Bulls n Bears Daily Market Commentary : 01 August 2019

Fri Aug 2 04:20:43 CAT 2019

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Bulls n Bears Daily Market Commentary : 01 August 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 3,337,394.11 with foreign buys at ZWL$ 550,474.40 and
foreign sales were ZWL$176,669.00 Total trades were 116.

The All Share index lost 1.31 points to close at 185.81 points. DELTA fell
$0.0549 to close at $3.4228, PADENGA dropped $0.0475 to trade at $1.8000 and
ECONET  eased $0.0191 to settle at $1.5800. Other losses were in NMB  which
shed $0.0177 to $0.2623 and INNSCOR went down by $0.0167 to close at
$2.2058.

CBZ HOLDINGS   was leading with a $0.0557 gain to close at $0.5477, OLD
MUTUAL LIMITED  increased by $0.0240 to settle at $16.2971 and FML   rose by
$0.0005 to close at $0.2545. FIDELITY traded $0.0001 higher at $0.0841.

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  Global Currencies & Equity Markets

South Africa

S.Africa's rand slides as lengthy Fed easing ruled out, stocks rise

(Reuters) - South Africa’s rand weakened on Thursday along with other
emerging market currencies, a day after the U.S. central bank cut lending
rates but ruled out a long rate-cutting campaign.

Stocks closed higher.

At 1505 GMT the rand was 1.45% weaker at 14.5475 per dollar, its weakest
since June 18.

The U.S. Federal Reserve cut interest rates as expected on Wednesday but
chief Jerome Powell said the move might not be the start of a lengthy
campaign to shore up the economy against risks, disappointing investors who
hoped for a more dovish stance.

The dollar index rose to a two-year high, hurting demand for developing
world currencies.

The tame outlook for U.S. rates adds to economic pressures faced by the rand
at home after unemployment hit an 11-year high and the fiscal and credit
ratings risk posed by power utility Eskom continued to unnerve investors.

In equities, the Top-40 index closed 1% higher while the broader all-share
was up 0.5%.

Among the gainers were e-commerce giant Naspers, which closed up nearly 4%.

Bonds weakened, with the yield on the benchmark 10-year government issue
climbing 5.5 basis points to 8.38%.

Kenya

Kenya's shilling strengths after central bank sells dollars

(Reuters) - Kenya's shilling strengthened on Thursday after the central bank
sold dollars to banks to stem persistent weakness in the local unit, traders
said.

At 0930 GMT, commercial banks quoted the shilling at 103.60/80 per dollar,
up from 104.15 when the central bank intervened earlier in the session. It
had slid more than 1% in seven straight trading sessions. 

The shilling sank to its lowest level against the dollar in nearly five
years earlier this week due to heightened political risk, a firmer dollar,
concerns about export earnings and excess liquidity in the money markets.

The bank also sought to mop up 15 billion shillings from the market through
seven-day repos. 

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

       <mailto:info at bulls.co.zw> 

Europe

Sterling sinks to $1.21 as BoE cuts growth forecasts before Brexit

LONDON (Reuters) - Sterling sank to a 30-month low on Thursday below $1.21,
hurt by a stronger dollar, renewed worries about a no-deal Brexit and
reduced Bank of England forecasts for British economic growth.

The pound plunged to a low of 1.2085 GBP=D3, its weakest since January 2017.
It came after the U.S. Federal Reserve's less dovish than expected policy
meeting on Wednesday spurred dollar buying, and before the BoE kept interest
rates on hold but cut its growth forecasts amid mounting Brexit risks.

Sterling was last down 0.5% at $1.2098, while against the euro it fell to
91.33 pence EURGBP=D3.

The pound shed more than 4% of its value in July, its worst month since
October 2016, following new Prime Minister Boris Johnson’s vow to leave the
European Union on Oct. 31 whether or not a transition deal can be agreed
with Brussels.

This sparked panic among investors that Britain was on course for a
disorderly divorce after 46 years in the world’s largest trade bloc.

On the Bank of England’s trade-weighted GBPTWI=BOEL index, which measures
sterling against its trading partners’ currencies, the pound has dropped to
its weakest since early November 2016, having fallen more than 7% since May.

The BoE kept rates on hold at 0.75% on Thursday but gave no indication it
was considering lowering interest rates like other central banks.

The pound was little moved by the announcement, hovering around the $1.21
mark.

BoE Governor Mark Carney said “profound uncertainties” over the future of
the global trading system and Brexit were weighing on UK economic
performance.

The BoE forecasts assume Britain avoids a Brexit shock, but it still cut its
growth forecasts to 1.3% for 2019 and 2020, down from 1.5% and 1.6%
respectively in its last forecasts in May.

“Sterling remains vulnerable to a further escalation in Brexit tensions and
we anticipate the market will likely discount higher risks of a ‘no deal’
outcome in the weeks ahead,” said Roger Hallam, Currency Chief Investment
Officer at JP Morgan Asset Management.

Money markets are pricing in a 25 basis point rate cut by the BoE by the end
of January 2020.

Also weighing on sterling are signs of a slowdown in the British economy.

British manufacturers’ output fell by the most in seven years in July, the
Purchasing Managers’ Index survey for the manufacturing sector showed, as
Brexit jitters and weaker global demand choked off growth.

The July survey had a reading of 48, the same as the June reading but
slightly better than economists’ forecasts.

 <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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