Bulls n Bears Daily Market Commentary : 10 June 2020

Thu Jun 11 05:14:17 CAT 2020

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Bulls n Bears Daily Market Commentary : 10 June 2020

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Zimbabwe Stock Exchange Update

Market Turnover ZWL$189,856,736.15 with foreign buys at ZWL$1,000.00 and
foreign sales were ZWL $24,762,017.00 Total trades were 243.

The All Share index eased by a marginal 5.78 points  to close at 1,540.30
points. INNSCOR lost $4.7029 to $20.1449, PADENGA dropped $0.6803 to
$14.0853 and SEEDCO   was $0.6672 weaker at $19.0000. ECONET (ECO.zw) also
went down by $0.1857 to settle at $9.6336 and OLD MUTUAL LIMITED traded
$0.0573 lower at $85.0000.

Trading in the positive; NATFOODS  added $7.2500 to $43.5500, CAFCA  rose by
$4.0000 to $43.0000 and AFDIS  was $1.8000 firmer at $10.8200. SEEDCO
INTERNATIONAL LIMITED  also increased by $1.5421 to $22.4909 and ZB
FINANCIAL HOLDINGS  traded $1.2700 higher at $7.6300.

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Global Currencies & Equity Markets

Nigeria

Nigeria's 5-year naira futures sink to 578 on dollar shortage 

(Reuters) - The Nigerian naira for five-year settlement was quoted at 578.37
to the U.S. dollar on Wednesday, just off a record low of 584.11 last week,
as a shortage of dollars piled on pressure, while the central bank seeks to
bolster the Nigerian currency.

The naira has been hitting new lows on the black and over-the-counter spot
markets since March after the central bank adjusted its official rate,
implying a 15% devaluation.

Meanwhile, a crash in oil prices in April, triggered by the coronavirus
pandemic, worsened shortages of dollars in the oil-producing nation.

The bank strengthened the naira on the futures market for May 2025
settlement by six naira, traders said on Wednesday.

Introduced in February, 5-year naira futures traded above 550 last month on
the derivatives market as dollars ran short on the spot market.

Bankers say the central bank has been intervening in liquidity on the
interbank market around the time when the bank plans currency auctions.

A central bank spokesman did not immediately respond to a request for
comment.

On Friday, the bank withdrew around 460 billion naira from the banking
system, banking sources said.

The bank has resumed dollar sales to local clients, selling around $100
million per week, but has yet to sell to offshore investors, traders say,
after it scrapped a planned auction because of lockdown measures to slow the
coronavirus.

Importers been left scrambling for hard currency while providers of foreign
exchange, such as offshore investors, have exited.

Liquidity on the over-the-counter spot market touched a low of around $31
million on Wednesday from around $300 million a day last year, traders said.

The naira closed at 387.08 on the spot market, while the two-week currency
futures settlement quoted the naira at 389.84. The currency was quoted at
361 on the official market, backed by the central bank.

South Africa

South African rand gains as dollar weakens ahead of Fed

(Reuters) - South Africa’s rand rose against the dollar on Wednesday, as the
U.S. currency weakened amid a cautious mood ahead of the U.S. Federal
Reserve’s verdict on the health of the economy.

At 1525 GMT the rand was at 16.5800 per dollar, 0.3% firmer than its
previous close and trading at its strongest since March 18.

Investors are waiting to see if the U.S. Fed reinforces an more upbeat tone
that has followed moves in the United States and Europe to reopen economies.

The U.S. dollar weakened broadly amid speculation that the Fed might take
measures to curb a recent steepening of the U.S. yield curve.

The Fed statement is expected at 1800 GMT.

The Johannesburg Stock Exchange (JSE) continued its slide on Wednesday in
line with global markets which remained cautious ahead of the U.S. Federal
Reserve meeting.

Emerging markets also slipped on worries of a surge in coronavirus cases.

The benchmark FTSE/JSE all share index fell 1.49% to end the day at 53,673
points, while the top 40 companies index slid 1.42% to close at 49,205
points.

The market fall was mainly led by its banks, with the banking index down
3.63% at close of trading hours.

In fixed income, the yield on the government issue due in 2030 was up 2.5
basis points to 9.140%. 

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GLOBAL MARKETS

Asia stock rush pauses, bonds rally on sober Fed

(Reuters) - Asian shares eased on Thursday while bonds rallied after a
downbeat economic outlook from the U.S. Federal Reserve stoked speculation
it would have to add to already historic levels of stimulus to safeguard
recovery.

Still, stock losses were modest given the scale of their recent rise. MSCI’s
broadest index of Asia-Pacific shares outside Japan dipped 0.3%, a natural
pause after 10 straight sessions of gains.

Japan’s Nikkei slipped 1.1% as the yen firmed, while Chinese blue chips were
off 0.4%. E-Mini futures for the S&P 500 fell 0.4%.

The Dow had ended Wednesday down 1.04%, while the S&P 500 lost 0.53%.
Bucking the trend, the Nasdaq Composite added 0.67% to a fresh record helped
by gains in Microsoft and Apple.

