Bulls n Bears Daily Market Commentary : 18 March 2020

Thu Mar 19 01:21:46 CAT 2020

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Bulls n Bears Daily Market Commentary : 18 March 2020

 <mailto:info at bulls.co.zw> 

Zimbabwe Stock Exchange Update

Market Turnover ZWL$18,087,327.35 with foreign buys at ZWL$87,043.00 and
foreign sales were NIL Total trades were 221

The All Share index continues to lose ground after dropping 6.39 points to
close at 474.42 points. BAT  eased $2.0000 to $97.0000, MEIKLES  lost
$1.4545 to $6.5455 and PPC   was $0.5000 weaker at $4.5000. DELTA also
decreased by $0.1662 to $6.3136 and FIRST MUTUAL PROPERTIES  traded $0.1370
lower at $0.6700.

Losses were offset by gains in FBC HOLDINGS  which added $0.1992 to $1.2000,
NAMPAK  rose by $0.0999 to $1.0000 and CASSAVA SMARTECH  was $0.0248
stronger at $2.8079. ZPI   also increased by $0.0210 to $0.1260 and
PROPLASTICS  was $0.0075 firmer at $1.6100.

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

  Global Currencies & Equity Markets

Nigeria

Nigeria working on worst case scenario of $30 a barrel oil price for revised
budget -finance minister

(Reuters) - Nigeria’s government is working on a worst case scenario of $30
per barrel oil benchmark price and production of 2.1 million barrels per day
for its revised budget, Finance Minister Zainab Ahmed told reporters on
Wednesday.

Zainab Ahmed, who last week said the 2020 budget for Africa’s largest
economy had to be cut because it assumed an oil price of $57 per barrel,
made the comments after stepping out of a cabinet meeting in the capital
Abuja.

Uganda

Uganda central bank says is in market to sell dollars

(Reuters) - Uganda’s central bank is in the foreign exchange market to sell
an undisclosed amount of dollars, it said in an announcement on Refinitiv.

Earlier on Wednesday, the shilling had weakened to 3,777/3,787 per dollar
from Tuesday’s close of 3,745/3,755. 

GLOBAL MARKETS

Markets tumble as scale of stimulus programs numbs investors

(Reuters) - Global equities tumbled further on Wednesday, with bond and gold
prices also sliding in an unusual tandem, as markets grappled with the scale
of government programs aimed at softening the economic shockwave from the
coronavirus.

The Trump administration asked Congress to approve $500 billion in cash
payments to taxpayers in two rounds starting April 6 and $50 billion in
secured loans to U.S. airlines to address the outbreak’s impact, according
to a document seen by Reuters.

Traders struggled to sort out various moves by governments and global
central banks to shore up economies bracing for what looks likely to be a
short but deep global recession from a still growing pandemic.

The rout pushed the S&P 500 below its level of the December 2018, a key
psychological low point that many investors hoped would not be breached. The
benchmark U.S. stocks index has fallen 29.2% in 20 sessions.

Wall Street pared some losses to close about 5% and gold fell 3.6% at one
point as investors dumped precious metals and other safe-havens for cash
after the additional U.S. stimulus measures unveiled Tuesday failed to calm
markets.

Heavy demand for U.S. Treasury securities and the difficulty of the market
to function as a vehicle for price discovery was creating dislocations, said
Marvin Loh, senior global macro strategist at State Street.

Rapidly rising yields for Treasuries and German bunds, the benchmark for
euro zone lending, have made cash the only risk-free asset, said Ulrich
Leuchtmann, head of FX and commodity research at Commerzbank in Frankfurt.

Estimates for the duration of the damage extend into the summer. Japan
already is in a recession, a downturn is imminent in Europe and a U.S.
recession will start in the second quarter, a report from IHS Markit said.

The U.S. economy could shrink 4% this quarter and 14% next quarter, and for
the year is likely to shrink 1.5%, a JP Morgan economist said, one of the
most dire forecasts yet issued for the potential hit from the epidemic.

The coronavirus has raised the prospect of the steepest ever annual fall in
oil demand, Goldman Sachs said. U.S. crude futures plummeted to an 18-year
low and Brent hit more than 16-year low as travel and social lockdowns
slammed demand.

Certain correlations are breaking down in the markets as typical safe-haven
assets sell off, said Yousef Abbasi, global market strategist at INTL
FCStone Financial Inc in New York.

A repricing of in the Treasury market added to anxiety about spread of the
cornavirus, while the plunge in oil prices did not help, said Nela
Richardson, investment strategist at Edward Jones.

Bond prices tumbled, instead of rising, as investors sold to raise cash.
Yields on the benchmark 10-year U.S. Treasury yield rose to 1.2080%, after
hitting 1.266%.

In Europe, the gap between German and other euro zone bond yields widened,
with investors demanding higher premiums to hold anything but German debt.

Ten-year French government bonds yielded 69 basis points more than their
German counterparts, the most since April 2017. The gap between 10-year
German and Dutch debt grew as wide as 37 basis points, the most since July
2015.

