Bulls n Bears Daily Market Commentary : 19 July 2019

Mon Jul 22 04:15:32 CAT 2019

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Bulls n Bears Daily Market Commentary : 19 July 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 5,242,004.11 with foreign buys at ZWL$ 543,821.00 and
foreign sales were ZWL$1,315,942.64 Total trades were 122.

The All Share index closed the week on a lower note losing 0.25 points to
close at 191.47 points. ECONET led the shakers with a $0.0073 loss to settle
at $1.6838, CASSAVA SMARTECH  eased $0.0066 to $1.6834 and SIMBISA traded
$0.0063 weaker at $1.0737.Other counters to lose ground include WILLDALE
which decreased by $0.0050 to end at $0.0350 and PADENGA which dropped by
$0.0034 to close at $1.9365.

Trading in the positive was INNSCOR  which gained $0.0195 to settle at
$2.2695 and MASIMBA  which was $0.0098 stronger at $0.0998.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South Africa's rand retreats as Fed pendulum swings back to soft cuts

(Reuters) - South Africa’s rand weakened on Friday, giving back some of the
big gains from the previous session as expectations of an aggressive
interest rate cut by the Federal Reserve cooled, prompting investors to
pocket end-of-week profits.

At 1520 GMT the rand was 0.63% weaker at 13.9275 per dollar from a
session-best of 13.8150 in early trade after momentum from a local rate cut
on Thursday, seen as a boost to faltering economic growth had lured
investors looking to shed long dollar positions.

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

On Friday the New York Federal Reserve walked back dovish comments from its
president the prior day saying pre-emptive measures were needed to avoid
too-low inflation and interest rates.

A New York Fed representative said New York Fed president John Williams’
comments were not about immediate policy direction, dragging the greenback
back from a two-week low. At 1520 the dollar measured against a basket of
currencies was 0.37% firmer.

The U.S. central bank decides on rates on July 31.

Bonds also weakened, with the yield on the benchmark 10-year government
issue adding 4.5 basis points to 8.02%.

On the bourse, stocks rose along with emerging market shares and currencies
after comments from a top Federal Reserve official reinforced expectations
of a U.S. interest rate cut this month, stoking demand for riskier assets.

The benchmark Johannesburg Stock Exchange Top-40 Index was up 0.72% at
52,107.18 points while the broader All-Share Index closed 0.65% higher at
58,248 points.

Musa Makoni, GT247 trader, said trades were firmer earlier in day, following
the trend in Asia, with stocks in Europe and the U.S. also on the up.

He also highlighted the performance of Pioneer Food Group , which shot up
32.09% to 101.35 rand after it was bought by PepsiCo for $1.7 billion
dollars. Shares in agribusiness investment company Zeder Investments, which
holds Pioneer as part of its portfolio, also rose 23.17%.

Other blue-chip winners of the day include mining company Gold Fields which
rose 2.97% and services, trading and distribution company Bidvest which was
up 2.83%. 

Nigeria

Nigeria's central bank tries to force banks to lend, not buy bills

(Reuters) - Nigeria’s central bank barred banks from buying bills for their
own accounts at an open market auction held on Thursday, a move intended to
force them to lend rather than invest in government debt, traders said on
Friday.

The bank is stepping up a campaign to get credit flowing. Last week, it
limited the size of interest-bearing deposits it would hold for banks, the
latest in a series of measures aimed at reviving an sluggish economy

The central bank, which had not issued market stabilisation bills for about
a week before Thursday’s auction, told banks bids must be backed by customer
demand. In the past, banks have bought government debt rather than assume
risk by lending.

It was unclear if the order applied to Thursday’s auction only. Banks can
still purchase bills on the secondary market, traders said.

At Thursday’s open market auction, the central bank offered 75 billion naira
($245.14 million) of bills, drawing demand totalling 475 billion naira for
the various maturities. The bank sold one-year bills at a yield of 12.25%.

A trader said Thursday’s auction was aimed at non-bank investors, adding
that the central bank has considered offering bills directly to foreign
investors to support the currency.

STRUCTURAL REFORMS NEEDED

The central bank had been issuing securities at high yields to mop up naira,
a policy it maintained for more than two years to attract foreign inflows
into bonds and support the naira.

It was unclear which option the central bank wants to pursue: boosting
credit flow locally or maintaining a stable currency in the face of high
inflation and dollar shortages.

At its last rate meeting in March, the bank cut rates by 50 basis points for
the first time since November 2015, saying it wanted to signal a new
direction. Analysts expect another 50-bp rate cut on Tuesday.

