Russ Mould, investment director at AJ Bell, said: “Equity markets pushed ahead in Europe despite oil prices creeping ever higher.
“The exception was the FTSE 100 which held firm as energy and industrial sector gains were offset by weakness in consumer non-cyclicals and miners.
“The oil market has been the place to watch closely since the start of March when the Middle East crisis unfolded.
“Oil below $100 is a relief signal, while higher than this level is concerning.
“Brent crude rose 2.2 per cent to $107.60 after the weekend’s setback to US-Iran peace talks dampened prospects for a near-term resolution to the conflict.
“Brent has now risen by 25 per cent over the past 10 days, illustrating a significant shift in market thinking towards the Middle East crisis.
“Oil had dropped quickly on April 17 amid hopes of a resolution to the war, but that weakness proved to be a short-lived blip.
“Investors have been encouraged by corporate news flow over the past few weeks, leading to higher equity prices.
“However, it’s impossible to ignore what’s happening on commodity markets as higher oil for longer spells trouble for inflation, which in turn could act as a headwind for the economy.”
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