Bulls n Bears Daily Market Commentary : 23 September 2020

[Bulls n Bears]

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Bulls n Bears Daily Market Commentary : 23 September 2020

 


 

 


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ZSE commentary

 

ZSE mixed in midweek session…

The market closed mixed in midweek session as the All Share Index and the Industrials let go a similar 0.11% to close at 1,646.36pts and 5,424.92pts apiece. The Top Ten Index gained 0.43% to 1,101.62pts spurred by gains in Cassava that added 2.69% to $4.5099. Banking group NMB surged 6.67% to close at $3.2000 while, fast foods group Simbisa advanced 4.85% to $6.7404. Dairibord rose 4.44% to $9.3477 while, Zimpapers grew 2.77% to end pegged at $0.7091. Fallers of the day were led by apparel retailer Truworths which trimmed a further 9.44% to $0.1630, trailed by Mashonaland that shed 6.96% to $0.4652. Banking group First Capital tumbled 6.73% to $0.8110 while, construction group Masimba declined 6.60% to $2.0402 reversing yesterday’s gains. FBC completed the top five losers of the day having lost 6.52% to settle at $15.0000.

 

The market closed with a negative breadth of two as fifteen counters lost against thirteen winners. Activity aggregates weakened as reflected in volumes that dipped 99.87% to 1.17m shares while, turnover succumbed 99.72% to $9.78m. The top volume drivers of the day were in heavies Delta and Econet which contributed 21.61% and 11.26% to the aggregate, respectively. Anchoring the value outturn were Delta, Innscor and SeedCo Limited that claimed a combined 71.11%. Local purchases claimed 99.55% of total value traded while, sales contributed 63.07% of the same. Elsewhere, African Sun reported a loss of $218.72m for its HY20. The hotelier closed at a price of $1.5800 after gaining 2.60%. -efesecurities


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

 

Global Currencies & Equity Markets

 

 

Sudan

 

Sudan Businesses Feel Pinch as Currency Devalues, Inflation Soars   

KHARTOUM - Sudan this month  declared an economic emergency  after the Sudanese pound lost 40  percent  of its value in one month and annual  inflation jumped to 167 percent.  Sudan's transitional authorities have struggled to stabilize the currency,  the weakness of which helped fuel the protests against former president  Omar al-Bashir.  The economic strain has hit traders in the Sajana Market, one of Sudan's largest. 

 

 Sudan declared an economic emergency this month as the Sudanese pound plunged in value and inflation soared.     

 

The pound, which traded at 135 to the U.S. dollar in August, dropped to 250 per U.S. dollar.    

 

The economic strain has hit traders in Khartoum's  Sajana Market, where many businesses sell imported goods.   

 

Most of the market has stopped purchasing fresh inventory as prices soared and goods are overstocked in shops and factories. 

 

 

People shop at a street market in the Sudanese capital's twin city of Omdurman on July 8, 2020, as the country eases lockdown…

Trader Khalif  Mukashfi  says he’s been forced to close his shop selling light bulbs due to the poor exchange rate.    

 

He says they suffer a lot from the exchange rate and the increased value of the dollar compared to the drop in the Sudanese pound.  Mukashfi says local traders buy from importers, who pay with U.S. dollars, and the price is always changing.  They can’t meet the changing market price, he says, unless they increase their own prices as the Sudanese pound has sharply dropped.     

 

Economic analysts blame the pound’s fall on government policies that prompted Sudanese to withdraw money from banks and buy U.S. dollars  on the black market.    

 

Analyst al-Nayer Mohamed says the policies include increases in fuel and gasoline prices, the second this year, as well as tariffs on imports.  

 

Mohamed says once the policies were declared, the market dropped the value of the Sudanese pound compared to foreign currencies.         

 

Many  Sudanese food  manufacturers  have also stopped production and distribution, leading to a scarcity of goods and higher prices.  

 

Food shop owner al-Hadi Mohiedeen says his shelves are becoming bare as many suppliers stopped deliveries.   

 

He says most of the companies have stopped working completely.  Those that still work have doubled their prices, says Mohiedeen, but only operate half as much as before.  Even if you buy goods, he says, you’ll see the price double the next day.        

