Bulls n Bears Daily Market Commentary : 13 October 2020

Wed Oct 14 04:40:58 CAT 2020

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Bulls n Bears Daily Market Commentary : 13 October 2020

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

ZSE commentary

ZSE swings back into the red.

The equities market swung back into the red as losses in selected heavies
continued to weigh down the market. The primary All Share Index let go 0.61%
to 1,528.15pts while, the Industrial Index eased 0.62% to end at
5,024.48pts. The ZSE Top Ten Index went down 0.94% and closed lower at
996.53pts while, the Mining Index lost 0.26% to 3,846.30pts. Leading the
shakers of the day was property concern Dawn that shed 6.67% to end the day
at a price of $0.7000 while, telecoms giant Econet declined 3.96% and
settled at $ 4.6098. The duo of SeedCo and Delta lost a similar 2.38% to
close at respective prices of $17.0000 and $15.9916. Retailers OKZIM
completed the top five fallers of the day as it slipped 2.13% to trade at
$4.6032.

MedTech firmed 13.66% to $0.0799 reversing previous day's losses while,
packaging group Nampak rallied 8.38% to $1.0500. Spirits manufacturer Afdis
advanced 2.35% to $16.3758 while, fintech group Cassava ticked up 1.37% to
$4.3487. Ariston capped the winners of the day after putting on 0.81% to
close at $1.4123. Twenty-four stocks were active in today's session as eight
registered gains against twelve fallers while, four remained unchanged,
leaving the market with a negative breadth of four. Volumes traded dipped
74.59% to 7.45m shares as Delta, OKZIM, Econet and Innscor anchored the
aggregate with respective contributions of 46.18%, 13.85%, 13.12% and
11.59%. Turnover of the day ballooned 696.62% to $85.06m with Delta and
Innscor being the top value drivers accounting for 64.68% and 19.05% of the
outturn apiece. Foreign outflows at $62.57m were up 1,078.05%, accounting
for 73.55% of the turnover while, inflows stood at $37.11m were 30,155.29%
up from prior session.-efesecurities

Global Currencies & Equity Markets

South Africa

South African Rand Edges Higher with Chinese Yuan but Nearing Budget Could
Put Brake on Advance

The Rand advanced Tuesday even as the U.S. Dollar clawed back earlier losses
from many of its rivals, with the South African currency edging higher
alongside the Chinese Yuan, although gains may be increasingly difficult to
sustain ahead of October's medium-term budget statement. 

South Africa's Rand was higher against the Dollar and Pound as well as most
major developed and emerging market rivals as the Yuan appeared to steady.

China's currency was blindsided on Monday by domestic regulation changes
that made it easier for international investors to bet against it. 

Regulators scrapped a rule requiring banks to set aside capital when dealing
in Yuan forward contracts, making Yuan 'short' positions less cumbersome for
local lenders to facilitate, after a months-long rally took the Chinese
currency back to highs not seen since mid-2018.  

The Rand has been a relative outperformer this last week and sits in the
middle of the rankings for the recent month, although it's rebounding from
record lows against the Dollar and a multi-year trough relative to Sterling
while still remaining an underperformer for 2020 overall. 

Tuesday's gains built despite a widespread rebound by the U.S. Dollar, which
advanced against almost all major currencies with analysts citing a
disclosure by Johnson & Johnson suggesting its coronavirus vaccine could
face delays after an unforeseen problem in phase three clinical trials. 

The Dollar has been sold heavily in recent months which, along with strength
in the Yuan, has provided breathing space to emerging market currencies. But
with the November 03 U.S. presidential election now just weeks away the
danger is that investor caution leads the Rand and other risk currencies to
run aground. 

Many analysts say range-trading is likely to define U.S. Dollar exchange
rates in the final weeks of October, with caution dominating in a period
that will also see Finance Minister Tito Mboweni provide the next update on
South Africa's finances to parliament and the country. 

The national budget deficit is expected to top 15% of GDP in 2020, according
to June's supplementary budget, when it had been expected to fall to around
-5.9% before the coronavirus closed down the global economy in March.

South Africa had already seen its last remaining 'investment grade' credit
rating cut to 'junk' and even before the virus struck, economists had feared
the country would slide further into sub-investment grade territory. 

With the debt-to-GDP ratio most recently forecast by the Treasury to rise to
87.4% by 2024, that slide down the rating scale could come quicker than many
had envisaged.

It's not clear when October's medium-term budget will be but the market will
be sure to scrutinise it closely in any case, especially after Finance
Minister Mboweni pledged in June to deliver a primary surplus by 2023/24. 

The prospect of a further deterioration in Treasury forecasts, or
backtracking on the commitment to a primary budget surplus, could constrain
the Rand in the weeks ahead in instances where pre-election caution and
Dollar moves don't. This is given that it could accelerate the decline in
South Africa's credit rating, which would make South African government debt
less attractive to investors, raise financing costs for the country and
could also weigh on the Rand.   -poundsterlinglive

Nigeria

Naira Plunges Against Global Counterparts on Tuesday on the Black Market

The Nigerian Naira declined on Tuesday on the black market despite efforts
by the Central Bank of Nigeria to prop up the value of the local currency
against global counterparts.

