UK Investor Magazine


FTSE 100 commodities sector: metals are more attractive than oil

As we start 2021 with a bumper performance in UK equities and a 300+ rise in the FTSE 100, Alan Green joins the first Podcast of the eyar to discuss the dynamics of the rally.

We have previously noted the relative value of UK shares compared to peers in the US, however the recent sharp rally may raise questions over the outlook from here and whether stocks have got ahead of themselves.

Apart from Entain, who received a takeover approach, the FTSE 100's top risers in 2021 thus far all reside in the commodities sector with Glencore (LON:GLEN), BP (LON:BP), Shell (LON:RDSB) and Rio Tinto (LON:RIO) all posting gains in excess of 13% YTD.

The prospect of a Biden administration and an economic reopening post-COVID has helped fuel a commodities rally but there is a noticeable divergence appearing in the share prices of oil companies when compared to miners. We explore the factors at play behind these companies and how this could develop in 2021.

We also discuss Blencowe Resources (LON:BRES), Versarien (LON:VRS) and Destiny Pharma (LON:DEST).

With rising metal prices a large part of the recent rally, we draw attention to Trident Royalties, who through their mining royalty business model, can provide exposure to developing mines without the high operating costs associated to junior miners:

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