Bulls n Bears Daily Market Commentary : 03 January 2020

Mon Jan 6 02:03:43 CAT 2020

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Bulls n Bears Daily Market Commentary : 03 January 2020

Zimbabwe Stock Exchange Update

Market Turnover ZWL$4,458,624.40 with foreign buys at ZWL$7,968.00 and
foreign sales were ZWL$12,245.00 Total trades were 88

The All Share index ended positively by adding 2.08 points  to close at
232.17 points. OK ZIMBABWE LIMITED gained $0.0561 to end at $0.6085, DELTA
CORPORATION

LIMITED was $0.0498 higher to close at $3.4573 and CASSAVA SMARTECH ZIMBABWE
LIMITED CSZL.zw advanced by $0.0403 to settle at $1.4403. INNSCOR  traded
$0.0107 firmer at $3.5531 and AMALGAMATED REGIONAL TRADING HOLDINGS LIMITED
was $0.01 stronger at $0.14.

Trading in the negative; OLD MUTUAL LIMITED lost $0.026 to close at
$36.0467, ZIMPAPERS dropped $0.014 to end at $0.12 and PROPLASTICS LIMITED
traded $0.0027 weaker at $0.8173.

  Global Currencies & Equity Markets

Uganda

Ugandan shilling weakens as banks exert demand

(Reuters) - The Ugandan shilling weakened on Friday on the back of a surge
in demand mainly from players in the interbank market looking to beef up
their hard currency positions.

At 1015 GMT commercial banks quoted the shilling at 3,685/3,695, weaker than
Thursday’s close of 3,670/3,680.

South Africa

South Africa's rand weaker as dollar recovers; stocks gain

(Reuters) - South Africa’s rand lost ground on Thursday as the U.S. dollar
recovered on global markets, while local stocks were boosted by looser
policy from China’s central bank and optimism over a U.S.-China trade deal.

Volumes on the Johannesburg Stock Exchange were thin with many traders yet
to return to work after the Christmas and New Year holidays.

By 1548 GMT, the rand had weakened around 0.5% from its previous close to
trade at 14.0830 per dollar, halting a recent rally. The dollar had gained
around 0.3% against a basket of currencies.

U.S. President Donald Trump said on Tuesday that Phase 1 of a trade deal
with China would be signed on Jan. 15, helping ease concerns over the health
of the global economy.

A Chinese central bank decision on Wednesday to cut the amount of cash that
banks must hold as reserves, a move likely to boost economic activity,
helped lift stocks. China is South Africa’s largest trading partner.

The JSE’s Top-40 Index closed up 1.22% at 51,438 points. The All-Share Index
rose 1.11% to 57,718 points.

Telecoms company MTN gained 1.41%, as the company agreed to sell stakes in
towers businesses in Ghana and Uganda.

Government bonds also gained, with the yield on the 2026 bond down 4.5 basis
points to 8.21%.

       <mailto:info at bulls.co.zw> 

The Pound-Canadian Dollar Rate Week Ahead: Charts Warn of Losses but
U.S.-Iran Tensions a Wild Card

The Pound-to-Canadian-Dollar rate declined in the opening week of the New
Year as the Loonie advanced against all major rivals other than the Japanese
Yen, although the outlook for the week ahead sees the exchange rate starting
off in neutral ground even though the charts are arguing for further losses.

Canada's Dollar broke kept Pound Sterling under pressure throughout last
week and broke above the key 1.30 resistance level against its U.S. rival as
investors celebrated the President Donald Trump's claim that his 'phase one
deal' to end the trade war with China will be signed on January 15. Although
the Loonie remained resilient even after Trump claimed responsibility for a
missile strike that killed Iranian General Qassem Soleimani. 

