Bulls n Bears Daily Market Commentary : 06 April 2018

Fri Apr 6 15:40:44 CAT 2018

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Bulls n Bears Daily Market Commentary : 06 April 2018

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Zimbabwe Stock Exchange Update

Market Turnover $1,658,890.17 with foreign buys at $204426.36 and foreign
sales were $462,921.44. Total trades were 52.

The All Share index was flat at 87.21 points. DELTA  added $0.0052 to close
at $1.6057, OLD MUTUAL went up by $0.0018 to end at $5.6226 while ECONET
rose by $0.0013 to $0.6713. WILLDALE gained $0.0010 to settle at $0.0060 and
EDGARS closed at $0.0460 following a $0.0005 increase.

Two counters lost ground; MEIKLES  lost $0.0271 to close at $0.2729 and
INNSCOR  slipped $0.0072 to trade at $0.9628.

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Global Currencies & Equity Markets

Uganda

Ugandan shilling in firm position on commodity flows

(Reuters) - The Ugandan shilling was unchanged on Friday amid some inflows
of hard currency from exporters of coffee and other commodities weighing
against sagging importer demand.

At 0822 GMT commercial banks quoted the shilling at 3,690/3,700 the same
level as Thursday’s close.

Kenya

Kenya's shilling steady on inflows from debt auction, thin demand

(Reuters) - The Kenyan shilling held steady against the dollar on Friday,
underpinned by inflows from government debt auctions amid thin demand from
importers, traders said. 

At 0948 GMT, commercial banks quoted the shilling at 101.00/20, the same as
Thursday's close. 

America

Dollar Pushes Higher on Hopes for Trade Compromise

Investing.com - The dollar pushed higher against a basket of the other major
currencies on Thursday amid hopes that the U.S. and China will reach a
compromise to overcome rising trade tensions.

The U.S. dollar index, which measures the greenback’s strength against a
trade-weighted basket of six major currencies, was up 0.16% to 89.92 by
02:35 AM ET (06:35 AM GMT).

The dollar gained ground against the safe haven yen, with USD/JPY rising
0.19% to 106.98, pulling further way from the previous session’s low of
105.98.

The safe haven yen, which tends to be sought out by investors during times
of political or economic uncertainty had rallied Wednesday after China
announced a fresh wave of tariffs on U.S. imports, in retaliation to a Trump
administration plan to impose tariffs on Chinese products.

But trade tensions eased after President Donald Trump's economic adviser
Larry Kudlow said proposed tariffs on China may not actually take effect and
added that there is not a trade war between the U.S. and China.

Market sentiment was also helped by hopes that the U.S. could reach a deal
with Canada and Mexico over the North American Free Trade Agreement.

Investors were turning their attention to the latest U.S. employment report
and comments by Federal Reserve Chairman Jerome Powell on Friday, which
could help determine the direction of the dollar.

Signs of increasing wage growth could underline the case for the Fed to
raise interest rates at a faster pace. Expectations of rising rates tend to
boost the dollar by making the currency more attractive to yield-seeking
investors.

The euro was a touch lower against the dollar, with EUR/USD dipping 0.11% to
1.2264.

The pound was also slightly lower against the U.S. currency, with GBP/USD
edging down 0.1% to 1.4067.

Commodities Markets

An aluminium mirror on Trump's tariff tornado: Andy Home

(Reuters) - The rhetoric of trade war is escalating with each passing day.

U.S. President Donald Trump threatens another $100 billion of tariffs on
Chinese goods. China warns that it will fight back “at any cost”.

This storm started with steel and aluminium, with tariffs coming into effect
on March 23, but has grown in intensity to encompass a lengthening list of
goods and products.

Rising trade tensions have weighed on industrial metal prices,
unsurprisingly given their exposure to global growth prospects, but have
caused the U.S. aluminium premium market to whipsaw higher.