In a challenge to the stock market’s recent optimism, the Fed predicted the
U.S. economy would shrink 6.5% in 2020 and unemployment would still be at
9.3% at year’s end.

Data out earlier had also shown core U.S. consumer prices fell for a third
straight month in May, the longest stretch of declines on record.

As a result, Fed Chair Jerome Powell said he was “not even thinking about
thinking about raising rates”. Instead, he emphasised recovery would be a
long road and that policy would have to be proactive with rates near zero
out to 2022.

Powell confirmed the Fed was studying yield curve control, a form of easing
already employed by Japan and Australia.

All of which, saw yields on 10-year Treasuries fall 9 basis points on
Wednesday, the biggest daily drop in almost two months. Yields were down at
0.72% on Thursday, a sharp rally from last week’s peak of 0.96%.

The risk of more easing kept the U.S. dollar under pressure, seeing it skid
to a three-month low on a basket of currencies at 95.714.

The dollar carved out a one-month trough on the yen to trade at 106.92,
threatening support at 106.72. The euro was firm at $1.1389 having hit its
highest since mid-March.

The prospect of super-low rates for longer was a boon for gold overnight,
leaving it at $1,732 an ounce.

Oil prices fell back after U.S. data showed crude inventories had risen to a
record high.

Brent crude futures fell 88 cents to $40.85 a barrel, while U.S. crude lost
93 cents to $38.67.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper glides to highest since January on technicals, demand uplift

(Reuters) - Copper prices rose for a fifth straight session on Wednesday to
their highest since January, supported by firm demand and an improved
technical picture.

Benchmark copper on the London Metal Exchange (LME) was up 2.1% to $5,893
per tonne by 1600 GMT, after touching its loftiest since Jan. 24 at
$5,913.50.

The metal broke through the 100- and 200-day moving averages recently,
prompting further buying.

The next area of resistance for LME copper lies at $6,050, Hansen said.

GOLDMAN SACHS: The investment bank raised its copper and aluminium
forecasts, and lifted its 12-month commodity returns forecast to 13.1%.

INVENTORIES: On-warrant LME copper stocks MCUSTX-TOTAL fell to their lowest
since Feb. 24 at 130,225 tonnes, while Shanghai Futures Exchange copper
inventories CU-STX-SGH were at their lowest since Jan. 17.

Bonded warehouse stockpiles in China SMM-CUR-BON were last at 213,000
tonnes, near record lows hit last month.

Analysts and traders say the drawn-down LME stocks are headed for China,
where prices are higher.

CHINA COPPER: Chinese domestic spot prices of refined copper SMM-CU-REF rose
to 46,350 yuan a tonne, their highest since Jan. 23, indicating strong
demand in top consumer China.

POSITIONING: “Net positioning on CME copper is on the verge of turning long,
with the net short position shrinking from over 40,000 contracts in February
to just 895 contracts as of early June,” said BMO analyst Timothy Wood-Dow.

U.S. DOLLAR: The dollar is trading at its weakest in three months,
supporting prices of dollar-denominated commodities.

OTHER PRICES: LME aluminium rose to its highest since March 20, up 1.4% to
$1,628 a tonne, zinc added 0.6% to $2,028.50, lead shed 1.3% to $1,742.50,
tin gained 1.6% to $17,200, and nickel rose 0.8% to $13,010. 

Mali's 2019 gold mining revenue boosted by strong output, prices

(Reuters) - State revenue from gold mining companies in Mali surged 63.5% to
403.6 billion CFA ($702 million) in 2019 compared with 2018, boosted by a
strong turnover from companies operating in the West African nation, the
government said on Wednesday.

Mali’s mines ministry said the gold mining sector generated a turnover of
1.65 trillion CFA in 2019 compared with the previous year, up 19%, due the
increase output and a rise in global gold prices.

Spot gold is currently trading at around $1,717 per ounce up from around
$1,280 per ounce at the end of 2018.

Mali’s gold output rose to 71.1 tonnes in 2019 compared with 66.8 tonnes the
previous year.

Industrial gold production is expected to fall by 8.3% year on year to 59.77
tonnes this year compared with 2019 due to falling output at several mines,
the mines ministry said on June 3.

The ministry said in the statement on Wednesday that the 403.6 million
revenue contribution included taxes, and other royalties. It represented
around 25% of the Mali’s total fiscal resources in 2019, according to the
finance ministry.

The mining sector accounted for around 9.7% of Mali’s gross domestic product
in 2019, with gold as the country’s main export revenue earner, the finance
ministry said.

Thirteen industrial gold mining firms operate in Mali including Barrick Gold
Corp, Resolute Mining Ltd , B2GOLD, AngloGold Ashanti Ltd, and Endeavour
Mining Corp. The country also has some 350 artisanal gold mining sites. ($1
= 574.4800 CFA francs)

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

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been compiled from sources believed to be reliable, but no representation or
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opinions expressed and recommendations made are subject to change without
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suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
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for guideline purposes only and sourced from third parties.

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