Bankers doubt the measure will do much to boost lending unless credit risk
is addressed through reforms.

Nigerian President Muhammadu Buhari won re-election in February and has
pledged to get the economy growing again. But he has failed to set up a
cabinet months after gaining a second term.

Analysts said recent policies aimed at boosting loans to revive the economy
could have a knock-on effect by lowering yields to unattractive levels for
foreign investors, which could weaken the naira. ($1 = 305.9500 naira)

       <mailto:info at bulls.co.zw> 

America

Stocks up on Fed rate cut hopes, Microsoft results; dollar bounces

(Reuters) - A gauge of global stocks climbed on Friday as investors looked
for a strongly dovish U.S. Federal Reserve at its next meeting and as early
returns on earnings season have come in better than anticipated.

On Wall Street, a gain of 1.06% in Microsoft helped lift the Dow and kept
the S&P 500 and Nasdaq slightly afloat as quarterly results topped
expectations, powered by its cloud business.

Stocks received some modest follow-through to the plus side following
Thursday’s late rally after two influential Federal Reserve officials - New
York Fed President John Williams and Fed Board of Governors Vice Chair
Richard Clarida - laid out the case for quick action by the central bank to
support the U.S. economy.

However, Williams’ comments were later walked back, with the New York Fed
saying the speech was not about potential action at the upcoming meeting.

That dialed back expectations to about 39% for a rate cut of half a
percentage point at the Fed’s July 30-31 meeting, according to CME’s
FedWatch tool. Markets see it as a certainty the Fed will cut rates by at
least a quarter of a percentage point at the meeting.

Earnings expectations for the S&P 500 have been trending upward recently and
show growth of 1% for the second quarter, according to Refinitiv data. As
recently as Tuesday, earnings were expected to show a decline for the
quarter.

The Dow Jones Industrial Average rose 85.45 points, or 0.31%, to 27,308.42,
the S&P 500 gained 2.13 points, or 0.07%, to 2,997.24 and the Nasdaq
Composite added 6.93 points, or 0.08%, to 8,214.18.

European shares closed slightly higher, having given up early gains of as
much as 0.7%, as political turmoil weighed on Italian stocks after the
country’s Deputy Prime Minister Matteo Salvini said he would meet coalition
partner and leader of the 5-Star Movement Luigi Di Maio amid speculation
that the increasingly unwieldy government might collapse.

The pan-European STOXX 600 index rose 0.12% and MSCI’s gauge of stocks
across the globe gained 0.33%.

Despite Friday’s advance, MSCI’s index was poised to snap a six-week streak
of gains.

The walk back in the dovish Fed comments helped the dollar recover from
declines in the prior session, while the euro weakened as expectations of a
rate cut by the European Central Bank as early as next week picked up steam.

The dollar index rose 0.33%, with the euro down 0.46% to $1.1223.

In oil markets, crude advanced but was off earlier highs after climbing
roughly 2% amid rising tensions between the United States and Iran after a
senior Trump administration official said the U.S. will destroy any Iranian
drones that fly too close to its ships.

Prices pulled back, however, with Brent prices on track for their biggest
weekly decline of the year and U.S. crude on pace for its biggest weekly
drop in two months.

U.S. crude rose 0.81% to $55.75 per barrel and Brent was last at $62.68, up
1.21% on the day.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Asia Gold-Consumers cash in on price rally, some switch to silver

(Reuters) - Consumers in leading Asian hubs continued to sell off physical
gold this week, with some switching their holdings to silver, after a jump
in prices that also attracted interest from investors betting further gains.

Global benchmark spot gold surpassed $1,450 an ounce for the first time in
more than six years on Friday.

However, with many people looking to rebalance their portfolio “gold is the
asset to be in this year”, he added.

In top consumer China gold was sold at a premium of $10-$11 per ounce over
the benchmark, little changed from last week’s $10-$13 range.

In Hong Kong, gold was sold at a premium of $0.50-$1.20 an ounce, compared
with a discount of 30 cents to a $1.20 premium last week. In Singapore,
premiums of $0.40-$0.60 were charged, compared with $0.60-$1 previously.

The steep rally in gold is prompting some to switch to relatively cheaper
silver, traders said.

In Japan, gold was sold at a $0.25 discount, having been at benchmark parity
last week, a Tokyo-based trader said.

In India, the world’s second-biggest gold consumer, dealers were forced to
offer the highest discounts since August 2016, at about $33 over official
domestic prices. This compared with $20 discounts last week.

