Bulls n Bears Daily Market Commentary : 18 July 2019

Fri Jul 19 04:25:33 CAT 2019

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Bulls n Bears Daily Market Commentary : 18 July 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 6,766,389.83 with foreign buys at ZWL$ 3,349,122.13 and
foreign sales were ZWL$1,758,933.00 Total trades were 45.

The All Share index retreated further by 0.11 points  to close at 191.72
points. BRITISH AMERICAN TOBACCO  lost $3.5000 to close at $36.0000, PPC
eased $0.2457 to end at $1.9500 and MEIKLES  was $0.1000 lower at $1.1000.
OLD MUTUAL LIMITED  also decreased by $0.0188 to settle at $15.7500 and
ECONET  eased $0.0039 to end at $1.6911. 

CASSAVA SMARTECH  was the only counter trading in the positive adding
$0.0415 to end at $1.6900.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South Africa's rand, bonds rally after central bank cuts rates

(Reuters) - South Africa’s rand rallied against the dollar on Thursday and
bond yields fell after the central bank cut its main lending rate by 25
basis points in a widely expected move to counter floundering economic
growth.

At 1600 GMT, the rand was 0.93% higher at 13.8825 per dollar after closing
at 14.0125 in previous session.

The South African Reserve Bank (SARB) cut rates by 25 basis points to 6.5%
in a unanimous decision, its first easing since March 2018, although it
struck a cautious tone suggesting future reductions to borrowing costs were
not a foregone conclusion despite benign inflation.

The reaction in the rand was tame by historical standards, he added.

Growth in Africa’s most industrialised economy contracted by a surprise 3.2%
in the first quarter, swelling calls for the bank to do more to support
consumer spending and corporate activity.

But in a media briefing on Thursday the bank poured cold water on the
long-term impact of lower lending rates, saying the weak economy was linked
more to fiscal policies and a rate cut could only have a short term effect.

The U.S. Federal Reserve is set to lower rates at its own policy meeting
next week, a move likely to spur demand for higher-yielding emerging market
assets, although South Africa’s now lower lending rate may limit interest.

Traders said the rand in the meantime would likely see some increased
volatility as investors looked for quick gains.

Bonds also crossed a crucial psychological mark, with the yield on benchmark
2026 government bonds dipping below 8% to 7.975%, 5 basis points lower on
the day.

Stocks closed higher, with miners, retailers and financial firms, all of
which benefit from the interest rate decision or its effect on the rand,
topping the Johannesburg Stock Exchange’s blue-chip index.

The JSE Top-40 index rose 0.33% to 51,733 points and the broader all-share
index closed 0.37% higher at 57,847 points.

Among top-40 companies, the biggest gainer was British American Tobacco, up
5.9% on the back of rival Philip Morris’ better-than-expected second quarter
earnings and improved full-year outlook.

Anglo American Platinum’s performance was also boosted by positive second
quarter results, lifting the stock 3.4%, with fellow miners AngloGold
Ashanti, Goldfields and Exxaro close behind. 

Uganda

Ugandan shilling little-changed, may weaken on energy demand

(Reuters) - The Ugandan shilling        was little-changed on Thursday but
was seen inclined on the weaker  side on a possible pick up in demand for
dollars from fuel importers, traders said. 

At 0931 GMT commercial banks quoted the shilling at 3,688/3,698, compared to
Wednesday's close of 3,685/3,695.

       <mailto:info at bulls.co.zw> 

America

Stocks slip as U.S.-China trade war drags on corporate earnings

(Reuters) - Global shares slipped on Thursday on growing signs that a trade
dispute between the United States and China was taking a toll on corporate
earnings, with nerves spreading from Wall Street through Asia to European
markets.

MSCI world equity index, which tracks shares in 47 countries, fell 0.2% to
its lowest in nine days, after the start of the earnings season brought bad
signs. Rail freight giant CSX Corp, cut its revenue forecast as it warned of
the impact of the U.S.-China trade war, pushing down Wall Street indexes on
Wednesday.

