Bulls n Bears Daily Market Commentary : 14 April 2020

Wed Apr 15 07:01:30 CAT 2020

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Bulls n Bears Daily Market Commentary : 14 April 2020

 <mailto:info at bulls.co.zw> 

Zimbabwe Stock Exchange Update

Market Turnover ZWL$8,079,657.31 with foreign buys at NIL and foreign sales
were ZWL$2,508.95 Total trades were 138

The All Share index opened the week lower at 466.74 points after losing 1.08
points . BAT eased $0.4487 to $85.5000, PROPLASTICS dropped by $0.1571 to
$1.6429 and

BINDURA  was $0.0760 weaker at $0.3040. ECONET also traded $0.0542 lower at
$2.9420 and AXIA traded $0.0140 lesser at $2.051.

Trading in the positive; ART CORPORATION added $0.0720 to $0.4820,
POWERSPEED gained $0.0505 to $0.3035 and AFRICAN SUN  was $0.0266 stronger
at $0.5200. CASSAVA SMARTECH also increased by $0.0088 to $3.0136 and OK
ZIMBABWE was $0.0073 firmer at $1.6582.

   . <mailto:info at bulls.co.zw> 

  Global Currencies & Equity Markets

South Africa

South Africa's rand dips after surprise rate cut

(Reuters) - South Africa’s rand gave back its early gains on Tuesday,
sliding as much as 1% after the central bank delivered a surprise cut to
lending rates to address the deepening economic impact of the coronavirus
outbreak.

The rand was 1.46% weaker at 18.3600 per dollar by 1546 GMT, having dipped
as low as 18.4200 in the wake of the unexpected 100 basis points cut by the
South African Reserve Bank (SARB).

The central bank had already cut rates by 100 bps in March and by 25 bps in
January and the latest cut brought rates to a record low of 4.25%, with more
reductions likely.

The rand had eked out some gains in early trade as riskier currencies were
lifted by trade data from China, which painted a less gloomy picture of the
economic fallout from the pandemic.

But the rate cut clipped the currency’s advance, with the policy move
narrowing the yield return, or carry, on South African assets, as well as
spooking some rand bulls betting the currency would rally further.

The real or effective interest rate is the return an investor in the
currency or local bonds expects to receive, minus inflation. That rate
stands at around 5%, but has come down sharply with falling lending rates
and benign inflation.

The bank said the cut was a response to the extension of the lockdown and
the hit to the economy, which the bank expects to contract 6.1% in 2020.

Government bonds rallied, with the yield on the 10-year instrument due in
2030 falling 24.5 basis points to 10.565%.

In equities, stocks rose on hopes the rate cut would provide relief for
households and businesses. The Johannesburg Stock Exchange’s Top-40 index
was up 3.98% to close at 45,580 points, while the All-Share index rose 3.88%
to 49,874 points.

Among the gainers were general retailers, with the index up 4.57%. Retailer
Steinhoff topped the gainers, jumping 35.29%.

Uganda

Ugandan shilling posts some gains as banks pare positions

(Reuters) - The Ugandan shilling traded stronger on Tuesday on the back of a
sell-off in the interbank market as some players sought to trim their hard
currency positions, traders said.

At 0936 GMT commercial banks quoted the shilling at 3,765/3,775, compared to
last Thursday’s close of 3,780/3,790.

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GLOBAL MARKETS

Asia shares consolidate, China cuts another interest rate

(Reuters) - Asian share markets took a breather on Wednesday as warnings of
the worst global recession since the 1930s underlined the economic damage
already done even as some countries tried to re-open for business.

China moved again to cushion its economy, cutting a key medium-term interest
rate to record lows and paving the way for a similar reduction in benchmark
loan rates.

While not unexpected, it did help MSCI’s broadest index of Asia-Pacific
shares outside Japan edge up 0.3% to a fresh one-month top.

Shanghai blue chips, however, eased 0.2%.

Japan’s Nikkei was still off 0.5%, though that followed a 3% jump the
previous session. E-Mini futures for the S&P 500 dipped 0.5%, following a 3%
rise in New York.

Even as some U.S. states considered relaxing restrictions, the country’s
death toll rose by at least 2,228, a single-day record, according to a
Reuters tally.

President Donald Trump responded by saying some states could still open
shortly or even immediately. He also temporarily halted funding to the World
Health Organization, saying it should have done more to head off the
pandemic.

Much economic damage has already been done, with the International Monetary
Fund predicting the world this year would suffer its steepest downturn since
the Great Depression of the 1930s.

Bruce Kasman, chief economist at JPMorgan, warned such a slowdown would take
a heavy toll on corporate earnings.

Shares of JPMorgan Chase and Wells Fargo & Co both fell on Tuesday as the
banks set aside billions of dollars to cover potential loan losses from the
pandemic.

BONDS STILL BID

Bond markets are still wagering on tough times ahead, along with unlimited
support from central banks and a disinflationary pulse from lower energy
prices.