The Naira declined by N4 from N457 per US dollar it traded on Friday to N461
on Tuesday morning. Against the European common currency, the Naira fell by
N1 to N538 from N537.

However, the local currency improved by N3 against the British pound from
N595 it exchanged on Friday to N592 on Tuesday.

Nigeria's weak economic outlook continues to weigh on the Naira outlook,
especially with the economy projected to enter recession in the third
quarter.

Despite efforts to cushion the negative effect of COVID-19 on the nation's
economy, unclear policy path amid weak business sentiment and low foreign
revenue generation needed to sustain economic productivity in a majorly
import-dependent economy drag on Nigerian Naira value and the entire
economic outlook.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar strengthens as vaccine, stimulus optimism dented

The U.S. dollar strengthened on Tuesday as investors turned cautious after a
Johnson & Johnson Covid-19 study was paused while a gauge of inflation rose
for a fourth straight month.

Major equity averages were lower, partly due to a decline in J&J shares
after the company paused due to an unexplained illness in a participant,
dampening optimism a vaccine was on the horizon.

U.S. consumer prices rose 0.2% in September, matching expectations, for a
fourth straight monthly climb, though the pace has slowed amid considerable
slack in the economy as it gradually recovers from the COVID-19 recession.

The dollar index rose 0.416% against a basket of other currencies, putting
it on track for its biggest daily percentage gain in three weeks.

The U.S. currency's safe-haven appeal has been curbed by growing
expectations former U.S. Vice President Joe Biden's win in the Nov. 3
presidential election would bring large stimulus for the pandemic-hit
economy, bolstering the stock market and investor risk appetite.

The greenback has held within a range of about 2% over the past three weeks
as talks on a fiscal deal have progressed in fits and starts.

On Tuesday, U.S. House Speaker Nancy Pelosi said the offer President Donald
Trump recently made on a package after he scrapped talks fell far short of
what the American people need, but she still hopes a deal can be reached.

Sterling was last trading at $1.2987, down 0.59%, after climbing above the
$1.30 mark for the first time in a month on Friday as Britain's unemployment
rate rose by more than expected to 4.5% in the three months to August.

In addition, as a deadline looms, British Prime Minister Boris Johnson told
his top cabinet ministers on Tuesday he wanted a free trade deal with the
European Union on the right terms but ending the year without one held "no
fear."-cnbc

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold, silver see some price weakness as USDX firmer

(Kitco News) - Gold and silver futures prices are modestly down in early
U.S. trading Tuesday, and seeing some pressure in part on a firmer U.S.
dollar index on this day. U.S. stock indexes that are approaching their
record highs is also a bearish underlying factor for the safe-haven metals.
December gold futures were last down $4.90 at $1,924.10 and December Comex
silver was last down $0.216 at $25.055 an ounce.

Global stock markets were mixed overnight. U.S. stock indexes are set to
open the New York day session mixed. Featured in the stock markets this week
will be third-quarter earnings reports from major companies.

Many major industrialized countries, including the U.S., just can't tamp
down the Covid-19 infection spread. Johnson and Johnson has now paused its
Covid vaccine trials, in what was hoped to be a promising vaccine.

In overnight news, China's imports in September were up 13.2% after falling
2.1% in August. Exports were up 9.9% in September. Both imports and exports
beat market expectations and underscore how China's forced and nearly
complete lockdowns for its Covid-19 hotspots have put that country's economy
back on track much sooner than most of the free world's economies.

Following the U.S. government holiday on Monday, the marketplace gets its
first data point of the week Tuesday, with the consumer price index in
focus. CPI for September is seen at up 0.2% from August, versus up 0.4% the
month prior. The U.S. CPI is seen up 1.4%, year-on-year versus up 1.3% in
August. These numbers are certainly not problematic on the inflation front.

The important outside markets early today see the U.S. dollar index firmer.
Nymex crude oil prices are higher and trading around $40.25 a barrel. The
yield on the benchmark U.S. 10-year Treasury note is 0.75% today.

Other U.S. economic data due for release Tuesday includes the NFIB small
business index, the IMF world economic outlook, real earnings, and the
monthly Treasury budget statement.

Technically, the December gold futures bulls have the overall near-term
technical advantage as recent price action has negated a downtrend line on
the daily bar chart. Bulls are now working on a price uptrend on the daily
chart. Bulls' next upside price objective is to produce a close in December
futures above solid resistance at $1,950.00. Bears' next near-term downside
price objective is pushing futures prices below solid technical support at
the September low of $1,851.00. First resistance is seen at Monday's high of
$1,939.40 and then at $1,950.00. First support is seen at the overnight low
of $1,915.20 and then at $1,900.00. Wyckoff's Market Rating: 7.0

December silver futures bulls have the overall near-term technical advantage
and are working on a price uptrend on the daily chart. Silver bulls' next
upside price objective is closing prices above solid technical resistance at
$27.00 an ounce. The next downside price objective for the bears is closing
prices below solid support at $23.00. First resistance is seen at this
week's high of $25.71 and then at $26.00. Next support is seen at the
overnight low of $24.72 and then at $24.50. Wyckoff's Market Rating: 7.0.

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
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