In Europe, too, earnings were top of the agenda. Tech stocks led the slide
as software firm SAP, Europe’s most valuable tech stock by market cap,
slumped 10% on poor results, flagging the impact of the U.S.-China trade
war.

The Euro STOXX 600 fell 0.5% to its lowest in almost three weeks, later
erasing its losses as traders cited a Bloomberg News report that the
European Central Bank staff are studying a potential revamp of the bank’s
near 2% inflation goal. That could mean longer stimulus than previously
thought.

With nerves already on edge over when face-to-face talks between the United
States and China will resume, U.S. President Donald Trump on Tuesday
maintained pressure on Beijing with a threat to put tariffs on another $325
billion of Chinese goods.

Investors also cited a report that progress toward a U.S.-China trade deal
has stalled as the Trump administration works out how to address Beijing’s
demands that it ease restrictions on Huawei Technologies.

Wall Street futures gauges were slightly down.

Adding to the concerns over corporate health, Netflix shed U.S. subscribers
for the first time in 8 years, sending shares falling over 10% after the
close of the market.

Compounding the trade concerns were worrying signs for the economy emerging
from Japan to the United States.

Japan’s exports slumped yet again, falling 6.7% in June, while
manufacturers’ confidence fell to a three-year low in July on the back of
the trade tensions and slowing China growth.

U.S. housebuilding fell in June for a second consecutive month, with
building permits also falling, in a possible sign of more trouble ahead for
the housing market.

The earnings anxiety and macro data boosted demand for safe haven assets,
with yields on benchmark 10-year and 30-year U.S. Treasuries climbing
overnight.

BOND YIELDS FALL

Euro zone government bond yields fell following the report on the ECB, which
also pushed the single currency down 0.1% to the day’s lows of $1.1205.

Euro zone bonds had already faced a negative mood after the poor economic
data and corporate earnings had deepened worries over the global economy,
boosting bets on interest rate cuts by major central banks.

Some investors are already betting on whether the U.S. Federal Reserve will
be cut by 25 basis points or 50 basis points in July.

While markets take comfort from central banks’ willingness to support
growth, said Sunil Krishnan, head of multi-asset funds at Aviva Investors,
there were concerns for equity markets that have rallied on the back of
stimulus expectations.

The weak start to the Q2 earnings season may spill over into the outlook for
the remainder of the year, threatening equity markets’ stellar rally this
year.

Earlier in the day, MSCI’s broadest index of Asia-Pacific shares outside
Japan lost 0.3%, with Tokyo’s benchmark Nikkei tumbling 2%, its biggest
one-day fall in four months.

POUND TO PARITY?

In currencies, the dollar slipped for a second day against its rivals on the
back of softer U.S. Treasury yields, with investors focusing their attention
on the Fed’s meeting next week.

Against a basket of its rivals, the dollar edged 0.1% lower to 97.195.

Sterling was a shade higher at $1.275, off its lowest since April 2017
touched on Wednesday amid growing risks of Britain leaving the European
Union in a no-deal Brexit.

Major British banks, such as HSBC, are already talking of the possibility of
the pound breaching post-Brexit referendum lows of $1.149, with some asking
whether the pound is headed for parity against both the dollar and the euro.

On the commodities front, oil rose 1% after Iran said it had seized a
foreign oil tanker in the Gulf.

Brent crude futures were up 58 cents at $64.24 a barrel by 1100 GMT. They
fell 1.1% on Wednesday.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Stocks gain on Fed rate cut optimism; oil drops

(Reuters) - A gauge of global stocks advanced on Thursday, erasing declines
on a late rally after comments from a U.S. Federal Reserve policymaker
heightened expectations for a rate cut, while oil prices dropped on
forecasts of rising output.

In a speech read as a strong argument in favor of quick and aggressive
action by the Fed to cut rates this month, New York Fed President John
Williams said policymakers need to add stimulus early to deal with too-low
inflation when rates are near zero.