Yields on U.S. 10-year Treasuries have settled around 0.74%, more than 100
basis points below where they started the year.

That drop in yields combined with the vast amounts of cash being created by
the Federal Reserve has been a drag on the U.S. dollar in recent sessions.

Currencies leveraged to global growth, including the Australian and New
Zealand dollars, have led the way higher though the dollar has also lost
ground to its major peers.

Early Wednesday, the dollar was down at 107.05 yen having shed 0.5%
overnight, while the euro firmed to $1.0985 . The dollar index was near its
lowest in two weeks at 98.854.

The dollar pullback and a tide of cheap money from central banks has
burnished gold prices, with the metal hitting its highest since late 2012.
It was last at $1,722 an ounce.

In energy markets, oil prices steadied on hopes for purchases by consumer
countries for their strategic stockpiles on a scale not before seen.

U.S. crude was last up 33 cents at $20.44, having shed 10% on Tuesday, while
Brent crude edged up 23 cents to $29.83 in erratic trade.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold climbs to 7-year high on growth fears, stimulus measures

(Reuters) - Gold prices rose to their highest in more than seven years on
Tuesday as concerns over global economic growth and a wave of stimulus
measures from central banks and governments lifted bullion's appeal. Spot
gold was up 0.4% at $1,721.54 per ounce at 1202 GMT, having touched its
highest since November 2012. U.S. gold futures were steady at $1,761.80.

Gold tends to benefit from widespread stimulus measures from central banks,
as it is often seen as a hedge against inflation and currency debasement.
Lower interest rates also cut the opportunity cost of holding non-yielding
bullion. 

Holdings in the SPDR Gold Trust , the world's largest gold-backed ETF, rose
to 1,009.70 tonnes on Monday, the highest since June 2013. 

Gold's rise came alongside gains in global equities after Chinese trade data
came in better than expected and some countries tried to restart their
economies by partly lifting restrictions aimed at containing the outbreak.

Bullion has on occasion moved in tandem with stock markets this year, with
recent sharp sell-offs prompting investors to sell precious metals to cover
their losses elsewhere.

Enough safe-haven demand remains for gold to counter pressure from any
further weakness in stocks going into the company earnings season, said Saxo
Bank analyst Ole Hansen.

Many nations have rolled out fiscal and monetary support to prop up their
economies hit by the virus, which has infected more than 1.88 million people
globally and killed 119,168.

Last week, the U.S. Federal Reserve announced a $2.3 trillion stimulus
package, while European Union finance ministers have agreed on
half-a-trillion euros worth of economic support. 

A steep economic downturn and massive coronavirus rescue spending will
nearly quadruple the fiscal 2020 U.S. budget deficit to a record $3.8
trillion, 18.7% of U.S. economicoutput, a Washington-based watchdog group
said on Monday.

Further supporting bullion, the dollar slipped against a basket major
currencies.       

Other precious metals also rose, with palladium gaining 2.9% to $2,251.57
per ounce. Silver rose 0.6% to $15.54, and platinum  climbed 3.1% to
$771.22.

Copper eases from 4-week high on global recession warnings

(Reuters) - Copper prices dipped on Wednesday as investor anxiety about the
health of the global economy heightened despite efforts to contain the
fast-spreading coronavirus pandemic.

Denting sentiment were comments from the International Monetary Fund, which
said the global economy is seen shrinking by 3.0% in 2020 due to the
coronavirus-driven collapse of activity that will mark the steepest downturn
since the Great Depression of the 1930s.

Copper, used widely in power, construction and manufacturing, is often seen
as a gauge of global economic health.

Prices dropped despite efforts by China, the world’s top copper consumer, to
combat the economic fallout from the pandemic by cutting interest rates on
its medium-term funding for financial institutions to the lowest level on
record.

Three-month copper on the London Metal Exchange (LME) was down 0.1% to
$5,157.50 a tonne, as of 0245 GMT, retreating from its highest in four weeks
hit in the previous session on supply risks.

The most-traded copper contract on the Shanghai Futures Exchange (ShFE) fell
0.5% to 41,570 yuan ($5,893.86) a tonne.

FUNDAMENTALS

* OTHER PRICES: LME tin fell 0.7% to $15,345 a tonne, aluminium rose 1.5% to
$1,525.50 a tonne, while ShFE aluminium increased 1.1% to 11,900 yuan a
tonne and lead fell 1.7% to 13,880 yuan a tonne.

* CHINA AUTOS: French automaker Renault SA is ditching its main passenger
car business in China, the world’s biggest vehicle market, following poor
sales in the Asian country.

* PERU: Peru, the world’s second-biggest copper producer, hopes to gradually
emerge from the economic hibernation aimed at containing the virus by May,
President Martin Vizcarra said.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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opinions expressed and recommendations made are subject to change without
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companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
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for guideline purposes only and sourced from third parties.

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