Bulls n Bears Daily Market Commentary : 25 July 2019

Fri Jul 26 04:14:18 CAT 2019

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Bulls n Bears Daily Market Commentary : 25 July 2019

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$ 1,227,861.01 with foreign buys at ZWL$ 305,469.85 and
foreign sales were NIL Total trades were 70.

The All Share index declined by 0.26 points to close at 190.97 points.
BRITISH AMERICAN TOBBACCO ZIMBABWE LIMITED lost by $0.5000 ending at

$36.0000, SIMBISA BRANDS LIMITED retreated by $0.0200 to close at $1.0400
and ECONET WIRELESS ZIMBABWE LIMITED traded $0.0177 lower at $1.6823. FBC
HOLDINGS LIMITED also decreased by $0.0075 to end at $0.6025 and PADENGA
HOLDINGS LIMITED   lost $0.0030 ending at $1.9000.

The losses were offset by gains in OLD MUTUAL LIMITED  which advanced by
$0.0481 to $16.0500, CASSAVA SMARTECH ZIMBABWE LIMITED added

$0.0083 to close at $1.6379 and SEEDCO INTERNATIONAL LIMITED  was $0.0025
higher at $2.1225. FIRST MUTUAL HOLDINGS LIMITED gained $0.0020 to settle at
$0.2520 and CBZ HOLDINGS LIMITED  traded $0.0010 higher $0.5010.

 <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

S.Africa's rand hits 2-week low on Moody's warning over Eskom

(Reuters) - South Africa’s rand fell to a two-week low on Thursday, hurt by
a Moody’s report saying the government’s proposal to offer 59 billion rand
($4.25 billion) in additional support to cash-strapped power utility Eskom
was credit negative.

At 1545 GMT the rand was 1.3% weaker at 14.0625 to the dollar, having opened
the day at 13.8950 before falling steadily as rand bulls rattled by the
credit warning took cover and closed some long positions.

Dovish comments by European Central Bank chief Mario Draghi, who all but
pledged to ease policy further as the growth outlook deteriorates, and bets
the Federal Reserve will cut interest rates next week failed to stem the
exodus as the rand slumped.

Selling looks set to intensify towards 14.10 and beyond to the dollar after
the unit breached the psychological 14.00 level.

Eskom, which supplies more than 90% of South Africa’s power but had to
implement power cuts earlier this year, is grappling with high debt and has
needed cash injections to stay afloat.

Finance Minister Tito Mboweni presented an appropriation bill to parliament
on Tuesday to give Eskom the extra cash, but warned at the same time of
lower-than-expected tax revenues and higher public debt levels.

In a worst-case scenario, Moody’s said it expected South Africa’s fiscal
deficit could widen to 5.7% of gross domestic product in 2019, up from
current projections of 5.2%.

Bonds also slipped, with the yield on the benchmark 10-year government debt
up 8.5 basis points at 8.18%.

On the bourse, stocks were also dragged lower by the Moody’s report.

The benchmark JSE Top-40 Index dipped 0.12% to 51,563 points while the
broader All-Share Index slipped 0.1% to 57,662 points.

Woods said the shrinking domestic tax base and lack of a cohesive plan to
fix the power utility were hurting sentiment.

Among blue-chip decliners was chemicals and energy company Sasol, which fell
6.37% after writing down the value of assets in North America and Africa by
18.1 billion rand.

The petrochemicals firm also flagged a decline of between 4% and 14% in
adjusted earnings before interest, taxes, depreciation and amortisation. 

Kenya

Kenya's central bank chief plays down impact of Rotich charges

(Reuters) - Kenya’s central bank governor on Thursday dismissed the market’s
concerns about the impact of graft charges against the finance minister and
attributed this week’s fall in the currency to seasonal demand for dollars.

The shilling has lost 0.8% since the charges against Henry Rotich were
announced on Monday, to trade at 104.05 per dollar on Thursday, as traders
fretted about a power vacuum at the finance ministry.