 

Sudanese officials are expected to hold talks with the United States in the United Arab Emirates this week. 

 

Sudan wants the country removed from the U.S. list of states that sponsor terrorism.   

 

Removal from the list would open Sudan’s access to international funding and help start the country’s economic recovery.   

 

 

 

South Africa

 

Rand breaks R17 to the dollar as global Covid fears mount

The rand broke past R17.00 to the dollar on Wednesday, as rising Covid numbers and fears of a renewed lockdown in Europe continue to dampen investor sentiment.

 

However, it isn’t only Covid fears at play, with several other incidents also factoring into the off-risk.

 

The rand has suffered its deepest losses since mid-June off the back of fears of swelling Covid numbers in Europe, where new infections are rising at speeds approaching those seen at the height of the first wave.

 

However, Goldman Sachs forecasts, as reported by Pound Sterling Live, point to the local unit recovering not only all of its more recent decline, but also a larger portion of its 2020 loss by the end of the year.

 

However, risks persist in the lead up to the mid-term budget in October, where finance minister Tito Mboweni will have to convince markets that South Africa has a sustainable path forward through its post-Covid economic recovery – while balancing emerging issues like a multi-billion rand bailout for SAA.

 

Other factors

 

Outside of the EU coronavirus troubles, US president Donald Trump has also stirred markets by calling on the United Nations to take action against China and hold it accountable for the pandemic.

 

The US president claimed that while China locked down its borders during the initial stages of the outbreak, it allowed travel out of the country, effectively infecting the rest of the world.

 

While analysts say the president’s appeal will likely find little support at the UN, it does risk exacerbating already rocky relations between the two nations, which have been embroiled in a long-running trade war.

 

Adding to market jitters are the revelation of a host of suspicious trades across the global banking system.

 

Earlier this week, leaked reports found that global banks moved large sums of allegedly illicit funds for nearly two decades, despite red flags about the origins of the money.

 

The consortium reported that the files contained information about more than $2 trillion worth of transactions between 1999 and 2017, and were flagged by internal compliance departments of financial institutions as suspicious.

 

Reuters said that the reports are not necessarily proof of wrongdoing, and the ICIJ reported documents were a tiny fraction of the reports filed with FinCEN.

 

Five global banks appeared most often in the documents – HSBC Holdings Plc, JPMorgan Chase & Co, Deutsche Bank AG, Standard Chartered Plc and Bank of New York Mellon Corp.

 

By 16h00 on Wednesday, the rand was trading at these levels against major currencies:

 

USD/ZAR: R17.03

USD/EUR: R19.89

USD/GBP: R21.70

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

 

Global Markets

 

Currency Traders rush to U.S dollars, reaching 8-week high

Currency traders are now adding more bets on the U.S dollar especially against the euro.

 

The greenback continued its strong comeback against most major financial assets at Wednesday’s trading session in Asia, keeping to its gains recorded on Tuesday.

 

The surge is attributed to the recent impressive economic data coming from the world’s largest economy amid rising concerns over the COVID-19 outbreak in key geopolitical zones of Europe.

 

What you should know; The U.S dollar index that gauges the greenback against a basket of major currencies rose by 0.19% to trade at 94.162 by 9.15 GMT after reaching a two-month high yesterday.

 

COVID-19 caseloads are also rising in the U.S with the number of deaths in the country now surpassing 200,000 and the number of caseloads reaching 6.9 million as of September 23, according to Johns Hopkins University data.

 

The U.S. recent economic data revealed that surge to 6 million in August, the highest level in nearly 14 years.

 

Quick fact: The U.S. Dollar Index tracks the greenback against a basket of major global currencies such as the Japanese yen, British pound sterling, Swedish Krona, Euro, etc. Individuals hoping to meet foreign exchange payment obligations via dollar transactions to countries like Europe, and Japan, would need to pay fewer dollars now in fulfilling such payment obligations.

 

Currency traders are now adding more bets on the U.S dollar especially against the euro, which looks overvalued.

 

 

 

 

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Silver Price Forecast – Silver Markets Show Signs of Stability

Silver went back and forth on Tuesday, as we await the conference with Jerome Powell. It does look as if the $24 level is trying to offer support.