Expectations the Fed will cuts rates by a half a percentage point jumped to
71%, according to CME’s FedWatch tool, up from 34.3% on Wednesday.

Williams’ comments led to a turnaround in stocks on Wall Street, where
shares were lower for a majority of the session in part due to disappointing
results from Netflix, which plunged 10.27%.

Honeywell, up 3.12%, was a bright spot as its results topped expectations
and raised its full-year outlook. However, the diversified manufacturer said
it is planning “somewhat cautiously” for the second half due to volatile
geopolitical and economic issues.

Earnings are now expected to show growth of 0.6% for the second quarter,
according to Refinitiv data. S&P 500 companies were expected to show a
decline as recently as Tuesday.

U.S. and Chinese officials were scheduled to have a phone call on trade
later on Thursday, U.S. Treasury Secretary Steven Mnuchin said in an
interview along the sidelines of the G7 meeting in Chantilly, France,
potentially opening the door for direct talks to resume.

The Dow Jones Industrial Average rose 3.12 points, or 0.01%, to 27,222.97,
the S&P 500 gained 10.69 points, or 0.36%, to 2,995.11 and the Nasdaq
Composite added 22.04 points, or 0.27%, to 8,207.24.

The Euro STOXX 600 managed to close off its lows on hopes of looser monetary
policy from the European Central Bank.

The pan-European STOXX 600 index lost 0.22% and MSCI’s gauge of stocks
across the globe gained 0.17%.

In commodities, oil slumped more than 2% on expectations crude output would
rise in the Gulf of Mexico following last week’s hurricane in the region.

U.S. crude settled down 2.61% at $55.30 per barrel and Brent was last at
$61.93, down 2.72% on the day.

U.S. Treasury yields fell in the wake of Williams’ comments, reversing
course after separate reports showed manufacturing in the U.S. mid-Atlantic
region rebounded and the labor market remained healthy, pushing yields
higher.

Despite a flurry of strengthening economic data recently, market
participants consider it a certainty the Federal Reserve will cut rates by
at least a quarter of a percentage point at its July 30-31 meeting.

Benchmark 10-year notes last rose 9/32 in price to yield 2.0294%, from
2.061% late on Wednesday.

In currencies, the dollar also weakened following the remarks from Williams,
while the euro lost ground following a report the European Central Bank’s
staff is studying a potential change to its inflation goal.

The dollar index fell 0.53%, with the euro up 0.47% to $1.1276.

Gold steadies near two-week high as dollar eases on rate cut bets

(Reuters) - Gold prices held steady on Thursday, holding close to a two-week
high, as the dollar eased on rising expectations of an interest rate cut by
the U.S. Federal Reserve.

Spot gold was up 0.2% at $1,430.01 an ounce as of 02:00 p.m. EDT (1800 GMT),
after touching its highest since July 3 at $1,432.20. U.S. gold futures
settled up 0.3% at $1,432.90 an ounce.

Prices had jumped about 1.5% in the previous session as the dollar fell
after weaker-than-expected U.S. housing data. The U.S. currency was last
down about 0.1% against key rivals.

Gold prices fell to a low of $1,414.36 earlier in the session, but recovered
after the dollar eased.

Increased bets on a Fed rate cut have kept gold well supported above $1,400
and overall momentum is positive, analysts said.

Interest rate futures traders are pricing in a 65% chance of a
25-basis-point cut this month and a 35% likelihood of a 50-basis-point cut,
according to the CME Group’s FedWatch tool.

Silver rose 1.4% to $16.19 per ounce, extending gains for a fifth straight
session. It touched its highest since Feb. 20 at $16.21 earlier and posted
its biggest one-day percentage gain in more than five months on Wednesday.

Spot platinum was up 0.4% at $846.17, after touching a two-month peak of
$852.32. Palladium fell 1.5% to $1,514.59 per ounce, after slipping to its
lowest level in more than three weeks at $1,506.50.

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
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
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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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