Which is ironic since prior to this week the premium was falling as the
aluminium market realised that in its case the U.S. administration’s bark
has proved considerably worse than its bite.

Graphic on the CME aluminium premium contract and reactions to key tariff
announcements:

A MIRROR ON TARIFF POLITICS

The CME’s Midwest aluminium premium contract has provided an accurate market
mirror on President Trump’s seemingly chaotic approach to tariffs.

Based on the supply and logistics drivers of the North American aluminium
market, it is a much more sensitive gauge of U.S. tariff impacts than the
London Metal Exchange price.

It is also an increasingly popular one with contract volumes up 32 percent
in the first quarter and open interest at a year’s high.

The premium exploded upwards on Feb. 13, the day of the release of the
Section 232 investigation into U.S. imports on national security grounds.

The report’s recommendations for blanket tariffs and/or quotas propelled the
CME’s Dec 2018 contract from 13.0 to 16.5 cents/lb, a 27 percent jump
equivalent to a $77 per tonne rise in the cost of delivered aluminium in the
U.S. Midwest.

After a brief pull back it surged again to 17.0 cents/lb after Trump
announced on March 1 his intention to impose duties of 25 percent on steel
and 10 percent on aluminium.

Crucially, there was no talk of countries being exempted, not even Canada,
the largest supplier of aluminium to the U.S. market place and one that is
“integrated” with the U.S. industrial base, to quote the Section 232 report.

There was panic in Canada with officials simultaneously promising it would
never happen and mulling possible retaliatory measures.

And there was panic everywhere else, encapsulated by the surging aluminium
premium.

However, the premium dropped following Trump’s signing of the executive
order on tariffs on March 8 with “carve-outs” for both Canada and Mexico.

It dropped harder towards 15 cents/lb after U.S. Trade Representative Robert
Lighthizer said on March 22 the Administration would “pause” on both steel
and aluminium tariffs for Argentina, Australia, Brazil, the European Union
and South Korea.

These exemptions, particularly that of Canada, significantly cushion but do
not eliminate the tariff hit on the U.S. market.

Graphic on top 10 suppliers of primary aluminium to the U.S. in 2017:
tmsnrt.rs/2uQFfQ0

Graphic on top 10 suppliers of plate, sheet and strip to the U.S. in 2017:
tmsnrt.rs/2GBYORD

HITTING THE TARGET(S)

Exempted, for now at least, are three of the largest 10 suppliers of primary
unwrought aluminium to the United States last year; top supplier Canada,
fourth largest Argentina and eight largest Australia.

India, sixth largest source of imports, is lobbying hard for its own
carve-out.

And others will be doing the same. Among last year’s top 10 importer list
are the United Arab Emirates, Qatar and Bahrain, all of which offer
intriguing bilateral deal potential for an Administration that explicitly
mixes trade and politics.

Probably not lobbying so hard are Russia and Venezuela, two of the five
countries singled out in the Section 232 report as benefiting from state
subsidy, being potentially unreliable partners or acting as points of
transhipment.

The other three were China, Vietnam and Hong Kong.

Russia was the second largest shipper of aluminium to the United States last
year and what happens to that metallic flow is perhaps the key question to
determining the lasting market impact of tariffs.

However, the broader take-away here is that after threatening to use a
sledge-hammer, the U.S. Administration has narrowed its sights on those it
regards as the real targets.

A similar pattern emerges from the tariffs on aluminium products.

Four out of last year’s 10 top suppliers of aluminium plate, sheet and strip
are exempt. Canada, Germany, Austria and France all duck the tariff bullet.

That leaves exposed China, target number one and by a wide margin the
biggest-volume supplier of products to the United States last year.

It would be wrong, however, to suppose that all of this is low-grade
material being dumped out of an oversupplied Chinese market.

Chinese imports to the United States, particularly those of
lower-specification products, have been falling in recent years in response
to ever tougher anti-dumping actions on specific product lines.

