Bulls n Bears Daily Market Commentary : 31 July 2019

Thu Aug 1 00:41:15 CAT 2019

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Bulls n Bears Daily Market Commentary : 31 July 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 9,862,681.82 with foreign buys at ZWL$ 13,117.54 and
foreign sales were NIL Total trades were 93.

The All Share index dropped 2.33 points to close at 187.12 points. ECONET
(ECO.zw) fell $0.0848 to close at $1.5991, PADENGA dropped $0.0548 to trade
at $1.8475 and CASSAVA SMARTECH  eased $0.0412 to settle at $1.5413. Other
losses were in INNSCOR  which shed $0.0177 to $2.2225 and AXIA went down
$0.0087 to close at $0.4799.

OLD MUTUAL led the movers with a $0.0731 gain to close at $16.2731, SEEDCO
INTERNATIONAL added $0.0075 to settle at $2.1300 and ZIMPLOW moved up
$0.0025 to close at $0.5025. ZIMRE HOLDINGS traded $0.0022 higher at $0.0454
and OK ZIMBABWE went up by $0.0004 to $0.4000.

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  Global Currencies & Equity Markets

Kenya

Kenyan central bank steps in after shilling slides

(Reuters) - Kenya's central bank pumped dollars into the foreign exchange
market on Wednesday and sought to soak up excess liquidity after the
shilling sank to its lowest level against the dollar in nearly five years,
traders said.

The shilling has been one of Africa's top performers this year. But it has
lost 1.2% against the dollar in the past six sessions due to heightened
political risk at home, a stronger dollar, concerns about export earnings
and excess liquidity in the money markets.

It fell to an intra-day low of 104.45/55 per dollar on Wednesday, from
103.20/30 on Monday last week, forcing the central bank to intervene and
send it back to the 104.00 level. 

The bank also sought to mop up 10 billion shillings from the money markets
using 7 day repos, saying there was excess liquidity.

The weighted average interest rate on the overnight borrowing market for
banks has hovered around 2 percent this month, making it cheaper for banks
to bet against the currency by buying up dollars.

Kenya's political risk went up a notch last week when Finance Minister Henry
Rotich was charged in court over the loss of funds in tender awards for the
construction of two dams. He denied all the charges and was freed on bail.

Political analysts said the charges exposed a widening schism between
President Uhuru Kenyatta and his deputy William Ruto, whose side of the
ruling Jubilee party Rotich belongs to. 

Investors have also been concerned about a potential drop in export earnings
from key commodities like tea and the tourism business. Falling imports,
however, mean the current account deficit will still improve this year, the
central bank says.

The central bank chief, Patrick Njoroge, who was sanguine about the
shilling's weakness last week, might have changed his stance this week due
to the technical charts, which show a drop below 104.60 for the shilling
could unleash further weakness, market participants said.  

The shilling plunged to its lowest ever in 2011 when it hit 107 per dollar,
mainly due to policymakers' refusal to raise rates in the face of high
inflation. 

South Africa

South Africa's rand steadies as markets await Fed verdict

(Reuters) - South Africa’s rand steadied against the dollar in late trade on
Wednesday, as investors awaited a likely cut in interest rates by the U.S.
Federal Reserve, shifting the spotlight away from domestic economic
troubles.

Stocks fell as a weaker-than-expected performance by AngloGold Ashanti put
pressure on gold shares, wiping out any benefit from stronger prices for the
precious metal.

At 1510 GMT, the rand was trading at 14.1800, not far off a close of 14.2050
on Tuesday.

The U.S. Federal Reserve is expected to cut interest rates for the first
time in more than a decade. The policy announcement is scheduled to be
released at 1800 GMT.

Investors will focus on whether the Fed leaves the door open for further
easing.

Eskom said on Tuesday it expected a loss of around 20 billion rand ($1.4
billion) this financial year. Lack of improvement in its financial position
indicated it would be unable to meet its obligations without government
help.

“There are many in the market questioning why the rand is not blowing off
more than it has. Eskom is producing major losses, there are bailouts
galore, and the budget deficit is blowing out to 6% or more,” ETM Analytics
said in a note.

