Bulls n Bears Daily Market Commentary : 21 August 2019

Thu Aug 22 03:51:01 CAT 2019

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Bulls n Bears Daily Market Commentary : 21 August 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 3,847,551.29 with foreign buys at ZWL$ 2,838,569.50 and
foreign sales were ZWL$ 1,246,052.00 Total trades were 82.

The All Share index added 0.25 points to end at 177.96 points. RIO ZIM led
the movers with a $0.1471 gain to close at $2.1500. TSL LIMITED was $0.0200
stronger at $0.7200 and CASSAVA SMARTECH rose by $0.0112 to end at $1.3000.
ECONET WIRELESS also increased by $0.0021 to $1.3001 and DAWN PROPERTIES
was $0.0009 up to end at $0.0462.

Gains were offset by the following negatives: OLD MUTUAL LIMITED lost
$0.0489 to trade at $18.9511. PADENGA HOLDINGS LIMITED  traded $0.0475 lower
at $1.7500 and SEEDCO LIMITED  eased $0.0021 to close at $1.5000.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

S.African rand rallies after data shows slowing inflation, stocks up

(Reuters) - South Africa’s rand rallied more than 1% to its firmest in
nearly a week on Wednesday on optimism the central bank has room to boost
the flagging economy after consumer inflation fell more than expected, while
stocks gained.

At 1525 GMT the rand was 0.91% firmer at 15.23 per dollar after opening at
15.3725, a chunk of those gains coming after the data showed July consumer
prices slowed to 4%, the lowest since January.

The subdued price growth reignited bets the Reserve Bank (SARB) may reduce
rates again after a 25 basis point cut to 6.5% in July, giving a boost to
companies and consumers.

A sharp slump in the rand, about 10% since the beginning of August, and
fears of a global growth recession had all but extinguished the chances of a
cut.

Africa’s most industrialised economy contracted by 3.2% in the first quarter
as nationwide power cuts by the ailing utility Eskom hit mining,
manufacturing and retailers.

With companies struggling to eke out profits as strained consumers cut
spending and face a weak growth outlook and continued political uncertainty,
monetary stimulus by a typically cautious central bank may be the only
short-term solution the country has.

Before the inflation data surprise, a poll in the previous week by Reuters
showed all but two of the 20 economists surveyed saw lending rates staying
on hold at the bank’s September meeting.

On the bourse, stocks strengthened amid positive risk sentiment as investors
awaited the outcome of a meeting on U.S. interest rate cuts.

The broader All-share index climbed 0.66% to 54,638 points, while the Top-40
index rose 0.6% to 48,837 rand.

Topping the blue chips was South Africa’s Phamarcare Aspen , which gained
6.95% to 69.52 rand. Discovery also rose 4.77% to 104.87 rand, recovering
after being affected by jitters over the National Health Insurance Bill
(NHI) bill.

The NHI bill seeks to centralise healthcare funding under the government.

Bonds also responded positively to the inflation data, with the yield on the
benchmark paper due in 2026 down 12.5 basis points to 8.265%.

Uganda

Ugandan shilling a touch stronger on commodity flows

(Reuters) - The Ugandan shilling was a touch stronger on Wednesday on the
back of hard currency inflows from exporters of coffee and other
commodities.

At 0933 GMT commercial banks quoted the shilling at 3,685/3,695, slightly
stronger than Tuesday’s close of 3,690/3,700.

       <mailto:info at bulls.co.zw> 

America

Stocks rise with focus on stimulus; U.S. yield curve briefly inverts

(Reuters) - A global equities gauge rose on Wednesday for a third day in
four as bets on more economic stimulus overcame, for now, worries over the
rising prospect of a global recession.

The brief inversion of the curve between 2-year and 10-year U.S. Treasury
yields loomed, however, as it is seen as a harbinger for an economic
contraction. The curve has at some point inverted in four of the past six
sessions.

Strong earnings in the United States and the report of talks on a megamerger
in European autos triggered gains in stocks, and the improved risk sentiment
drove safe-haven yields higher while the yen and gold edged lower.

There was muted reaction across markets to minutes from the Federal
Reserve’s meeting late last month. Policymakers debated lowering interest
rates more aggressively than the quarter-point cut last month, while showing
broad concern over a global economic slowdown and trade tensions.

The trade war escalated further after that Fed meeting, and investors were
cautious about the current validity of policymakers’ comments.

Traders expect that the Fed’s annual Jackson Hole, Wyoming, symposium and a
Group of Seven summit this weekend will shed light on the next steps
policymakers will take to support economic growth.

Auto shares led European stocks higher after Italian media suggested the
merger talks between Fiat Chrysler and Renault have continued despite
reports to the contrary.

In U.S. equities, earnings from Target and Lowe’s boosted consumer-centered
stocks and overall market sentiment.

The Dow Jones Industrial Average rose 240.29 points, or 0.93%, to 26,202.73,
the S&P 500 gained 23.92 points, or 0.82%, to 2,924.43 and the Nasdaq
Composite added 71.65 points, or 0.90%, to 8,020.21.

The pan-European STOXX 600 index rose 1.21% and MSCI’s gauge of stocks
across the globe gained 0.70%.

Emerging market stocks rose 0.31%. MSCI’s broadest index of Asia-Pacific
shares outside Japan closed 0.16% lower, while Japan’s Nikkei lost 0.28%.