Last month, for example, the U.S. Commerce Department slapped hefty duties
on imports of aluminium foil from China, previously a major part of the two
countries’ aluminium trade.

Some of what China supplies may not be easily replaceable, opening the door
for potential product exemptions, a process that is now underway.

This gradual dilution of the original “shock and awe” threat to hit everyone
and every product with a 10 percent tariff is why the aluminium premium was
steadily retreating from its earlier highs.

Until this week, that is.

WHIPLASH

The rising political trade temperature has whiplashed U.S. aluminium
premiums higher again.

The Dec 2018 contract closed Thursday back up at 17.0 cents/lb. as everyone
reassesses, again, their previous assumptions about how this tariff storm is
going to play out.

An interesting contrarian indicator comes in the form of the share price of
Century Aluminum, a prominent lobbyist for action against China aluminium
imports and a domestic producer now promising to reactivate idled capacity.

The Century share price hit a two-year high of $24.77 on the day the Section
232 report was released.

It slumped on the two exemption announcements and is currently trading just
above $17.00 with no obvious knock-on impact from the renewed strength in
physical premiums.

Is that because, when it comes to aluminium at least, Trump’s tariffs are
not what they first appeared?

Nickel slips on concern over stainless steel, trade tension

(Reuters) - Nickel dropped 3 percent on Friday on worries about the
stainless steel market while the wider industrial metals complex was
pressured by fears of a global trade war.

Nickel prices surged 34 percent from early December until mid-February when
it hit $14,420 a tonne, the strongest since May 2015, partly due to
excitement over the potential demand for use in batteries for electric
vehicles (EVs).

While nickel was rallying, stainless steel prices hardly budged, showing
weakness in that market, he added.

Nickel was the biggest loser on the London Metal Exchange on Friday with
benchmark prices sliding 3 percent to $12,920 a tonne in official open
outcry trading.

* TRADE: Weighing on metals was news that China warned it would fight back
“at any cost” with fresh trade measures if the United States continues on
its path of protectionism, hours after President Donald Trump threatened to
slap an additional $100 billion in tariffs on Chinese goods.

* COPPER: LME three month copper, untraded in official activity, was bid
down 1.1 percent at $6,738 a tonne, paring a 1.4 percent advance from
Thursday. “Copper appears particularly sensitive to the geopolitical
headlines,” Alastair Munro at broker Marex Spectron said in a note.

* SHFE: The Shanghai Futures Exchange is closed for a second day on Friday
for the Tomb Sweeping Festival and will reopen on Monday.

* DOLLAR: Adding to the pressure on metals, the dollar edged higher on
Friday, heading for a second week of gains, as investors cut some bets
against the currency before monthly U.S. payrolls data that may signal price
pressures are growing in the world’s biggest economy.

* U.S. PAYROLLS: Traders awaited U.S. jobs data, which likely showed job
growth slowed in March as the boost from mild temperatures faded, but the
gains were probably more than enough to push the unemployment rate down to
4.0 percent, indicating the labour market continues to tighten.

*PRICES: Aluminium traded down 1.1 percent in official rings to $1,988 a
tonne, zinc traded down 0.6 percent to $3,218.50, lead was bid down 1.1
percent at $2,356 and tin was bid down 0.6 percent at $20,925.

* For the top stories in metals and other news, click or

DATA/EVENT AHEAD (GMT)

1230 U.S. Nonfarm payrolls Mar

1230 U.S. Unemployment rate Mar

1730 Federal Reserve Chairman Jerome Powell speaks on the

U.S. economic outlook before the Economic Club of Chicago

INVESTORS DIARY 2018

Company

Event

Venue

Date & Time

Zimbabwe

Independence Day

Zimbabwe

18/04/2018

Workers’ Day

01/05/2018

Africa Day

25/05/2018

Zimbabwe

Heroes’ Day

Zimbabwe

13/08/2018

Zimbabwe

Defence Forces Day

Zimbabwe

14/08/2018

DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

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