On Tuesday, data showed unemployment rose to an 11-year high in the second
quarter, underscoring the country’s fragile growth outlook. But early on
Wednesday markets were looking ahead to the Fed rate decision later in the
session.

The Johannesburg Stock Exchange’s broader all-share index declined 0.8% to
56,784 points, while blue-chip firms on the top-40 index fell 0.8% to 50,799
points.

AngloGold led the declines on the blue-chip index, shedding 5.37% to 255
rand, while Gold Fields also slipped 4.53% to 76 rand and Anglo American
Platinum lost 1.78% to 352 rand.

Yields on the benchmark 10-year bond added 1.5 basis points to 8.325%.

       <mailto:info at bulls.co.zw> 

America

Dollar jumps, stocks fall after Fed rate outlook; pound stalls

(Reuters) - The dollar index hit a more than 2-year high and stocks tumbled
after Federal Reserve Chairman Jerome Powell said Wednesday’s 25-basis-point
rate cut was not the same as the beginning of a lengthy easing cycle.

Powell, speaking in a news conference after the release of the Fed
statement, characterized the rate cut as “a mid-cycle adjustment to policy,”
comments that do not imply sharp further cuts are on the way.

Some market participants were expecting the Fed to leave the door open for
further cuts or even a 50 basis point cut after Wednesday’s meeting, so the
less dovish stance sent U.S. stocks to session lows and the dollar index
soaring.

The Dow Jones Industrial Average fell 333.75 points, or 1.23 percent, to
26,864.27, the S&P 500 lost 32.8 points, or 1.09 percent, to 2,980.38 and
the Nasdaq Composite dropped 98.20 points, or 1.19 percent, to 8,175.42.

MSCI’s gauge of stocks across the globe shed 0.70.

Emerging market stocks lost 0.59 percent. MSCI’s broadest index of
Asia-Pacific shares outside Japan closed 0.69 lower, while Nikkei futures
lost 0.77.

In currencies, the sharp move higher in the dollar ate into a pound rebound,
though the British currency was still slightly up against the greenback
after four days of declines.

The pound earlier rose as much as 0.8% against the dollar near $1.225 but
was last trading at $1.2161, up 0.10 percent on the day.

It closed July with its weakest monthly performance against the dollar since
October 2016.

The dollar index rose 0.52 percent, with the euro down 0.7 percent to
$1.1075.

The dollar powered higher partly as the Fed “acknowledged strong labor
markets, recent reasonable signs of moderate growth. It still leaves the
playing field wide open as to what they’re going to do in future months,”
said Tony Bedikian, head of global markets at Citizens Bank in Boston.

The Japanese yen weakened 0.15 percent versus the greenback at 108.79 per
dollar.

In commodities, crude oil futures settled higher for the fifth straight day,
buoyed by a bigger-than-expected drop in U.S. inventories, but the stronger
dollar helped bring prices down from session highs in post settlement
trading.

U.S. crude futures settled at $58.58, up 0.91% per barrel and Brent settled
up 0.7% at $65.17. WTI was in the red in post settle trading.

The yields on U.S. government debt were in part weighed down by the tumble
in stocks.

Benchmark 10-year notes last rose 13/32 in price to yield 2.0161, from 2.061
late on Tuesday.

Spot gold dropped 1.3 to $1,412.30 an ounce. Copper lost 0.13 to $5,940.00 a
tonne.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold steadies as investors await cues on future Fed rate cuts

(Reuters) - Gold prices steadied on Tuesday, a day before the conclusion of
the Federal Reserve’s two-day policy meeting, as investors awaited more
information on the outlook for interest rate cuts by the U.S. central bank.

Spot gold was up 0.2% at $1,429.38 per ounce as of 1:45 p.m. EDT (1745 GMT).

U.S. gold futures settled 0.7% up at $1,429.70

Market participants expect the U.S. central bank to cut its benchmark
interest rate for the first time since the financial crisis more than a
decade ago. Federal funds futures implied traders saw an 81% chance of a 25
basis-point rate cut.