President Uhuru Kenyatta appointed Labour Minister Ukur Yatani as acting
finance minister on Wednesday, a day after Rotich was charged with various
corruption charges. Rotich pleaded not guilty to the charges.

Njoroge attributed the shilling’s weakness this week to excess liquidity in
the money markets, which makes it cheaper to fund dollar purchases, and
increased hard currency demand from private companies.

Seasonal demand for dollars from companies to pay dividends to their
overseas shareholders had also contributed to the pressure on the shilling,
Njoroge said.

The shilling pared some of its losses in the afternoon session and after
Njoroge’s remarks, to trade at 103.60/80 per dollar.

ECONOMIC GROWTH

The economy, East Africa’s largest, is likely to grow by at least 6% this
year, helped by a stronger-than-expected recovery in its key agriculture
sector, the governor said.

The economy grew by 5.6% in the first quarter, slowing from 6.5% in the same
period a year earlier, mainly due to the impact of dry weather.

But the rains unexpectedly came in late April, brightening the outlook for
the economy.

The finance ministry says the economy is likely to grow by 6.3% in 2019, the
same rate as last year. Njoroge had said in May that the delayed rains could
cut as much as 0.4 percentage points off the ministry’s forecast.  

       <mailto:info at bulls.co.zw> 

America

Equities fall, bond yields rise on Draghi remarks, mixed earnings

(Reuters) - U.S. stocks backed off record highs and government bond yields
ticked up on Thursday following mixed earnings reports and
rosier-than-expected economic sentiment from the European Central Bank.

The ECB signaled its intention to explore monetary easing but left interest
rates unchanged, and bank President Mario Draghi struck a more upbeat tone
on the economy than investors expected, sending U.S. and European equities
lower and boosting sovereign debt yields.

A mixed bag of earnings reports from a swath of U.S. companies pulled Wall
Street lower a day after the S&P 500 and the Nasdaq hit all-time highs,
painting a picture of profit beats amid underwhelming guidance.

The protracted U.S.-China trade war and a softening global economy should
encourage the U.S. Federal Reserve to cut interest rates next Wednesday for
the first time in a decade.

But investors will be eyeing the Fed’s statement at the conclusion of its
two-day monetary policy meeting for clues as to what to expect going
forward.

The Dow Jones Industrial Average fell 128.65 points, or 0.47%, to 27,141.32,
the S&P 500 lost 15.83 points, or 0.52%, to 3,003.73 and the Nasdaq
Composite dropped 82.96 points, or 1%, to 8,238.54.

The pan-European STOXX 600 index declined 0.56% and MSCI’s gauge of stocks
across the globe shed 0.51%.

U.S. Treasury yields rose following Draghi’s remarks.

Benchmark 10-year notes fell 8/32 in price to yield 2.0758%, compared with
2.05% late on Wednesday.

The 30-year bond fell 20/32 in price to yield 2.6061%, compared with 2.578%
late on Wednesday.

The dollar index, which measures the greenback against a basket of other
world currencies, inched higher, while the euro gave up earlier gains to
show a nominal increase from Wednesday’s two-month low.

The dollar index rose 0.09%, with the euro up 0.04% to $1.1144.

The Japanese yen weakened 0.48% versus the greenback at 108.72 per dollar,
while sterling was last trading at $1.2451, down 0.24% on the day.

Oil prices climbed as Middle East tensions and a substantial drop in U.S.
crude stocks raised supply concerns.

U.S. crude oil futures settled at $56.02 per barrel, a 0.25% gain, while
Brent crude oil futures settled up 0.33% at $63.39 per barrel.

Spot gold dropped 0.8% to $1,414.27 an ounce.

Copper fell 0.23% to $5,985.50 a tonne.

