Bulls n Bears Daily Market Commentary : 23 May 2019

Fri May 24 04:47:35 CAT 2019

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Bulls n Bears Daily Market Commentary : 23 May 2019

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Zimbabwe Stock Exchange Update

Market Turnover RTGS$ 14,390,718.83 with foreign buys at RTGS$ 5,965,062.38
and foreign sales were RTGS$ 9,957,683.54. Total trades were 165.

The All Share index gained another 4.70 points  to close at 154.86 points.
OLD MUTUAL LIMITED  led the movers with a $0.3371 gain to close at $11.7846,
CASSAVA SMARTECH   rose by $0.0995 to end at $1.2994 and ECONET  was $0.0972
stronger at $1.3306. Other counters to advance include INNSCOR   which added
$0.0407 to settle at $2.0007 and AFRICAN SUN   was $0.0279 firmer at
$0.3988.

Four counters lost ground including MEIKLES  which dropped $0.0600 to end at
$0.6400, DAIRIBORD  eased $0.0294 to close at $0.1605 and SIMBISA traded
$0.0095 lower at $0.8905. BINDURA (BIND.zw) decreased by $0.0040 to settle
at $0.0600.

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  Global Currencies & Equity Markets

South Africa

South Africa's rand slides after central bank holds rates, stocks down

(Reuters) - South Africa’s rand slipped nearly 1 percent to a three-week low
and stocks fell on Thursday after the central bank kept lending rates
unchanged, cut its growth forecast and struck a dovish tone that suggested a
cut was on its way.

At 1500 GMT the rand was 0.64% weaker at 14.4650 per dollar, off a session
low of 14.5350 hit soon after the South African Reserve Bank (SARB) decided
to leave lending rates at 6.75% for the third meeting in a row.

The bank’s five-member policy committee voted 3-2 to keep rates on hold.
Governor Lesetja Kganyago said while inflation and inflation expectations
were close to the middle of the bank’s 3% to 6% target range, they had not
yet settled there.

The bank was bearish on economic growth, slashing its 2019 outlook to 1%
from a 1.5% forecast in January.

Bonds were firmer, with the yield on the benchmark 2026 down 3 basis points
to 8.38 percent, its lowest since May 2018.

Stocks fell as local companies felt the pinch of a slow economy and a
squeezed consumer.

The broader All-Share index weakened 1.74% to 54,271 points, while the
Top-40 index fell 1.84% to 48,290 points.

Tiger Brands, which dropped 5% to 218.50 rand, also continued to weaken
after it reported half-year revenue falling short after challenges at its
meat unit.

Massmart declined 13.14% to 67.75 rand after it flagged 50% lower headline
earnings than the year before while Steinhoff shed 10% before recovering to
1.35 rand, a 4.93% decline. The biggest faller among blue chip stocks in the
Top-40 index was Sasol, which fell for a second consecutive day, shedding
5.72% to 353.55 rand, after it raised the expected cost of its U.S. ethane
cracker project by around $1 billion.

Egypt

Egypt's central bank keeps key interest rates unchanged

(Reuters) - Egypt’s central bank on Thursday kept its key interest rates
unchanged, in line with a Reuters poll of economists.

The central bank held its overnight deposit rate at 15.75% and its overnight
lending rate at 16.75%, a bank statement said.

Leaving them unchanged is “consistent with achieving the inflationary target
of 9 percent (±3 percentage points) in 2020 Q4 and price stability over the
medium term,” the bank said in a statement.

Headline inflation slowed to 13% in April from 14.2% in March. It had fallen
slightly in March from 14.4% in February, its highest since November. The
bank’s target range is 10% to 16%.

Core inflation, which strips out volatile items such as food, also fell in
April to 8.1% from 8.9% the previous month.

The Egyptian pound hit a two-year high on Thursday, bucking a downtrend
among emerging market currencies with help from inflows in the tourism and
energy sectors.

While the deepening trade conflict between the United States and China has
generally heaped pressure on emerging currencies, the pound has risen nearly
5% against the dollar since the beginning of the year.

Eleven out of 14 economists polled by Reuters said the Central Bank of
Egypt’s (CBE) monetary policy committee was unlikely to change its overnight
rates.

