Bulls n Bears Daily Market Commentary : 09 October 2020

Fri Oct 9 16:59:15 CAT 2020

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Bulls n Bears Daily Market Commentary : 09 October 2020

 <http://www.zb.co.zw/> 

ZSE commentary

Selling pressure continues.

Selling pressure continued on the bourse as three of the benchmarks in our
review closed pointing southwards. The All Share Index declined 0.40% to
1,534.34pts while, the Industrials trimmed 0.42% to 5,040.96pts. The blue
chips Index slipped 0.26% to end at 1,004.43pts. Property concern Dawn led
the market retreat after succumbing to 15.25% to close at $0.7500. Nampak
trailed on a 9.51% drop to $0.9501 while, crocodile skin producers Padenga
came off 7.20% to settle at $14.8488. Hotelier African Sun shed 5.29% to
close at $1.5000 while, brick manufacturers Willdale completed the top five
fallers of the day on a 4.02% loss to $0.2245. Construction group Masimba
headlined the risers of the day on a 9.09% surge to $2.4000. 

Conglomerates Meikles and Innscor put on 4.34% and 2.66% to settle at
respective prices of $15.7037 and $18.7665. SeedCo Limited added 2.15% to
$1.5000 while, telecoms giant Econet capped the gainers' pack with 1.59%
rise to $4.8069. The market closed with a negative breadth of eight as
sixteen counters faltered against eight that gained. Activity aggregates
improved in Friday's session as seen in volumes that grew 40.82% to 13.51m
shares while, value outturn soared 49.10% to $36.20m. Truworths was the top
traded stock by volume with a 74.02% contribution to the aggregate. Value
outturn was anchored by heavies Innscor and Delta that claimed 40.61% and
35.34% of the aggregate, respectively.-efesecurities

Global Currencies & Equity Markets

South africa

ZAR Strength  continues for third straight day

The USD/ZAR has traded lower since the Tuesday swing high despite President
Trump seemingly reluctant to discuss a new stimulus package. Since then,
more positive news has emerged as the administration is keen on agreeing a
comprehensive stimulus package.

The daily USD/ZAR chart below highlights the long term downtrend where, more
recently, price action has been trading within the broader 17.7500 - 16.0000
range. Such choppy price action may be expected to persist unless price
makes a significant move outside of this range followed by continued
momentum.

KEY UZD/ZAR TECHNICAL LEVELS

Price has broken below the 16.5000 psych level which opens up the
possibility for continued ZAR strength. Furthermore, should the bear flag
play out, the first level of support comes in at the zone of support
(16.3000 - 16.3550) highlighted in blue, followed by the previous low of
16.0800. Further momentum may then bring into play the 61.8% Fib (drawn form
the Jan low to the April high).

However, should market sentiment sour, resulting in capital flight away from
EM currencies, there may be a continuation of the choppy price action seen
in previous months. A close above the 16.5000 level may spur a move towards
the Tuesday high and possibly even the 17.0000 psych level before the 38.2%
Fib level becomes resistance.

South African Mid-Term Budget Speech

Finance Minister Tito Mboweni is scheduled to deliver the mid-term budget
speech later this month. He will have his work cut out for him as SA is
currently dealing with increasing levels of public and private debt,
struggling state owned enterprises (mainly, SAA and Eskom) and a slowing
economy, all of which have all been exacerbated by the economic impact of
the coronavirus.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar dips on stimulus optimism, bets on Biden victory

(Reuters) - The dollar fell to three-week lows on Friday as optimism that a
deal for new U.S. stimulus would be reached, and as investors bet that
Democrat Joe Biden is more likely to win the U.S. presidency and offer a
larger economic package.

After stalling talks with Democrats on a comprehensive aid package earlier
this week, U.S. President Donald Trump on Thursday called for a "skinny"
relief bill that would include elements such as direct payments and a
bailout of the struggling airline sector. 

Senate Majority Leader Mitch McConnell said another rescue package was
needed but noted "vast differences" over costs. U.S. House of
Representatives Speaker Nancy Pelosi said legislation to help airline
companies could only move through Congress with guarantees that a
comprehensive aid bill would be developed too. 