YIELDS RISE, YEN FALLS

Futures markets have fully priced a 25-basis-point cut in next month’s Fed
meeting. On Wednesday, U.S. Treasury yields rose as rising stock prices
reflected improving risk sentiment.

Benchmark 10-year notes last fell 9/32 in price to yield 1.5893%, from
1.559% late on Tuesday.

Germany sold 30-year bonds with a negative yield for the first time at an
auction on Wednesday, a milestone for a fixed-income market where the entire
curve now yields less than zero. The very weak demand seen at the auction
was expected.

West Texas crude futures fell after U.S. government data showed a drawdown
in domestic crude stockpiles but rises in refined product inventories, while
worries about a possible global recession capped gains in Brent.

U.S. crude fell 0.32% to $55.95 per barrel and Brent was last at $60.40, up
0.62% on the day.

In currencies, the dollar rose against the Swiss and Japanese safe-haven
currencies and the dollar index rose 0.12%, with the euro down 0.14% at
$1.1083. Sterling was last trading at $1.2123, down 0.37% on the day.

The Japanese yen weakened 0.37% versus the greenback to 106.63 per dollar.

Spot gold dropped 0.3% to $1,502.15 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper prices firm ahead of Fed minutes

(Reuters) - Copper prices edged higher on Wednesday ahead of U.S. Federal
Reserve meeting minutes expected to shed light on actions to counter slow
growth even as the U.S.-China trade war continues to pose a threat to metals
demand.

Benchmark copper on the London Metal Exchange (LME) rose 0.2% to $5,724 a
tonne in official trading rings, having touched a two-week low on Tuesday.

Macroeconomic conditions have been the main driving factor behind the moves
in base metals, said Deutsche Bank analyst Nick Snowdon, adding that traders
were positioning in anticipation of more macro events.

Meanwhile, U.S. President Donald Trump told reporters that he had to
confront China over trade even if it caused short-term harm to the U.S.
economy, saying Beijing had been cheating Washington for decades.

The tit-for-tat trade conflict between the world’s two largest economies has
subdued economic growth and cast doubt on demand for base metals, of which
China is the world’s biggest consumer.

FEDERAL RESERVE: Traders are also awaiting the U.S. central bank’s annual
Jackson Hole seminar this week and a Group of Seven summit at the weekend
for clues on what additional steps policymakers could take to boost economic
growth.

DOLLAR: The U.S. dollar edged off two-week highs, providing some support to
dollar-denominated commodities, which become cheaper for holders of other
currencies.

COPPER BALANCE: For the first five months of the year, the global copper
market was in a 190,000 tonnes deficit, compared with a 131,000 tonnes
deficit in the same period a year earlier, the International Copper Study
Group said.

INVENTORIES: On-warrant LME copper inventories MCUSTX-TOTAL - those not
earmarked for delivery - stood at 298,900 tonnes, near their highest since
April 2018.

VEDANTA: Zambian President Edgar Lungu will not meet the chairman of Vedanta
Resources to discuss the disputed liquidation of its Konkola Copper Mines on
his visit to India this week, a statement from the Zambian State House said.

LEAD PRICES: Lead was at a one-week high on supply disruption. After failing
to trade in official rings, lead was bid 1.3% higher at $2,088 a tonne.

PRICES: Aluminium was bid 0.1% lower at $1,780 a tonne while zinc was bid up
1.3% to $2,255. Tin, meanwhile, fell 1.9% to $16,155 after touching its
lowest in more than three years while nickel shed 0.8% to $15,730.

COLUMN: Tiny tin market sounds a recessionary warning note: Andy Home

Gold eases as investors await Fed minutes

(Reuters) - Gold eased on Wednesday to hold around the $1,500 level as
investors cashed in some gains ahead of minutes from the U.S. Federal
Reserve’s last meeting, which are expected to shed more light on interest
rate cuts.

Spot gold was down 0.5% at $1,499.51 per ounce as of 1232 GMT, while U.S.
gold futures slipped 0.4% to $1,509.60.

The metal is still up more than $80 this month after recent strong gains
fuelled by worries over the outlook for the global economy, and the prospect
of more U.S. interest rate cuts.

Minutes from the Federal Open Market Committee’s most recent meeting in July
- when the U.S. central bank cut interest rates for the first time in a
decade - are due on Wednesday.

Traders are also awaiting the central bank’s annual Jackson Hole seminar
later this week, with major focus on a scheduled speech by Fed Chair Jerome
Powell.

Powell’s comments are of particular interest after last week’s inversion of
the U.S. yield curve - widely regarded as a recession signal - boosted
expectations the Fed would lower interest rates at its September policy
meeting.

Lower interest rates decrease the opportunity cost of holding non-yielding
bullion and weigh on the dollar, making gold cheaper for investors holding
other currencies.

On the trade front, U.S. President Donald Trump said on Tuesday he had to
confront China over trade even if it caused short-term harm to the U.S.
economy.

The escalation in the trade war between the world’s biggest economies and an
increasingly dovish shift in policy by central banks have contributed to a
more than 6% rise in gold this month.

Indicative of sentiment, holdings of the world’s largest gold-backed
exchange-traded fund, SPDR Gold Trust, rose 0.2% to 845.17 tonnes on Tuesday
from Monday.

Among other precious metals, silver fell 0.35% to $17.06 per ounce, while
platinum edged 0.1% higher to $849.06.

Palladium was steady at $1,491.38 per ounce. 

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
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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
whatsoever for any loss howsoever arising from any use of this report or its
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for guideline purposes only and sourced from third parties.

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