Bulls n Bears Daily Market Commentary : 24 September 2020

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Bulls n Bears Daily Market Commentary : 24 September 2020

 


 

 


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

 


ZSE commentary

 

Market Turnover ZWL$50,578,596.70 with foreign buys at NIL and   foreign
sales were ZWL $13,772,186.50 Total trades were 242

 

The ZSE All Share Index continued to lose ground after dropping by a further
2.00 points to end at 1,644.36 points. AFRICAN DISTILLERS went down by
$3.0000 to settle at $17.0000, PADENGA HOLDINGS dropped by $0.39150 to close
at $14.1085 while HIPPO VALLEY lost $0.2276 to end at $14.5000. TURNALL
HOLDINGS traded weaker at $0.6400 after losing $0.1600 and RIOZIM eased
$0.1000 to close at $12.0000.

 

Trading in positive; MEIKLES LIMITED advanced by $1.9463 to close at
$16.0000, BRITISH AMERICAN TOBACCO gained $0.9000 to settle at $224.9000 and
DAIRIBORD ZIMBABWE  increased by $0.1423 to end at $9.4900. INNSCOR AFRICA
traded $0.1035 firmer at $17.0135 and ZIMRE PROPERTY INVESTMENTS traded
higher at $0.6325 after adding $0.055.


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

 

Global Currencies & Equity Markets

 

 

Kenyan shilling, black market naira seen weaker

NAIROBI, (Reuters) - Kenyan and Nigerian currencies are seen on the ropes
next week, while Zambia's awaits direction from Friday's budget presentation
and Uganda and Tanzania's hold steady.

 

KENYA

 

Kenya's shilling is expected to weaken next week as demand for dollars
begins to build up ahead of the end of the month, when firms typically meet
their hard currency obligations, and due to oil importers.

 

Commercial banks quoted the shilling at 108.40/60 per dollar, compared with
last week's close of 108.30/50.

 

NIGERIA

 

Nigeria's naira could weaken on the black market next week after the central
bank unexpectedly cut interest rates this week to boost credit as it works
to stimulate an economy tilting towards recession, traders said.

 

The naira eased to 467 per dollar on the unofficial black market on
Thursday, down 0.4% from a week earlier.

 

The central bank on Tuesday cut interest rates by 100 basis points to 11.5%
to support an economy that contracted in the second quarter. Analysts fear
the liquidity impact from the rate cut could pile pressure on the currency.

 

The naira opened at 386.13 on the over-the-counter spot market, widely
quoted by investors and importers, on volumes in excess of $69 million on
Wednesday.

 

The naira was quoted at 381 per dollar on the official market, which is
supported by the central bank.

 

ZAMBIA

 

The kwacha is likely to remain range-bound against the U.S. dollar as market
players await Finance Minister Bwalya Ng'andu's budget speech on Friday.

 

On Thursday, commercial banks quoted the currency of Africa's second largest
copper producer at 19.9000 per dollar from a close of 19.8600 a week ago.

 

 

UGANDA

 

The Ugandan shilling is seen trading broadly stable over the coming days as
inflows from charities and some commodity exporters help provide support to
the local currency.

 

At 0938 GMT commercial banks quoted the shilling at 3,700/3,710, compared to
last Thursday's close of 3,685/3,695.

 

Some non-governmental organisations (NGOs) looking to meet their typical
month-end operational costs will be converting some of their dollar holdings
for local currency, said a trader with one of the commercial banks.

 

TANZANIA

 

Tanzania's shilling is expected to hold steady next week as inflows from
agricultural exports match U.S. dollar demand from manufacturing and oil
importers.

 

Commercial banks quoted the shilling at 2,315/25 on Thursday, unchanged from
last week's close.

 

 

South Africa

 

South African Rand Follows Chinese Yuan, Euro Lower as U.S. Dollar Rebound
Continues 

The Rand crumbled alongside the Chinese Yuan and Euro on Wednesday as the
nascent U.S. Dollar resurgence endured for a fourth day, with U.S.-China
tensions being the source of the sell-off while the November presidential
election presidential election presents itself as key to the outlook. 

 

South Africa's Rand about-turned Wednesday when the volatile currency fell
against most major developed and emerging market rivals after, having gotten
the better of them earlier in the week when USD/ZAR was seen trading at its
lowest levels since March. 

 

USD/ZAR rose above 17.0 and was aided higher by Federal Reserve Chairman
Jerome Powell who said in testimony to Congress that rate setters have done
"all of things we can think of" before warning that the U.S. recovery could
suffer without action from lawmakers. Powell's comments are an admission
that the world's pre-eminent central bank is all out of ideas as well as
ammunition and so they're also a bit of a red rag to a raging and resurgent
Dollar. 