U.S. gold futures settled 3.1% lower at $1,477.90 an ounce.

MSCI’s gauge of stocks across the globe shed 5.06% and emerging market
stocks lost 4.70%. The pan-European STOXX 600 index lost 3.92%.

On Wall Street, the Dow Jones Industrial Average fell 1,338.46 points, or
6.3%, to 19,898.92. The S&P 500 lost 131.09 points, or 5.18%, to 2,398.1 and
the Nasdaq Composite dropped 344.94 points, or 4.7%, to 6,989.84.

Boeing Co fell another -18.6% as the planemaker called for a $60 billion
bailout for U.S. aerospace manufacturers facing the fallout of an extended
collapse in global travel.

European bourses tumbled, with indexes in London, Frankfurt and Paris
plunged from 4% to 5%.

In Asia, the MSCI’s broadest index of Asia-Pacific shares outside Japan
dropped 4% to lows last seen in summer 2016, led by a 6.4% fall in
Australia. Japan’s Nikkei dipped 1.7%.

The economic slowdown will be tough on travel-related industries, gaming and
brick-and-mortar retail, said Scott Crowe, chief investment strategist at
real estate-focused CenterSquare Investment Management in Philadelphia.

U.S. clothing retailer Gap Inc and luxury department store operator Neiman
Marcus will close their stores for two weeks, joining other retailers in a
widespread effort to stem the spread of the coronavirus.

U.S. crude hit its lowest since March 2002, falling even after weekly
government data that otherwise could have been supportive to prices. The
draw on gasoline stockpiles and smaller-than-expected build in crude
inventories showed that people were preparing ahead of business and school
closings, analysts said.

U.S. crude fell $6.58 to settle at $20.37 a barrel as a 56% slide over the
past 10 days marked the worst stretch over a similar period of time since
the futures contract was launched in 1983.

 <mailto:info at bulls.co.zw> 

Commodities Markets

After the rout, platinum and palladium face more turmoil before recovery

(Reuters) - Platinum and palladium will remain turbulent in coming months
after huge losses sparked by the spread of coronavirus, before starting a
tentative recovery with support from palladium’s supply gap and platinum’s
correlation with gold, analysts said.

Platinum has plunged 40% and palladium 45% from February highs as efforts to
contain coronavirus stifled the global economy and turmoil in wider markets
forced investors to sell precious metals for emergency cash.

On Monday, platinum suffered its biggest one-day fall on record and touched
$558 an ounce – the lowest since 2002 – while palladium tumbled from a
record high of $2,875.50 to some $1,500 an ounce.

Around 80% of palladium and 40% of platinum is used in vehicle exhausts to
remove harmful emissions. Platinum is also widely used in jewellery.

Auto sales could fall 10% this year, analysts at Citi said, reducing
palladium consumption by nearly 600,000 ounces – around 6% of global annual
demand – and platinum use by close to 300,000 ounces – 4% of annual demand.

Even as factories restart in China, carmakers including Daimler, Volkswagen
and Ford have this week suspended manufacturing in Europe, where the virus
is spreading fast.

But while weaker demand both for vehicles and jewellery will keep platinum
oversupplied, palladium – in deficit for most of the last decade – will
remain in shortfall, the Citi analysts said.

They said both metals could fall in the short term, but that platinum would
average $1,050 next year and palladium $1,875.

The palladium market remains tight, with metal for near-term delivery
costing more than later-dated contracts – a situation that suggests a lack
of ready supply - and forward and lease rates, while lower, still well above
zero. < XPD1M=TTKL>

Supply of both metals has been reduced by a shutdown at an Anglo American
Platinum facility in South Africa, and could be further disrupted as
coronavirus spreads.

Prices would stay low for some time before recovering, she said.

Even at lower prices, few industrial users have been buying extra, traders
and analysts said.

The bulk of the selling has been by financial investors, analysts said.

Speculators have slashed bets on higher prices for platinum and palladium on
the Nymex exchange, though holdings of platinum by exchange-traded funds
(ETFs) remain near record highs, exposing the metal to the risk of further
sell-offs.

Platinum will however find support from gold, since the two tend to move
together, analysts said, and from expectations that auto makers will over
time boost their platinum use now that it is so much cheaper than palladium.

Gold prices are expected to rise as investors seek safe places to store
money and central banks cut interest rates, making non-yielding bullion more
attractive.

Shanghai Gold Exchange raises trading margin and limit for silver contract

(Reuters) - China’s Shanghai Gold Exchange (SGE) said on Wednesday it would
raise margin requirements for its silver contract to 19% from 14% from
today’s settlement.

The exchange will also hike the trading limit for its Ag(T+D) silver
contract to 18% from 13% when trade resumes on Thursday, it said in a
statement on its website.

The SGE imposed a one-day trade halt on its silver contract on Wednesday
after price fluctuations. It also warned investors to reasonably control the
scale of their positions and ensure market stability.

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
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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
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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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