Bulls n Bears Daily Market Commentary : 02 September 2020

Wed Sep 2 16:03:49 CAT 2020

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Bulls n Bears Daily Market Commentary : 02 September 2020

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ZSE commentary

Market Turnover ZWL$69,422,126.27 with foreign buys at ZWL$1,210,497.00 and foreign sales were ZWL $36,660,446.30 Total trades were 326.

The ZSE All Share Index closed higher at 1,439.62 points after adding 25.89 points . This was caused by an uptick in CBZ HOLDINGS  which advanced $2.4596 to settle at $33.6598, DELTA CORPORATION LIMITED increased by $1.6766 to close at $18.8463 and DAIRIBORD HOLDINGS  advanced by $1.0000 to settle at $6.0000. AFDIS DISTILLERS  added $0.9500 to end $19.8500 while FIDELITY LIFE ASSURANCE was $0.0940 firmer at $0.5640. Trading in the negative; FBC HOLDINGS  and CAFCA LIMITED which both lost $1.0000 to close at $7.5000 and $61.0000 respectively. BINDURA NICKEL CORPORATION dropped $0.2000 to to end at $3.8000 while CASSAVA SMARTECH eased $0.0977 to close at $4.0416. AFRICAN SUN LIMITED was $0.0866 lower at $1.4008.

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Global Currencies & Equity Markets

Nigeria

Nigeria Naira Rallies in Parallel Market as Dollars Expected

Nigerian naira strengthened to its strongest level in informal trading since at least April as supplies of the U.S. currency surged ahead of an auction set for next week by the central bank.

The local unit traded 440 naira per dollar on Wednesday from a peak of 477 naira last week, according to abokifx.com, which collates rates from street traders in Lagos, the nation’s commercial hub. In the official spot market, the unit weakened 0.4% to 387.15 naira per dollar as of 8.53am on Wednesday.

The parallel rates went 5% weaker than the official rate of 380 naira when the central bank suspended dollar sales to bureau de change operators in March, widening as much as 20% at a point, as Africa’s most populous country went into lockdown to contain the spread of coronavirus.

The Abuja-based Central Bank of Nigeria said it will resume sale of foreign currency to traders on Sept. 7 as the lockdown eases and international flights resume, increasing the demand for the greenback by businesses and leisure travelers. The central bank plans to sell at 384 naira to a dollar to dealers, who will then sell at 386 naira to end users.

Many dealers who hoarded foreign currency are releasing it “to the market because they don’t know where the price will settle on Monday,” Aminu Gwadabe, president of the Association of Bureau de Change Operators of Nigeria, said by phone. “They are dumping, people are not willing to buy.”

The central bank is struggling to clear a backlog of foreign-exchange demand by foreign investors taking their profit and locals seeking imports. The shortage was exacerbated by the outbreak of Covid-19 and the slump in the price of crude, which accounts for more than 90% of the nation’s foreign exchange earnings and more than half of government revenue.-bloomberg

South African

South African Stocks Rise as Vaccine News Boosts Risk Appetite

South Africa’s main stock index gains for a second day, rising 0.4% by 10 a.m. in Johannesburg, as reports that a Covid-19 vaccine may be available earlier than expected drives risk appetite higher.

The biggest listed companies, Naspers Ltd., Richemont, and Anglo American Plc, led gains, with the market shaking off declines in more than half of the 150 listed companies, including from gold miners and Old Mutual Ltd.

Sentiment got a boost from data showing U.S. manufacturing expanded last month at the fastest pace since 2018 and Chinese factory data signaling rising global demand for exports, a sign the world economy is recovering from the pandemic.

Naspers, with a 20% weighting in the index, as well as its subsidiary, Prosus NV, advanced Wednesday, rising 1.7% and 1.6% to propel index higher. The gains were driven by advances in tech giant Tencent Holdings Ltd, which climbed 1.5%.

Naspers holds a 31% stake in Tencent through Prosus.

Rand-hedge Richemont, which has an 8% weighting in the index, advanced 1.9% as the currency came under pressure from a rebounding dollar. bloomberg

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America

U.S. Stock Futures Climb as Risk Rally Gains Steam: Markets Wrap

U.S. equity futures rose alongside European stocks as as the nearly relentless rally in risk assets continued, supported by dovish comments from policy makers.

The tech-heavy Nasdaq gauges once again appeared poised to lead gains, with Nvidia Corp. jumping in the premarket after its new computer chips for gaming won praise from analysts. The Stoxx Europe 600 Index headed for its biggest increase in almost a month. The dollar trimmed its advance after data showed U.S. companies added fewer jobs than forecast in August and as traders awaited the Federal Reserve’s Beige Book report on the economy.