 

Silver markets look very likely to find a bit of stability at the $24 level, and I do think that this is an important area. Whether or not we can hang on to the $24 level will be crucial, because quite frankly if we can, then we can keep going higher over the longer term. If we do not, then it is likely that we will continue to see more negativity, perhaps pushing silver down towards the 200 day EMA which is just above the psychologically and structurally important $20 level. At this point, I do think that it is only a matter of time before we would find buyers in that general vicinity, due to the fact that central banks around the world continue to flood the markets with liquidity.

 

 

Having said that, there is a certain amount of concern when it comes to industrial demand, so that might make silver lag a bit going forward. If you are looking to play the “anti-US dollar” trade, then you will probably do better in gold, at least initially. Silver does tend to lag a bit, but once it takes off it really gets moving. Remember that the contract for silver is quite a bit smaller than gold, so you need to keep that in mind as well. This means that it can be influenced quite drastically and in short order if you are not careful. Nonetheless, if you keep a reasonable position size, you should be able to find a nice opportunity on either it dips or break back above the 50 day EMA.

 

 

Gold sees more price pressure; near-term uptrend in jeopardy

(Kitco News) - Gold and silver prices are lower in the early U.S. trading Wednesday. Gold hit a six-week low and silver fell to a seven-week low. Silver has seen its near-term price uptrend (on the daily chart) negated this week and gold is in serious danger of seeing its near-term uptrend ending. A rallying U.S. dollar index recently and a rebound in global stock markets at mid-week are bearish elements for the precious metals markets. December gold futures were last down $13.40 at $1,885.90 and December Comex silver was last down $0.803 at $23.72 an ounce.

 

Gold and silver bulls are confounded this week. Their markets sold off, along with the global stock markets, on Monday, but then also see selling pressure at mid-week when the world stock indexes are rebounding. It appears the safe-haven metals need a new fundamental spark to jumpstart upside price action. Don’t be surprised if such occurs sooner rather than later.

 

Global stock markets were mostly firmer overnight. U.S. stock indexes are set to open the New York day session higher. At mid-week there is less risk aversion in the global marketplace compared to Monday. The U.S. House of Representatives late Tuesday passed a short-term funding bill that will keep the federal government running until early December. However, it’s still unlikely the Congress and President Trump will get a new, second financial stimulus package for Americans out the door before the November elections.  

 

Reports overnight said a U.K. scientist has warned a full second lockdown is coming, as Prime Minister Boris Johnson considers banning household visits and other restrictions. Johnson warned the U.K. faces a long, hard winter of lockdowns.

 

Meantime, the Euro zone composite purchasing managers index (PMI) for September came in at 50.1 vs 51.9 in August. Better growth in manufacturing led by Germany was offset by a renewed downturn in the service sector as a result of Covid-19 restrictions.

 

The important outside markets today see the U.S. dollar index near steady following solid gains this week that have pushed the USDX to a six-week high. Nymex crude oil prices are slightly firmer and trading around $40.00. Meantime, the yield on the U.S. Treasury 10-year note is trading around 0.66% today.

 

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the monthly house price index, the U.S. flash and services PMI’s, and the weekly DOE liquid energy stocks report. Several Federal Reserve officials are slated to give speeches today, including Fed Chairman Powell to a House committee.

 

Technically, the December gold futures bulls have the overall near-term technical advantage but are fading and need to show fresh power very soon to keep the near-term price uptrend alive. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at this week’s high of $1,962.90. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the August low of $1,874.20—which would negate the near-term price upternd. First resistance is seen at the overnight high of $1,900.00 and then at the overnight high of $1,909.90. First support is seen at the overnight low of $1,876.10 and then at $1,874.20. Wyckoff's Market Rating: 6.5

 

December silver futures bulls have the overall near-term technical advantage but have faded badly this week and need to stabilize prices very soon, to avoid more serious technical damage being inflicted. The near-term price uptrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at this week’s high of $27.13 an ounce. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $24.00 and then at the overnight high of $24.62. Next support is seen at the overnight low of $23.22 and then at $23.00. Wyckoff's Market Rating: 6.0.

 

 

 

 


 

INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 


 

 

 

 


Invest Wisely!

Bulls n Bears 

 

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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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