Three-month aluminum on the London Metal Exchange rose 0.03% to $1,826.50 a
tonne.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Nickel prices plunge as rally begins to unwind

(Reuters) - Nickel prices dived more than 3% on Thursday, its blistering
rally unwinding as a sharp slowdown in euro zone factory activity undermined
the outlook for metals demand.

Benchmark nickel on the London Metal Exchange (LME) ended 3.3% down at
$14,075 a tonne.

The stainless steel ingredient hit $15,115, its highest in a year, on July
18 after surging more than 20% in a little more than two weeks.

The rally was driven largely by speculators and not justified by
fundamentals showing a largely balanced market, said Capital Economics
analyst Ross Strachan.

CENTRAL BANKS: ECB President Mario Draghi said the euro zone’s central bank
was looking at interest rate cuts, fresh bond buys and new policy guidance
to lift persistently low inflation.

The U.S. Federal Reserve, meanwhile, looks poised to cut U.S. rates next
week.

Aggressive easing by the two central banks is designed to support economic
growth, which should lift metals prices.

GERMANY/EURO ZONE: Underlining a slowdown in global factory activity that
has pushed down metals prices, German business morale deteriorated more than
expected in July, hitting its lowest since April 2013.

Recession is spreading across the German industrial sector, Ifo economist
Klaus Wohlrabe said.

The German data added to a growing pile of numbers suggesting business
growth is weakening across the euro zone, hurt by a deepening contraction in
manufacturing.

TRADE WAR: Negotiators for China and the United States will meet in Shanghai
on Tuesday to continue talks to resolve a trade dispute that has roiled
markets and damaged growth in China, the largest metals consumer.

Nearly 70% of global nickel consumption, estimated at 2.4 million tonnes
this year, is by stainless steel mills, most of which are in China.

NICKEL STOCKS: Headline nickel stocks in LME-approved warehouses, at about
145,000 tonnes, are the lowest since 2013. MNISTX-TOTAL

YUGUANG LEAD: Henan Yuguang Gold and Lead Co, China’s top lead producer, is
due to finish maintenance at a lead smelter in Jiyuan, Henan province, on
Thursday.

OTHER METALS: LME copper closed 0.1% up at $6,007 a tonne, aluminium ended
unchanged at $1,826, zinc fell 0.8% to $2,440, lead was up 1.4% at $2,114.50
and tin slipped 0.4% to $17,850.

Gold falls from one-week high on robust U.S. data

(Reuters) - Gold eased off a one-week peak on Thursday as robust U.S.
economic data outweighed the European Central Bank’s decision to hew to an
accommodative monetary policy, with investor focus on next week’s Federal
Reserve meeting.

Spot gold was down 0.4% at $1,420.80 per ounce as of 10:54 a.m. EDT (1454
GMT). U.S. gold futures fell 0.2% to $1,420.80.

Earlier, prices rose as much as 0.5% to $1,433.46, a one-week high, after
the ECB left benchmark rates unchanged, with the bank’s chief sounding the
need for a “significant degree of monetary stimulus” down the road.

Weekly U.S. jobless claims number fell to a three-month low last week,
pointing to strength in the labor market, while new orders for key U.S. made
capital goods surged 1.9 % in June.

“However, these two numbers will pass by as the day goes on and traders will
be back to being focused on the Fed next week. People want to be long
heading into the meeting,” Haberkorn said.

Market participants are now looking ahead to the U.S. central bank’s July
30-31 monetary policy meeting where it is expected to trim its interest rate
by at least 25 basis points.

Among other precious metals, spot palladium edged up 0.1% to $1,541.09 per
ounce, while platinum slid 0.5% to $871.22, after touching its highest in
nearly three months earlier in the session.

Gains in platinum was due to bargain hunting as it is cheaper than gold by
about $550, with traders taking the opportunity to narrow the wide spread
between the two, RJO’s Haberkorn added.

Silver slid 0.6% to $16.50 per ounce. It has gained about 16% since a near
six-month low of $14.25 hit in late May.

.

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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