The missile strike has stoked fears of a possible U.S. conflict with Iran in
the Gulf, leading stock markets to fall and the U.S. Dollar as well as oil
prices to rise. However, what matters most to the outlook for the
Pound-to-Canadian-Dollar rate is how the Canadian and U.S. Dollars respond
Trump's Saturday claim to have preselected 52 sites inside Iran for attack
in even the country or its so-called proxy forces retaliate against U.S.
bases and personnel elsewhere. 

Herrera said ahead of the holiday that Sterling's gains should be limited to
1.72 and that over the coming weeks, the Pound should decline toward 1.68.
Sterling did advance into the New Year but gains were stymied just above
that 1.72 level and have since given way to fresh losses. 

Shaun Osborne, chief FX strategist at Scotiabank, said last week the GBP/USD
rate will vulnerable to further weakness in the days ahead although he also
warned of a possible move higher in the USD/CAD rate over the short-term,
which could be said to leave the outlook for the Pound-to-Canadian-Dollar
rate on neutral ground. After all the GBP/CAD rate can be calculated at its
most basic level by dividing the GBP/USD rate over the CAD/USD rate. 

Pound Sterling: What to Watch

Pound Sterling softened against both the Euro and Dollar heading into the
weekend as investors responded to an admission by President Donald Trump
that U.S. forces were responsible for the killing of a senior Iranian
military commander in Iraq, stoking tensions between the two rivals that are
likely to again set the agenda in currency markets early in the new week.

Tensions were already rising between the U.S. and Iran after the White House
said the U.S. was responsible for an earlier missile attack on an
Iran-backed militant group in Iraq, although the death of targeting of
General Qassem Soleimani earlier in the week has exacerbated the fued. And
President Trump may now have upped the stakes again when saying via his
Twitter feed late Saturday the U.S. has preselected 52 sites inside Iran for
attack in the event that any of its bases or personnel in Iraq or elsewhere
are targeted by Iran-enabled forces.

Investors are unlikely to welcome the hawkish White House rhetoric, which
could see risk assets remain on the back foot Monday and safe-havens
continue to outperform. That would benefit the Dollar against all currencies
other than the Japanese Yen and Swiss Franc but it also provide support to
the Euro in the short-term if it forces more international investors out of
emerging markets. In that environment the now-slow-moving domestic story
could easily fall by the wayside for Sterling.

Monday sees the IHS Markit final services PMI for December released at 09:30
and consensus is for the earlier ‘flash’ estimate of 49.0 to be revised
higher to 49.1, although risk might be to the downside given that both the
construction and manufacturing surveys have already surprised on the
downside despite markets also looking for upward revisions there too.

Tuesday sees the Withdrawal Agreement Bill back before parliament for the
‘committee stage’ before the whole of House, which could take until the end
of Wednesday, while Lords amendments and the Third Reading of the bill are
expected to take place Thursday. The bill is the legislative vehicle through
which the withdrawal agreement is brought into force.

Prime Minister Boris Johnson’s withdrawal bill is widely expected to become
law given the scale of the Conservative majority so the event itself is seen
by analysts as unlikely to move the Pound, which will leave Sterling to take
its cues from developments in the international arena and on the charts.

That being said, Johnson will meet European Commission chief Ursula Von der
Leyen in Downing Street on Wednesday as markets wait to hear if a possible
February visit to the U.S. and meeting with President Donald Trump will be
confirmed. Senior Tories have been calling for the government to waste no
time in starting parallel trade negotiations with the U.S. and Foreign
Secretary Dominic Raab is set to meet Secretary of State Mike Pompeo in
London Thursday, although that meeting may now be overshadowed by the State
Department’s ire over the UK’s response to recent events in Iraq, which has
echoed that of France and Germany.

The Canadian Dollar: What to Watch 

The Canadian Dollar saw a strong start to the New Year in which it advanced
against all major rivals other than the Yen, although appetite for the
Loonie will be tested in the week ahead. 

Developments in the international arena, notably in tensions between the
U.S. and Iran, as well as the Bank of Canada's interpretation of recent
economic events will be key to the Canadian Dollar's trajectory in the days
ahead.