The dollar index against a basket of major currencies fell 0.34% to 93.23,
the lowest since September 21. It has held within a range from 91.74 to
94.75 since late July. The euro rose 0.45% to $1.1811. The greenback
weakened 0.16% against the Japanese yen to 105.84 yen. 

The U.S. currency also fell on rising expectations that Biden will win the
Nov. 3 election, and that Democrats could win the Senate. A Democratic
victory would likely result in larger stimulus, which would be negative for
the dollar. 

Rising expectations of a Biden victory has also boosted appetite for
currencies that have been hurt by the trade war between Washington and
Beijing, with the Chinese currency the biggest beneficiary. The offshore
yuan strengthened to 6.6801, the strongest since April 2019. 

The pound was steady, brushing off worse than expected UK growth data as
investors became more optimistic about a Brexit deal being reached ahead of
a key European Council summit next week. 

Sterling was last up 0.29% at $1.2970.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Price Forecast - Gold Markets Continue to Try to Fill Gap

Gold fell significantly over the last couple of days, as we gapped lower to
kick off the Wednesday session. Since then, we have been trying to fill that
gap.

Gold markets went higher during the trading session on Thursday, as we are
trying to fill the gap from before. However, we have pulled back a bit to
form a bit of a negative looking candle. At this point, it is likely that we
continue to see negativity, especially as the US dollar is negative for
gold, at least in the short term. The market could go down to the $1850
level where we had seen buyers and could see a little bit of interest. If we
break down below there, then it is likely that we go to the $1800 level
underneath. That is an area that we had broken out of previously, and of
course we have the 200 day EMA underneath there.

On the other hand, if we were to turn around a break above the hammer from
the Tuesday session it would be a very bullish sign and could send this
market looking towards the $1950 level. Either way, this is a market that
will continue to be noisy, and I think there are a lot of concerns out there
when it comes to the economy, and therefore we are starting to see money run
back towards the US dollar. This could work against the value of gold in the
short term, and then we could very well see both of these assets go higher.
That of course would be something worth paying attention to because it would
show a complete run towards safety. When that happens, both of these markets
will continue to be closely watched.

Copper price in biggest drop since height of pandemic

The copper price rally came to an abrupt halt on Thursday with the
bellwether metal experiencing one of the worst one-day price drops on
record. 

On the Comex market, copper for delivery in December fell 5.9% to a low of
$2.8540 a pound ($6,292 a tonne) amid heavy selling, with more than 2.6
billion pounds traded by 1pm in New York. 

It was the biggest decline since mid-March at the height of the covid-19
induced sell-off, which sent the copper price crashing to below $2.00 a
pound - levels last seen during the global financial crisis.  

S&P Global reports a rapid buildup of inventories in warehouses managed by
the London Metal Exchange could be behind Thursday's decline after inflows
of almost 92,000 tonnes over just three days.

TD Securities' head of commodity strategy Bart Melek told S&P Global that
"following months of steeply drawing inventories resulting from a powerful
'V-shaped' recovery in China, combined with a cascading global re-opening
and constrained supply amid social-distancing enforcement at operations, the
substantial inflows into LME warehouses have eased the near-term tightness
that has propelled copper to multi-year highs."

Wild swings

Thursday's decline comes just a day after copper leapfrogged the pivotal $3
a pound level and looked ready to retake levels last seen in 2018, after a
key gauge of the Chinese manufacturing sector, the world's top consumer of
the metal, showed new orders jumping to a nine-year high.

Capital Economics said China's September PMI reading suggests that "the
economy is now entering a period of above-trend growth, which is
indisputably good news for the prices of commodities, particularly
industrial metals."

The Wall Street Journal reported Wednesday a measure from Citigroup that
tracks end uses of copper in the country in various sectors, including auto
and appliance makers, shows the three-month average reaching its highest
level since early in 2017.

INVESTORS DIARY 2020

Company

Event

Venue

Date & Time

Invest Wisely!

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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
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for guideline purposes only and sourced from third parties.

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