Commodity falls knock FTSE, Caledonia adds to Friday’s gain

A fall in metal and oil prices pull FTSE 100 down from 13-month high but Caledonia Investments extends its advance after the global fund's revaluation of its private equity portfolio.

The reopening of UK shops wasn’t enough to buoy the FTSE 100, which started the week in the red as falling mining stocks knocked the blue chip index off its 13-month high.

The country may be entering the second stage of its roadmap out of lockdown this week but investors were focused on falling commodities this morning. The main market slid 0.59%, or 40 points, to 6,874 as miners tracker lower oil and metal prices; Brent crude oil fell 0.9% while copped tumbled 1.4%.

Russian miner Evraz (EVR) fell to the bottom of the index, losing 2.3%, or 14p, to trade at 585p, and was followed by its peers:

Anglo American (AAL) was down 2.3% at £30.10

BHP Group (BHP) was down 1.9% at £21.08

Antofagasta (ANTO) was down 1.6% at 489p

Glencore (GLEN) was down 1.6% at 283p

Spreadex analyst Connor Campbell said a rise in sterling – which was trading up 0.24% at $1.3742 against the dollar – did little to help the FTSE 100.

‘The lacklustre showing in the UK comes despite the second big step in the country’s reopening efforts, and news that business optimism has hit a record high in the UK as firms anticipate a post-Covid-19 comeback,’ he said.

The strong pound did little to help the domestically-focused FTSE 250, which lost 100 points, or 0.45%, to trade at 22,150.

In the spirit of its large cap peer, Tullow Oil (TLW) led the mid-caps lower, tumbling 4.7%, or 2p, to 44p while mining group Ferrexpo (FXPO), lost 2.3% to trade at 355p.

Hammerson (HMSO) was also making waves this morning, gaining 1.4% in early trading before falling back 2.8% to changed hands at 36p as the shopping centre owner confirmed it was in talks with  Canadian investor Brookfield over the sale of its retail parks portfolio.

The owner of the Bullring in Birmingham and Brent Cross in London has had a tumultuous year as the nationwide lockdowns compounded the existing issues of declining footfall. As it confirmed talks, it said it ‘continues to make asset disposals in liquid markets to further strengthen its balance sheet’.

AJ Bell analyst Russ Mould said it was too early to judge what impact the next stage of the reopening would have on shares.

‘While it is possible that we’ll see plenty of people venturing into the shops today, particularly as it provides an excuse to finally get out of the house, retailers need strong footfall to be sustained for more than just a few days otherwise they face more difficult times ahead,’ he said.

‘It seems inevitable that we haven’t seen the last of the retail sector casualties.’

Caledonia ‘offers value’

Caledonia Investments (CLDN ) gained another 41p or 1.4% to £29.16 after Friday’s 6% advance in response to the global fund’s semi-annual revaluation of its private equity holdings. This helped generate a 24% return for the multi-asset fund in the year to 31 March. Friday’s rise narrowed the shares’ wide discount to net asset value (NAV) to 28% at Friday’s close.

Numis Securities said the performance was ‘solid’ but lagged global equity markets with the private capital pool weighed down by an earlier writedown of its big investment in Buzz Bingo.

‘Caledonia is trading at a 28% discount to NAV, which we believe offers value given the potential for uplifts in the funds portfolio, which is valued 70% at 31 December and 30% at 30 September,’ the broker’s analysts said.

In other investment trust news, Weiss Korea Opportunity (WKOF ) rose 7p or 2.6% to 272p after annual results confirmed a 63.7% surge in NAV last year with the company predicting further outperformance as the preference shares in which it invests stood 49% below their respective asset values at the end of December, the wideset portfolio discount since 2013.

Marble Point Loan Financing (MPLF ) advanced 1.9% to 66 cents on a 10% discount after the dollar-denominated debt fund reported a 0.9% total return on net assets for 2020, though shareholders lost 16.5% last year as the shares fell to a 21% discount at 31 December. 

KKV Secured Loan (KKVL ) firmed 5p or 1% to 22.6p as the winding-up debt fund said it would return £19.6m or 5.5p per share to its ordinary shareholders, and £8.3m or 6p per share to its C-shareholders.

Jupiter US Smaller Companies (JUS ) added 8.5p or 0.6% to £13.71 after changing name to Brown Advisory US Smaller Companies in order to reflect its new fund manager, and sending out a circular spelling out minor changes to its investment policy ahead of next month’s general shareholder meeting.

BMO Commercial Property (BCPT ) eased 0.2p to 77.8p after saying it could use money from property sales this year to buy back its shares in a move to lower the wide 33% discount at which the real estate investment trust trades. Annual results confirmed a 10.2% drop in NAV last year to 117.5p per share with the underperformance driven by retail properties and offices and an underweight allocation to industrials.

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