Canada's Dollar is sensitive to the price of oil, the country's largest
export, and so was able to hold earlier gains against the U.S. Dollar last
week despite the greenback stabilising in response to the U.S. admission
that it killed Iran's Qassem Soleimani. WTI crude oil futures prices rose
3.1% on Friday while Brent crude futures rose 3.7% in response to fears over
a possible U.S.-Iran clash in the Gulf, which boosted the U.S. greenback and
other safe-haven currencies.

Canada's oil industry and bond yields that still pay investors more than
those of the U.S. government helped prevent the USD/CAD rate from rising too
far off its recent low around 1.2950. The Loonie had fallen to lowest since
late 2018 last week amid earlier broad weakness in the Dollar that was
prompted in part by President Donald Trump's declaration that his phase one
deal with China will be signed on January 15. 

However, analysts at Scotiabank say the Canadian Dollar's correlation with
oil prices isn't what it used to be and that the U.S. Dollar could be due a
further comeback. Meanwhile, other local analysts are looking to the
economic calendar for clues for on the likely trajectory of the Loonie in
the week ahead. 

Thursday will see Bank of Canada Governor Stephen Poloz address the Greater
Vancouver Board of Trade's Economic Outlook Forum in which he's expected to
provide insight into the bank's reading of the November jobs report, which
showed employment contracting sharply in Canada and the unemployment rate
rising 40 basis points in a straight line to 5.9%. The speech is due at
19:00 London time on Thursday.

Poloz's speech will come barely more than 18 hours before Statistics Canada
will publish jobs figures for December, which markets will scrunise closely
for signs of a more protracted turn for the worse in the labour market.
Consensus is looking for the economy to have added 31.8k new jobs in
December and for the unemployment rate to have declined from 5.9% to 5.8%.
The data is due out at 13:30 on Friday. 

The BoC left its cash rate unchanged at 1.75% all year in 2019, supporting
bond yields and lofting the Loonie, but it's said households, the consumer
and international tensions will be key to its policy decisions in the
months.  --poundsterlinglive.com

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold, oil surge in Asia as U.S., Iran exchange threats

(Reuters) - Asian share markets looked to be heading into turbulence on
Monday as a flare-up of tensions in the Middle East sent gold to its highest
in almost seven years while oil flirted with four-month peaks.

The United States detected a heightened state of alert by Iran’s missile
forces, as President Donald Trump warned the U.S. would strike back,
“perhaps in a disproportionate manner,” if Iran attacked any American person
or target.

Iraq’s parliament on Sunday recommended all foreign troops be ordered out of
the country after the U.S. killing of a top Iranian military commander and
an Iraqi militia leader.

Spot gold surged 1.6% to $1,575.37 per ounce in jittery trade and reached
its highest since April 2013.

Oil prices added to their gains on fears any conflict in the region could
disrupt global supplies.

Brent crude futures rose $1.05 to $69.65 a barrel, while U.S. crude climbed
94 cents to $63.99.

MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.16%
though most major indices were yet to open. Futures for Japan’s Nikkei
pointed to an opening fall of around 500 points.

E-Mini futures for the S&P 500 fell 0.4% in very choppy trade.

Sovereign bonds benefited from the safety bid with yields on 10-year
Treasuries down at 1.795% having fallen 10 basis points on Friday. Treasury
futures gained 7 ticks.

In currency markets, the Japanese yen remained the favoured safe harbour
courtesy of Japan’s massive holdings of foreign assets. Investors assume
Japanese funds would repatriate their money during a true global crisis,
pushing the yen higher.

Early Monday, the dollar had edged down to a three-month trough of 107.81
yen, and risked a pullback all the way to 107.00. The euro likewise eased to
120.45 yen having hit a three-week low.

The dollar was steadier against the other majors, with the euro being little
changed at $1.1166. Against a basket of currencies, the dollar was holding
at 96.852.

INVESTORS DIARY 2020

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
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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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