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America

Shares slide on fear trade spat morphs to a tech cold war

(Reuters) - World shares skidded further on Thursday and oil prices plunged
more than 5% as investors worried the China-U.S. trade spat was turning into
a technology cold war between the world’s two largest economies, boosting
the dollar and knocking benchmark government debt yields down.

Worries over German manufacturing, trade-sensitive Asian economies, Brexit
and European parliamentary elections led investors to flee riskier assets
and buy perceived safe-havens.

The dollar at one point hit its highest level in two years against a basket
of six major currencies and the euro slumped to levels last seen in May 2017
as a recovery in euro zone business activity was weaker than expected.

Stocks tumbled on Wall Street and yields on the benchmark 10-year U.S.
Treasury note fell below 2.30% to the lowest since October 2017 as an early
read of U.S. manufacturing data for May posted its weakest pace of growth in
nearly a decade.

Equity investors, encouraged by low interest rates, had been hoping for the
best since U.S.-China trade talks soured, said Michael O’Rourke, chief
market strategist at JonesTrading in Greenwich, Connecticut.

As of Wednesday’s close, the S&P 500 was just 3% off its record closing high
on April 30.

Asian stocks fell overnight to a four-month low and European shares sank,
with Germany’s trade-sensitive DAX down 1.8% and Italian shares more than 2%
lower.

MSCI’s gauge of stocks across the globe shed 1.3% while the FTSEurofirst 300
index of leading European shares closed down 1.42%.

On Wall Street, the Dow Jones Industrial Average fell 286.14 points, or
1.11%, to 25,490.47. The S&P 500 lost 34.03 points, or 1.19%, to 2,822.24
and the Nasdaq Composite dropped 122.56 points, or 1.58%, to 7,628.28.

Investors worry the U.S.-China trade dispute could escalate.

U.S. Secretary of State Mike Pompeo accused Chinese telecom giant Huawei
Technologies of lying about its ties to the government. Beijing said
Washington must end its “wrong actions” if it wants trade talks to continue.

Japanese conglomerate Panasonic Corp joined a growing list of multinationals
that have said they are disengaging from Huawei, the largest telecom-gear
maker and second-largest seller of smartphones.

Reuters reported on Wednesday the U.S. administration was considering
Huawei-like sanctions on Chinese video surveillance firm Hikvision over the
country’s treatment of its Uighur Muslim minority.

The U.S. military also said it had sent two Navy ships through the Taiwan
Strait.

One of few markets to escape the turmoil was India. Its main stock market
touched an all-time high after Prime Minister Narendra Modi’s party scored a
historic election victory. Official data showing Modi’s Bharatiya Janata
Party (BJP) ahead in 292 of the 542 seats available.

The rupee also climbed but that, too, was an outlier.

Investors piled into the dollar as a relative safe haven because of its
importance in the global economy and the extra cushion of high U.S. interest
rates compared to other developed economies.

The dollar hit a high of 98.371 against a basket of six major currencies,
its highest since May 2017, but then pared gains. The euro rebounded after
touching $1.1109 as slower growth raised the prospect that the Federal
Reserve may cut U.S. interest rates.

The Japanese yen strengthened 0.72% versus the greenback at 109.54 per
dollar.

U.S. Treasury yields dropped across the board as risk appetite faded and
Germany’s 10-year bond yield fell further into negative territory after a
survey showed business activity in the bloc was weaker than expected in May.

IHS Markit’s PMI, a guide to economic health, nudged up to 51.6 from a final
April reading of 51.5, but was below market expectations for 51.7.

The benchmark 10-year U.S. Treasury note rose 23/32 in price to push its
yield down to 2.3115%.

Germany’s 10-year government bond yield fell three basis points to minus
0.114%.

Oil prices tumbled more than 5% as trade tensions dampened the demand
outlook, leading the crude benchmarks to their biggest daily declines in six
months.

Brent crude futures, the international benchmark, settled down $3.23 at
$67.76 per barrel, and was trading down $3.00 at $67.99.

U.S. West Texas Intermediate (WTI) crude futures fell $3.51 to settle at a
two-month low of $57.91 per barrel.

Gold prices jumped 1 percent as the dollar pulled back from a two-year peak
scaled earlier in the session.