The Federal Reserve is scheduled to announce its monetary policy decision at
2 p.m. EDT on Wednesday as well as issue a statement.

Lower interest rates reduce the opportunity cost of holding non-yielding
bullion and weigh on the dollar.

The dollar held close to a two-month peak against key rivals, making
greenback-denominated assets such as gold costlier for investors holding
other currencies.

On the technical front, “Gold is holding a narrow range ahead of the FOMC
meeting results with support standing at just below $1,420 per ounce and
more importantly at $1,410,” INTL FCStone analyst Rhona O’Connell said in a
note.

Meanwhile, investors will also keep a close eye on U.S.-China trade talks in
Shanghai this week.

Officials from both the countries restarted negotiations, after talks
stalled in May, in a bid to end a year-long tit-for-tat tariffs war.
Expectations of a breakthrough are low.

Reflecting investors’ appetite for bullion, holdings in the world’s largest
gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.8% to 824.89
tonnes on Monday.

Holdings have risen for the second straight month, gaining nearly 4% so far
in July.

Among other precious metals, silver rose 0.5% to $16.53 per ounce, while
platinum fell 1.2% to $868.17 per ounce.

Palladium dropped 2.7% to $1,510.98 per ounce. 

Lead prices slip on rising stockpiles and weak factory output

(Reuters) - Lead prices fell on Tuesday after large deliveries of metal into
London Metal Exchange (LME) warehouses eased supply concerns and poor
economic data pointed to weakening demand.

Benchmark lead on the LME closed 2.4% down at $1,998 a tonne.

The metal used in batteries had rallied nearly 20% from early May to a high
of $2,117 last week as smelter outages in Australia and China curtailed
production.

But lacklustre projected demand from China, the biggest consumer of metals,
was undermining prices, said Macquarie analyst Vivienne Lloyd.

Lead is likely to fall to about $1,900 by the end of the year despite a
small deficit in the market, she said, adding that other base metals would
also slip unless China was able to step up stimulus spending.

LEAD STOCKS: Lead inventories in LME-registered warehouses rose by 11,850
tonnes to 67,325 tonnes but remain near their lowest in a decade.
MPBSTX-TOTAL

LEAD SPREAD: In a signal that nearby supply is not too tight, cash lead
moved back to a discount against three-month metal on the LME. CMPB0-3

KOREA: Month-long planned maintenance is being carried out at Korea Zinc’s
500,000 tonne Onsan lead refinery, a source at the company said on Tuesday.

POLL: Analysts polled by Reuters see cash lead averaging $1,947 this year
and $1,925 in 2020. They also marked down this year’s forecasts for copper
and other industrial metals.

FACTORIES: Underlining the weak demand outlook, a Reuters poll showed
factory activity in China is expected to have contracted for the third month
in a row in July.

The data will add to a slew of weak manufacturing readings in Europe, the
United States and Japan, where output tumbled the most in nearly 1-1/2-years
in June, data showed on Tuesday.

GERMANY: Consumer morale worsened in Germany for the third month in a row, a
survey showed.

TRADE WAR: Contributing to the slowdown in economic activity is a U.S.-China
trade war that shows no sign of ending as negotiators shift to Shanghai this
week for their first in-person talks since a G20 truce last month.

FED: Investors were looking to the U.S. Federal Reserve, which is expected
to lower borrowing costs this week for the first time in more than a decade.

Lower interest rates should support commodities prices by encouraging
economic growth and weakening the dollar, which has strengthened sharply in
recent weeks to make metals more expensive for buyers with other currencies.

JAPAN: The Bank of Japan held off from expanding stimulus on Tuesday but
committed to doing so “without hesitation” if a global slowdown jeopardises
the country’s economic recovery.

OTHER METALS: LME copper closed 1.2% down at $5,947.50 a tonne, aluminium
fell 0.4% to $1,803, zinc slipped 0.4% to $2,460, tin lost 0.9% to $17,450
and nickel finished unchanged at $14,360.

.

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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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
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for guideline purposes only and sourced from third parties.

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