 

Powell left the ball squarely in the court of bickering and electioneering
lawmakers, although it was price action in Chinese and European currencies
that scuppered the Rand. The Rand had risen alongside the Dollar and Yuan
early on Tuesday but turned lower with the Chinese currency later in the
session before unravelling on Wednesday. 

 

Wednesday's bond auction didn't save the Rand nor did the chequered
performance in global stock markets, with losses building alongside falls in
the S&P 500 but also those of the Chinese Yuan, which suffered its steepest
intraday decline for months. Yuan losses may finally have pulled the rug
from underneath EUR/USD too, although the Rand tends to be influenced by
both because each is a currency of one of South Africa's largest export
destinations.

 

The Euro has itself followed the Yuan since the European Central Bank (ECB)
protested in early September about the threat that a strong single currency
could pose to the inflation outlook and Eurozone economic recovery. Central
banks, especially those of economies which earn their bread and butter from
exports, rarely welcome currency strength but the ECB has grounds to be
particularly averse to it after having missed its inflation target for
years. 

 

EUR/USD's rally had lifted the trade-weighted Euro sharply and threatened to
lift it even further still until the Yuan began to rise rapidly in late
July. China's rally led to falls in EUR/CNH, which is 17% of the
trade-weighted Eurozone currency, and enabled EUR/USD to keep climbing
without lifting the trade-weighted exchange rate. But since then Pound
Sterling, which is 15% of the index, has fallen heavily and now the Yuan is
unravelling too.

 

This gives the trade-weighted Euro a powerful uplift and potentially demands
offsetting falls in EUR/USD, which is more than 20% of the index.

 

The Rand, Yuan, Euro and stock markets have all traded with strong positive
correlations of late, and were rocked last Friday when the White House went
ahead with earlier established plans to prise two social media companies
from China's hands or otherwise push them out of the country. 

 

Since then President Donald Trump has called for China to face United
Nations scrutiny over its handling of the coronavirus, at a meeting in New
York, and President Xi Jingping warned of a "clash of civilisations" while
casting China as a defender of free trade, globalisation and
multilateralism.  

 

U.S.-China tensions are rising just weeks out from the November 03 election,
a ballot that pollsters have credited the incumbent with almost no chance of
winning. The outcome of the vote could be instructive of U.S.-China
relations for years to come, not to mention the trajectory of a Yuan.

 

The market perception is that tensions will remain no matter if Trump is
re-elected or evicted from the White House by opposition candidate Joe
Biden. The latter has historically favoured a once-consensus "engagement
policy," which rarely resulted in new or enhanced tariffs on U.S. imports
from China and never the 'trade war' that erupted between the two in early
2018, although Biden has changed his tune of late. An Asia-Pacific
perspective can be found here.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

 

Turkey

 

Turkey hikes rates to support currency, fight inflation

ANKARA, Turkey (AP) - Turkey's Central Bank raised its benchmark interest
rate by 2 percentage points on Thursday, its first hike in two years to
fight inflation and support its falling currency.

 

In a surprise move that helped boost the Turkish currency, the Monetary
Policy Committee said it had decided to increase the policy rate from 8.25%
to 10.25% "to restore the disinflation process and support price stability."

 

The Turkish lira has been plummeting to record lows, dipping to 7.7 against
the dollar this week, as the coronavirus pandemic continues to batter the
economy. The lira has lost some 20% of its value this year.

 

The Central Bank had long resisted pressure to raise the key interest rate
due to pressure from Turkish President Recep Tayyip Erdogan to keep rates
low. Lower interest rates tend to weaken a currency but boost economic
growth and inflation.

 

The Central Bank had gradually reduced the benchmark rate to 8.25% from as
high 24% and had since kept the rates unchanged.

 

On Thursday, the lira was about 1 % higher, trading at 7.6 against the
dollar.

 

 

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Gold, silver see follow-through price pressure as USDX rallies

(Kitco News) - Gold and silver prices are lower in the early U.S. trading
Thursday. Both metals hit two-month lows overnight. A rallying U.S. dollar
index that hit a two-month high overnight and eroding near-term technical
postures have the gold and silver bulls on the ropes. December gold futures
were last down $8.90 at $1,859.50 and December Comex silver was last down
$0.77 at $22.34 an ounce.

