrel and that it is concerned about the demand implications of a global economic downturn. The FTSE 100 was up 0.5% in early trading, extending the gains seen on Friday after the non-farm payrolls data from the US.
“The market seems keen to take the view this is indicative of a potential soft landing for the US economy given the jobs figures were higher than expected but wage growth has cooled.
“For the time being investors are prepared to squint and see the sunny side of most data points, with services PMI data from across the Atlantic later today potentially proving to be the next test of the market’s optimism.”