India recently raised import duties on gold and other precious metals to
12.5% from 10%.

Gold futures hit a record of 35,409 rupees per 10 grams on Friday.

Gold slips from 6-year top on profit-taking, still up for the week

(Reuters) - Gold fell over 1% on Friday as the dollar firmed and investors
took profits after prices briefly surpassed $1,450 to hit a six-year peak on
dovish signals from the U.S. Federal Reserve and is still on course for a
second week of gains.

Spot gold was down 1.5% at $1,424.66 per ounce at 12:05 p.m. EDT (1605 GMT),
having touched its highest since early May 2013 at $1,452.60.

Prices have risen about 3% in the past two days and by about 0.6% so far
this week on increased expectations for a rate hike by the Fed at its
month-end meeting.

U.S. gold futures slipped 0.2% to $1,425.70 per ounce.

The dollar was about 0.4% stronger against a basket of currencies,
recovering from a sharp fall triggered by dovish comments from Fed
policymakers.

On Thursday, New York Fed President John Williams said policymakers cannot
wait for economic disaster to hit before adding stimulus, while Fed Vice
Chair Richard Clarida said policymakers might need to act early to stimulate
the economy as an insurance policy against rising risks.

The United States said its Navy had destroyed an Iranian drone in the Strait
of Hormuz, while Iran said all its drones had returned to base safely and
there was no sign of major escalation in the Gulf.

Elsewhere, silver slipped 1.3% to $16.13 per ounce, after surging to its
highest level in more than a year, but was on track for its best week since
July 2016, having gained about 6%.

“There is still a good level of demand for silver at the moment with some
investors speculating that the gold/silver ratio could fall further, and
that a silver trade could potentially allow them to secure more gold in the
future,” said See Hong Kang, customer service manager at BullionStar
Singapore.

Platinum dipped 0.3% to $846.91 per ounce, after hitting a two-month high,
while palladium fell 1.2% to $1,507.44 per ounce. 

Nickel's spectacular rally hits buffers, but copper soars

(Reuters) - Nickel prices fell on Friday as a two-week explosion of buying
which helped push the metal used in stainless steel to its highest in more
than a year appeared to run out of steam.

Copper meanwhile surged to a two-month high as investors ramped up bets that
U.S. interest rates will fall.

Benchmark nickel on the London Metal Exchange (LME) ended down 0.7% at
$14,750 a tonne, but still up more than 9% this week.

Prices on Thursday touched $15,115, the highest since June 2018 and up a
massive 20% in just two weeks.

A supply deficit, low stockpiles, solid stainless steel production and the
likelihood of future demand for nickel in rechargeable batteries meant
prices should eventually rise, he said, although he added: “Not now, and not
to this extent.”

INTEREST RATES: Two influential U.S. Federal Reserve officials on Thursday
sharpened their public case for acting, quickly if needed, to support the
U.S. economy.

Lower interest rates tend to push commodity prices higher because they mean
lower inventory financing costs and raise appetite for riskier assets.

GLOBAL GROWTH: Rate cut bets and rallying equity and bond markets are
feeding into a gradual loosening of financial market conditions that could
potentially send world growth ticking higher by the end of the year.

TRADE WAR: U.S. and Chinese officials spoke by telephone on Thursday as the
two countries seek to end a year-long trade war, with U.S. Treasury
Secretary Steven Mnuchin suggesting in-person talks could follow.

The trade dispute has sent industrial metals prices sharply lower because
investors fear it will damage demand.

NICKEL STOCKS: Headline stocks in LME-registered warehouses, at 147,942
tonnes, have slid from more than 450,000 tonnes in 2016 and are the lowest
in 6-1/2 years. MNISTX-TOTAL

CHINESE BUYING: Chinese firm Tsingshan Holding Group has been buying large
quantities nickel on the LME to supplement its own output, two sources
familiar with the matter told Reuters.

INDONESIA: Nickel prices were supported this week by an Indonesian mining
ministry official reiterating that a ban on the export of raw ore exports
would be enforced by 2022.

Fear of the ban is unfounded, writes Reuters columnist Andy Home.

COPPER: LME copper finished up 1.4% at $6,065 a tonne after touching
$6,170.50, the highest since May 10. It was up more than 2% this week.

OTHER METALS: Aluminium closed down 0.3% at $1,848 a tonne, zinc fell 1.6%
to $2,425 and lead rose 0.1% to $2,051. Tin did not trade in closing rings
but was bid down 0.3% to $17,800. 

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
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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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