Investor/An insider's guide to the market: The price per barrel of oil now seems to be firmly lodged above $40 (€33.33) per barrel.

Demand and supply in the world's oil markets are finely balanced and most analysts would seem to be fearful of further rises in oil prices.

Geopolitical tensions in the oil-producing Middle East continue to rise and with it the risk of an unexpected disruption to supply also increases.

With world demand for oil growing, and with stockpiles of oil low, any sudden negative development would exert an immediate further upward twist to the oil price.

Equity markets have also come under pressure from developments in the bond markets.

There is now an overwhelming consensus that US short-term interest rates will begin to rise very soon. Yields on medium-dated and long-dated fixed-interest bonds have risen in anticipation of this upcoming cycle of rising interest rates.

Falling bond prices (and hence rising yields) are another factor that is making equity investors more nervous.

Some perspective does, however, need to be maintained during this current phase of market weakness.

Firstly, the financial markets hate uncertainty and there have been many times in the past when they have overreacted to unfolding political and economic events.

The rising price of oil is a case in point. The world economy is forecast to achieve a rate of growth of approximately 3.5 per cent this year, which is a healthy performance by any standards. The rise in the price of oil, if sustained, will take some of the gloss off this rate of growth.

However, economists estimate that the oil price would need to rise above $50 per barrel to have a significant depressing impact on growth.

At such a level, the rate of global growth would be trimmed by about half-a-percentage point. This would clearly be unwelcome but would certainly not spell disaster for the world economy.

A second factor that needs to be borne in mind is that, in general, companies are currently achieving rapid growth in revenues and profits.

Profit growth amongst the largest US corporations was a very strong 27 per cent for the first quarter of this year compared with the same period last year.

In the Irish market, the rate of growth has not been quite so spectacular. Nonetheless, Irish-quoted companies have been reporting good financial results - which are particularly impressive given that few Irish companies actually suffered substantial profit declines through the downturn.

Typical of the recent positive tone of financial results were those released by DCC earlier this week. DCC, with a market capitalisation of €1.03 billion, is one of the Irish market's mid-capitalisation stocks and the company revealed a strong set of annual results to end-March 2004.

DCC is effectively a mini-conglomerate and operates in a focused selection of diverse industries including energy, healthcare and information technology. The company focuses mainly on marketing and distributing products in its chosen sectors and it has built up an enviable track record in growing its operations both organically and through acquisitions.

For the year to end-March, DCC reported a rise of 9.8 per cent in earnings per share and a 15 per cent rise in the dividend per share. This was significantly ahead of market expectations and this strong performance was reflected in a very healthy trend in the company's ability to generate cash.

Free cash flow - defined as operating cash flow less tax, interest and capital expenditure - rose to more than €100 million during the year. This was much stronger than analyst forecasts and will enable the company to continue to buy back its own shares, if it so desires.

From a valuation perspective, DCC shares are not highly rated and represent good investment value in the context of the company's strong operating performance.

The share price responded positively to the results rising by 40 cents to €12.80 immediately afterwards. At this price, DCC is trading on a price/earnings ratio of 10 times earnings and pays a dividend yield of fractionally under 3 per cent.

With its diverse range of operations and its proven ability to manage these businesses, DCC offers investors in the Irish market a relatively low-risk, long-term investment opportunity.

DCC illustrates that, even in weak markets, good financial performance is rewarded and highlights that the overall improving trend in corporate profits should act to limit the extent of weakness experienced by share prices.