U.S. gold futures rose 0.9 percent to $1,285.50 an ounce.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold hovers above $1,280 as dollar recoils on U.S. data blow

(Reuters) - Gold prices held steady on Friday after rising above $1,280 in
the previous session as weaker U.S. data pushed back the dollar and
reignited hopes of a rate cut by the Federal Reserve this year.

FUNDAMENTALS

* Spot gold was broadly unchanged at $1,283.18 per ounce as of 0056 GMT,
having risen more than 1% to $1,287.23 in the previous session.

* U.S. gold futures eased 0.2% to $1,282.40 an ounce.

* The metal is also on track for a weekly gain, and is up about 0.5% so far.

* The U.S. dollar retreated after hitting its highest level in two years as
weaker domestic data and the potential economic fallout from the trade war
with China increased expectations for an interest-rate cut this year.

* Sales of new U.S. single-family homes fell from near an 11-1/2-year high
in April as prices rebounded and manufacturing activity hit its lowest level
in almost a decade in May, suggesting a sharp slowdown in economic growth
was underway.

* Asian shares hobbled near four-month lows on Friday on worries the
U.S.-China trade spat was turning into a technology cold war between the
world’s two largest economies, prompting investors to embrace safer assets.

* President Donald Trump said on Thursday U.S. complaints against Huawei
Technologies Co Ltd might be resolved within the framework of a U.S.-China
trade deal, while at the same time calling the Chinese telecommunications
giant “very dangerous.”

* The U.S. administration is considering Huawei-like sanctions on Chinese
video surveillance firm Hikvision over the country’s treatment of its Uighur
Muslim minority, a person briefed on the matter said on Wednesday, the
latest effort by the Trump administration to crack down on Chinese companies
as trade friction between the world’s top two economies escalates.

* The U.S. military said it sent two Navy ships through the Taiwan Strait on
Wednesday, its latest transit through the sensitive waterway, angering China
at a time of tense relations between the world’s two biggest economies.

* Bullion is often seen as a safe-haven investment in times of political or
economic uncertainty.

* Ongoing stoppages at Newmont Goldcorp Corp’s Penasquito gold mine in
Mexico are costing “millions” every day to both public coffers and the
company, a senior Mexican official said on Thursday, urging a solution that
will restart operations.

Copper rebounds from more than 4-month low as dollar eases

(Reuters) - Copper prices rebounded on Friday from their lowest since Jan.
14 hit in the previous session, as the U.S. dollar eased, but were heading
for their sixth straight week of losses on a prolonged U.S.-China trade war.

U.S. President Donald Trump said on Thursday Huawei could be included in the
U.S.-China trade deal after last week banned U.S. firms from doing business
with the Chinese company, which is the world’s largest telecoms network gear
maker.

The metals market gained some support as the dollar fell from a two-year
high overnight and was largely unchanged on Friday, on fears that a trade
war with China will hurt the U.S. economy more than expected and on
expectations of a rate cut.

A weaker dollar makes dollar-denominated metals cheaper to imports using
other currencies.

FUNDAMENTALS

* Three-month copper on the London Metal Exchange rose 0.4% to $5,950.50 a
tonne by 0155 GMT, while the most-traded copper contract on the Shanghai
Futures Exchange advanced 0.4% to 46,980 yuan ($6,798.25) a tonne.

* London aluminium rose 0.5%, nickel increased 0.3%, zinc edged up 0.2%, and
lead was 0.6% higher.

* Shanghai aluminium rose 0.5%, nickel eased 0.1% and zinc dropped as much
as 1.9% to its lowest since Jan. 18 at 20,000 yuan a tonne.

* Chile’s SQM, the world’s No. 2 producer of lithium, said it would delay a
key expansion of production capacity from the Atacama salt flat until the
end of 2021 amid a slump in prices for the coveted battery metal.

INVESTORS DIARY 2019

Company

Event

Venue

Date & Time

Africa Day

25 May 2019

Dairibord

AGM

Steward Room, Meikles

31 May 2019, 12pm

Lafarge

AGM

Manresa Club, Arcturus

05 June 2019 , 12pm

CBZ

AGM

Stewart Room, Meikles

05 June 2019 , 3pm

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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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