Bulls n Bears Daily Market Commentary : 20 August 2019

Tue Aug 20 04:11:08 CAT 2019

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Bulls n Bears Daily Market Commentary : 20 August 2019

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Zimbabwe Stock Exchange Update

The All Share index closed the day lower at 178.72 points after loosing 0.98
points . OLD MUTUAL LIMITED lost $1.6745 to close at $20.0477, INNSCOR
AFRICA   went down by $0.0089 ending at $2.039 and AXIA CORPORATION eased
$0.0050 to trade at $0.4750. ECONET WIRELESS also traded $0.0048 lower at
$1.2952 and OK ZIMBABWE lost $0.0047 closing the day at $0.3836.

Trading in the positive: DAWN PROPERTIES advanced by $0.0053 to trade at
$0.0453. SEEDCO INTERNATIONAL LIMITED and SEEDCO LIMITED  both gained
$0.0025 to close at $2.1525 and $1.5025 respectively. DELTA CORPORATION also
traded $0.0002 higher at $3.4602.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South Africa's rand falls as investors weigh local, global risks

(Reuters) - South Africa’s rand weakened on Monday as traders and investors
continued to weigh heightened global growth risks against local uncertainty,
while equities rose in line with global stock markets.

At 1555 GMT the rand was 0.82% weaker at 15.4150 per dollar, tracking
weakness in most emerging markets currencies as trade worries linger.

The rand has fallen more than 7% since the beginning of August, pressured by
the rising likelihood of a credit ratings downgrade by Moody’s linked to a
massive, additional bailout for state power firm Eskom and signs of slower
global growth.

The inversion of the U.S. Treasury bond yield curve - widely viewed as a
sign of looming global recession - for the first time since 2007, also put
pressure on the rand last week.

Locally, traders will also look to Wednesday’s release of local consumer
price inflation for July, with the rand’s attraction as a carry yield target
the key focus.

On the bourse, however, stocks rose to a three-month high. The Johannesburg
Stock Exchange’s broader all-share index closed 0.95% up to 54,386 points,
while the benchmark Top-40 index gained 1.01% to 48,647 points.

Leading the blue-chip index upwards was chemicals and energy company Sasol,
which rose 3.29% to 273.71 rand, while miner Anglo American gained 3.07% to
322.85 rand. Pharmacist Clicks also increased 2.57% to 198.07 rand.

Ryan Woods, trader at Independent Securities, said the stock market was
lifted by factors including the prospect of government stimulus to stave off
recession Germany.

China’s central bank also unveiled interest rate reforms expected to lower
corporate borrowing costs, boosting hopes that major economies would seek to
prop up stalling growth with fresh stimulus measures and lifting stock
markets around the world.

Bonds weakened, with the yield on the benchmark paper due in 2026 adding 4.5
basis points to 8.43%.

Egypt

Egypt sells 610 mln euros in euro-denominated t-bills - central bank

(Reuters) - Egypt sold 610 million euros in one-year euro-denominated
treasury bills on Monday at an average yield of 1.49%, data from the central
bank showed.

The bank sold 695.10 million euros in a similar auction in November with an
average yield of 1.75%. 

       <mailto:info at bulls.co.zw> 

America

Dollar firms, stocks soar on ECB rate cut expectations

(Reuters) - U.S. and European stocks surged on Friday on expectations the
European Central Bank will cut interest rates but the dollar pared gains
against the euro after a report said the German government was prepared to
take on new debt to lift the economy.

The dollar hit a two-week high against the euro as expectations of ECB
stimulus weighed on the single currency and bullish data showing a jump in
U.S. homebuilding permits to a seven-month high also helped lift the
greenback.

But German and other euro zone government bond yields rose late Friday on a
Der Spiegel report. Borrowing costs had plumbed new lows throughout the week
as investors unnerved by the prospect of European recession piled into safer
assets.

The euro rebounded to pare most losses after Der Spiegel magazine said the
German government would be prepared to ditch its balanced budget rule and
take on new debt to counter a possible recession.

Germany’s Finance Ministry declined to comment on the report.

There has been a rising drumbeat of news recently from German politicians
and businesses calling for a stimulus program, said Karl Schamotta, director
of global markets strategy at Cambridge Global Payments in Toronto.

The German 10-year bund yield rose to a negative 0.688%, having earlier hit
a record low of negative 0.727%. Rates turned negative in March and have
trended lower since May.

The rebound in equity markets buoyed investor sentiment, though it is hard
to say the recent rout has found a floor despite cheaper prices, said Yousef
Abbasi, global market strategist at INTL-FCStone Financial in New York.

U.S. banks are likely to get cheaper because European banks are likely to do
so if the ECB does not put together a credible off-set plan for further
negative rates for banks, he said.

Technology shares led Wall Street’s advance but U.S. stocks posted a third
straight week of declines, battered by the U.S.-China trade row and an
“inversion” of 2- and 10-year bond yields that sparked fears of a recession.

