The FTSE 100 made another good start today as investors shrugged off oil price worries and took their cue from New York, which yesterday again closed at new record highs.
In early action the FTSE 100 was up 32.35 or 0.49% to 6609. Last night the Dow ended its session ahead a hefty 154.64 or 0.87% to 17959.44.
Michael Hewson, chief market analyst at CMC Markets, says the strong performance in New York partly indicates investors are adopting a positive view on the continuing sell-off in oil prices. They are concluding lower fuel costs will leave consumers with more disposable income, as well as keep downward pressure on inflation, making an imminent Fed rate move much less likely.
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Yesterday's oil price sell-off reversed earlier gains after the Saudi oil minister, Ali Al-Naimi, said Saudi Arabia had no intention of cutting its own output, and would even be prepared to increase it given the right set of circumstances,whether the price was at $20, $30 or $40.
Hewson says: "It seems Saudi Arabia is digging in for the long haul as it looks to protect its market share by squeezing both OPEC as well as non-OPEC members like Russia. While we saw strong gains for the rouble yesterday, further pressure on Brent oil prices and a move below the recent lows at $58 could well see further sharp declines in Russia's battered currency.
"A further sell-off will in oil prices is not likely to go down too well inside OPEC either, with Venezuela, Iran and Iraq likely to be vocal behind the scenes about the effects lower prices are having on their budgets."
With that in mind, Hewson reckons investors can probably expect more contradictory jawboning from Opec officials, which is likely to cause prices to flip flop sharply.
He adds: "This late sell-off in oil prices while acting as a boost to global equities generally, continues to act as an anchor on the FTSE 100, with its high percentage of energy related stocks."
A number of key economic numbers are due today, starting with a third quarter reading from France. It is expected to be confirmed at 0.3%. Final third quarter GDP numbers for the UK are also due, with expectations they will confirm 0.7% growth, 3% annualised.
On the corporate front chocolate retailer Thornton's slumped 23.5% or 27.75p to 90.5p after it issued a profit warning, blaming poor sales of its products in some supermarket chains.
Health and hygiene product group Reckitt Benckiser fell 1.3% or 70p to 5240p after it completed the spin-off of its specialty pharmaceuticals business Indivior. The demerged company now trades as a separate entity on the London Stock Exchange.
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