Rising oil price hits UK equities

ON UK GROWTH

DSP's Glen Pratt examines how expanding political upheaval in the Middle East could hurt equities.

UK equities are experiencing weakness as the oil price rises following the turmoil in North Africa. A clear risk to equities is if political upheaval spreads to larger countries such as Iran and Saudi Arabia and the oil price spikes towards $150. This would cause a recession with an inevitable impact on corporate earnings and stock prices. While the future course for oil prices is never predictable with any degree of certainty, our analysis of supply and demand would suggest, should the political upheaval calm down, the oil price should fall back under $100. The rise in commodities is...