MSCI’s gauge of stock performance in 47 countries gained 1.18% and its
emerging market rose 0.69%. In Europe, the FTSEurofirst 300 index of leading
regional shares closed 1.23%.

The Dow Jones Industrial Average rose 306.62 points, or 1.2%, to 25,886.01.
The S&P 500 gained 41.08 points, or 1.44%, to 2,888.68 and the Nasdaq
Composite added 129.38 points, or 1.67%, to 7,895.99.

The euro earlier slid to $1.1090, shy of a two-year low it set two weeks
ago, on reports the ECB’s Olli Rehn had suggested Thursday that a
significant easing package was needed in September.

The dollar index rose 0.06%, with the euro down 0.15% to $1.1089. The
Japanese yen weakened 0.23% versus the greenback at 106.35 per dollar.

The German 10-year bund posted a fifth straight week of declines, Italy’s
10-year bond yield set its biggest weekly fall since late 1997 and the
decline in Spanish 10-year yields were the largest since at least 1994.

The benchmark 10-year U.S. Treasury notes fell 9/32 in price to push yields
up to 1.5589%.

Crude oil prices recovered from two days of declines after data on Thursday,
showing a rise in U.S. retail sales, helped ease recession concerns. A
bearish outlook from OPEC capped gains.

Brent crude rose 41 cents to settle at $58.64 a barrel while U.S. crude
settled 40 cents higher at $54.87 a barrel.

U.S. gold futures settled down 0.5% at $1,523.60 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

BHP annual profit rises on robust iron ore prices, pays record dividend

(Reuters) - BHP Group, the world’s biggest miner, posted a 2% rise in
full-year profit helped by a windfall from higher iron ore prices, and
declared a record final dividend on Tuesday.

Iron ore prices have staged a dramatic rally this year, with the Dalian iron
ore benchmark more than doubling, amid supply outages from Brazil and
Australia earlier this year and more Chinese appetite for the steel-making
ingredient.

China’s iron ore imports surged 21% in July from the month before to their
highest level since January, as supply grew from miners in Australia and
Brazil.

Iron ore shipments to China from Australia’s Port Hedland terminal, the
world’s biggest iron ore port and used by BHP, had risen more than 11% in
June.

Underlying profit for the twelve months ended June 30 rose to $9.12 billion
from $8.93 billion a year earlier.

Underlying profit is a measure of the company’s core performance excluding
one-time gains and losses.

Including one-time items, profit more than doubled to $8.31 billion, which
includes $1 billion in productivity losses for fiscal 2019 on disruptions to
production at its copper and iron ore operations.

BHP declared a final dividend of 78 cents per share, up from 63 cents last
year. 

Aluminium hits two-week high after China unveils rate reforms

(Reuters) - Aluminium touched its highest in more than two weeks on Monday
and copper also rose after China unveiled interest rate reforms that could
boost the economy of the top metals consumer.

The move by China, which also fuelled hopes of interest rate cuts, triggered
short-covering and came on top of fears of aluminium shortages because of
flooding in Shandong province in China, a big producer of the metal, traders
said.

The Chinese rate reform announced on Saturday is designed to steer borrowing
costs lower for companies to support the slowing economy.

Benchmark aluminium on the London Metal Exchange rose 0.1% to $1,794 a tonne
in final open-outcry trading, having earlier touched $1,807.50, its highest
since July 31.

LME three-month copper added 0.5% to finish at $5,774 a tonne.

* U.S.-CHINA TRADE: U.S. Commerce Secretary Wilbur Ross on Monday said the
U.S. government will extend a reprieve given to Huawei Technologies that
permits the Chinese company to buy supplies from U.S. businesses, even
though nearly 50 of its units were being added to a U.S. economic blacklist.

* ALUMINIUM: Investors remain concerned about potential disruption from
flooding in China’s eastern province of Shandong, the smelting heartland of
the country, broker Marex Spectron said in a note.

The floods followed typhoon Lekima, which struck last week, causing billions
of dollars of economic losses.

China Hongqiao Group, the world’s biggest aluminium producer, said on Aug.
13 that it was operating as normal after the typhoon lashed its home
province.

* TIN: LME tin shed 0.6% to end at $16,475, its lowest since June 2016,
while Shanghai tin dropped as much as 3.1% to near a seven-week low after
stocks surged 33% in LME warehouses in one day, data showed on Friday.
MSNSTX-TOTAL

* NICKEL SPREAD: The premium of LME cash nickel over the three-month
contract CMNI0-3 eased from a decade-high of $40 a tonne last week to $30 a
tonne on Monday, suggesting nearby supply tightness has eased but the market
is still relatively tight.

* PRICES: LME zinc closed little changed at $2,262 a tonne, lead gained 0.7%
to $2,054 and nickel lost 1.7% to $15,920.

($1 = 7.0449 Chinese yuan)

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
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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