The euro slid further below $1.20, a level it breached for the first time in over two years Tuesday.

The VIX 1st/2nd/3rd contract butterfly moves to record level

Hedging against that potential volatility around U.S. November presidential election looks to be the most-expensive event risk on record based on a common way to bet on volatility known as a “butterfly trade.”Bloomberg

The rally in global stocks has pushed major indexes to record highs as traders bet that a flood of liquidity unleashed by major central banks will make its way to equity markets. The risk-taking was underpinned by dovish commentary from officials including Fed Governor Lael Brainard and European Central Bank Executive Board member Philip Lane on Tuesday.

Amid the risk-on rally, key U.S. markets now appear to be pricing in chances of a delayed or inconclusive result from the November presidential election, JPMorgan Chase & Co. analysts said.

Elsewhere, 10-year bunds rose along with most of their sovereign peers across Europe, benefiting Germany, which took in 33 billion euros ($39 billion) of orders for its first green bonds. West Texas crude oil hovered around $43 a barrel, while gold edged lower.

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Commodities Markets

Gold prices today fall for second day in a row, silver rates crash

Analysts say that the momentum in gold is weakening and the yellow metal may be choppy in near term

Gold and silver prices edged lower today in Indian markets amid muted global cues and a strong rupee. On MCX, October gold futures fell 0.12% to ₹51,438 per 10 gram while silver futures slumped 1.6% or ₹1,150 to ₹69,732 per kg. In the previous session, gold futures had declined 0.44% while silver futures had risen 0.4%. Gold prices in India have been volatile since prices hit a record high of ₹56,200 on to August 7.

In global markets, gold prices fell today giving up early gains as the US dollar rebounded from two-year lows. Strong US manufacturing data pushed up the global risk sentiment. Spot gold fell 0.7% to $1,957.15 per ounce.

"MCX gold today continued with yesterday's selling pressure as dollar rebounded from nearly more than two year low. The ISM manufacturing PMI for August in the US lifted the sentiment in the equity markets. Since the dollar has rebounded overnight, we expect pressure to mount on commodities. MCX gold is likely to be more volatile as U.S. will release ADP employment change for August," said Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers on Gold.

Among other precious metals, silver dipped 2.1% to $27.58 per ounce, platinum slipped 1.2%, to $929.94, and palladium fell 1% to $2,248.72.

"Gold has bounced back sharply after taking support near $1900/oz level however the momentum is weakening and we could see choppy trade if there are no fresh triggers. Hence one should wait for a corrective dip before creating fresh long positions," Kotak Securities said in a note.

Weighing on gold price is persistent strength in US and global equity markets, sluggish ETF activity and weaker consumer demand, the brokerage added.

The dollar index held steady at near two-year lows as investors bet that interest rates in the US would stay low for longer under the new monetary policy framework outlined by the Fed chief last week.

Low interest rates reduce the opportunity cost of holding non-yielding gold while a weak dollar makes the yellow metal cheaper for holders of other currency.

Data released on Tuesday showed that US manufacturing activity accelerated to a nearly two-year high in August amid a surge in new orders.

Gold prices are up about 30% so far this year as governments and central banks across the globe rolled out unprecedented stimulus to prop up the economies amid the coronavirus pandemic.

White House chief of staff Mark Meadows said that Senate Republicans are likely to take up their COVID-19 relief bill next week offering $500 billion in additional federal aid.

In India, the latest tranche of sovereign gold bonds is open for subscription, which closes on September 4. The issue price has been fixed at 5,117 per gram. Those applying online and making payment online get a discount of ₹50 per gram. Minimum permissible investment is 1 gram of gold. livemint.com

Copper Tumbles 1% On MCX

Copper saw volatile moves in last session. The red metal jumped amid a deep slide in US dollar index, which fell to two and half year low under 92. An earthquake in leading producer Chiles Northern region also benefitted the red metal. The commodity dropped thereafter though as profit selling took a toll in US session after a Federal Reserve official said the economy faces substantial risks. 

The risk of permanent layoffs and business bankruptcies will rise the longer uncertainty related to the coronavirus pandemic remains high, said Fed governor Lael Brainard in a speech Tuesday. COMEX Copper tanked 1.50% to $3.01 per pound as it extended a slide from 27 month high. MCX Copper also lost 1.12% to end at Rs 521.40 per kg.-indiainfoline

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 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 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 report shall be solely responsible for making their own independent 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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