 

Not quite half-way through the "rough waters" period (September and October)
for the stock market, it seems odds do not favor a strong recovery to new
record highs in the U.S. stock indexes. It's also a period when North
Americans and Europeans will be staying inside more as colder weather
approaches, with the potential for new Covid restrictions on businesses
crimping their revenues. And there is no new financial stimulus package for
Americans in sight. Throw in the element of the high potential for a
disputed and even protracted U.S. presidential election result (President
Trump said Wednesday the presidential election in November will likely be
decided by the Supreme Court), and all of the above should favor
trader/investor demand safe-haven assets like gold, silver, the U.S. dollar
and U.S. Treasuries. Yet, many longtime market watchers are presently
scratching their heads that only the greenback is benefiting at present,
while gold and silver are tanking and U.S. Treasuries languish.

 

Global stock markets were mostly weaker overnight. U.S. stock indexes are
set to open the New York day session mixed. Stock markets have turned more
wobbly this week. Said one analyst in a morning email dispatch: "If the
latest sell-off is just about the removal of froth and a healthy correction,
it may indicate we are near a bottom and it's time to reaccumulate stocks.
This approach would be based on the notion that the U.S. and the global
economy will continue heading in the right direction towards a full
recovery. And with central banks across the globe remaining extremely
generous with their policies, we should not worry about some bumps along the
road. However, the risks of a stalling recovery are growing as spikes in
Covid-19 cases surge across Europe and expectations are for similar trends
in the U.S. if no action is taken. The virus continues to be winning at this
stage and there are no clear answers as to when a vaccine will be
delivered."

 

The important outside markets today see the U.S. dollar index up and hitting
another two-month high overnight. Nymex crude oil prices are near steady and
trading around $40.00. Meantime, the yield on the U.S. Treasury 10-year note
is trading around 0.67% today.

 

U.S. economic data due for release Thursday includes the weekly jobless
claims report, new residential sales and the Kansas City Fed manufacturing
survey. Once again, several Federal Reserve officials speak today, including
Fed Chairman Powell speaking to a Senate panel.

 

 

Technically, the December gold futures bulls have the slight overall
near-term technical advantage but are fading fast. The near-term price
uptrend has been negated and prices are now trending down on the daily
chart. Bulls' next upside price objective is to produce a close in December
futures above solid resistance at $1,900.00. Bears' next near-term downside
price objective is pushing futures prices below solid technical support at
$1,800.00. First resistance is seen at the overnight high of $1,872.20 and
then at $1,885.00. First support is seen at the overnight low of $1,851.00
and then at $1,825.00. Wyckoff's Market Rating: 5.5

 

 

December silver futures bulls have lost their the overall near-term
technical advantage as an uptrend has been negated and prices are now
trending lower on the daily chart. Silver bulls' next upside price objective
is closing prices above solid technical resistance at Wednesday's high of
$24.62 an ounce. The next downside price objective for the bears is closing
prices below solid support at $20.00. First resistance is seen at the
overnight high of $23.065 and then at $23.60. Next support is seen at the
overnight low of $21.81 and then at $21.50. Wyckoff's Market Rating: 5.0.

 

 

 

 

 

Crude Oil Price Forecast - Crude Oil Markets Relatively Quiet

The crude oil markets did rally just a bit during the trading session on
Wednesday as we continue to go back and forth near the $40 level.

 

The WTI Crude Oil market has initially pulled back early in trading on
Wednesday but then rallied to break back above the $40 level. This is an
area that will attract a lot of attention for multiple reasons, not to
mention the fact that it is just the $40 level causing psychological
importance. The 50 day EMA is right here as well and relatively flat, and of
course we have the 200 day EMA above that should offer resistance. I still
believe in fading rallies, and if we break down below the lows of both
Tuesday and Wednesday, then I think it opens up a move towards the $42.50
level.

 

Brent

Brent markets initially pulled back a bit during the trading session, but
then rallied a bit to break above the $42 level. The 50 day EMA is just
above there as well, so I think that if we show signs of exhaustion, then it
is likely that we start to sell off yet again. On the other hand, if we were
to break down below both Tuesday and Wednesday, the market is likely to go
looking towards the $40 level. A breakdown below the $40 level would send
this market looking towards the $37.50 level, perhaps even lower than that.

 

The 50 day EMA continues to cause issues, so if we were to break above there
then it is possible that we could go looking towards the 200 day EMA above
at the $45 region. That being said, I still favor fading rallies that show
signs of exhaustion on short-term charts, especially as the US dollar is
trying to strengthen more.-fxempire.com

 

 

 


 

INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 


 

 

 

 


Invest Wisely!

Bulls n Bears 

 

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