Bulls n Bears Daily Market Commentary : 05 August 2021

Thu Aug 5 14:03:10 CAT 2021

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Bulls n Bears Daily Market Commentary : 05 August 2021

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ZSE commentary

The ZSE closed in the red in today’s session halting a 11-day winning streak. This halt is ahead of the Monetary Policy review presentation today by the RBZ governor. Total turnover was down by 38% to ZW$183.4 million. Activity levels declined to 411 trades below the recent averages of 500 trades. Medtech and OK Zimbabwe were the most active stock at 33 trades each followed by Delta at 27 trades. National Tyre Services was the most liquid counter as it anchored volume aggregate trading 1 050 100 shares and Delta anchored value aggregate with a value of ZW$44 million contributing 24% to total turnover.

At close, the benchmark All Share Index lost 1.76% with 16 advancers and 22 losers while 4 counters remained unchanged. The Top 10 Index was down by 3.33% with major losses in Innscor, Delta and Simbisa. The Top 15 Index shaded 2.77%. The Medium Cap Index traded higher to 18 016.59 points appreciating by 0.38% whilst the Small Cap Index added 0.27% to close at 232 242.18 points. Leading the shakers pack of the day was Innscor down by 14.93% followed by First Mutual Holdingsn and Masimba  which shaded 8.94% and 8.88% respectively. Simbisa Brands  was up 8.73%. Leading in the risers’ pack were NMB  and TSL  which added 20.00% and 11.63% respectively. National Tyre Services Limited added 7.03%. First Capital Bank  and Truworths added 5.02% and 4.99% respectively. The Old Mutual Top Ten ETF closed at 209.98c up by 5.43% after 1 425 752 units with a value of ZW$2 993 839 in 14 trades exchanged hands .WealthAccess

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Global Currencies & Equity Markets

South Africa

South Africa's rand steadies as dollar firms on hawkish Fed official

JOHANNESBURG (Reuters) - South Africa's rand steadied in early trade on Thursday, as the dollar held firm after hawkish remarks from a top U.S. Federal Reserve official signalled the possibility of bringing forward policy tightening there.

At 0625 GMT, the rand traded at 14.3660 to the dollar, largely unchanged from its previous close, and down from a three-week high of 14.2275 hit on Wednesday.

The dollar rallied after Fed Vice Chair Richard Clarida said conditions for an interest rate hike could be met in late 2022, setting the stage for a move in early 2023.

Clarida also suggested the U.S. central bank could start cutting back on its asset purchase program later this year.

Higher U.S. interest rates subdue the appeal of riskier but high-yielding currencies such as the rand.

Market focus was on U.S. non-farm payroll numbers due on Friday. The data is an important parameter to determine the Fed's future policy stance.

Nigeria

Naira gains at black market, stable at official window

The naira gained against the U.S. dollar at the unofficial market window on Wednesday by rising to N506.00 per $1.

According to abokiFX.com, the currency closed with a N2.00 or 0.40 per cent appreciation from the N508.00 rate it exchanged hands with the greenback currency in the previous session on Tuesday.

The currency has maintained five consecutive gains on a stretch at the parallel market after the currency hit an all-time devaluation of N525.00 on Wednesday last week, as the Central Bank of Nigeria (CBN) stopped forex sales to Bureau De Change operators.

However, the naira maintained stability against the U.S dollar at the Investors and Exporters (I&E) window also known as the Nafex rates on Wednesday.

Figures from the FMDQ Security Exchange where forex is officially traded showed that the naira closed at N411.50 per $1, the same rate it has traded on the market segment for three consecutive sessions on a stretch.

It touched an intraday high of N400.00 and staged a low of N413.00 before settling at N411.50 at the Nafex window.

This happened as forex supply dipped by 11.40 per cent, with $126.92 million posted at the end of the market session as against the $143.20 million recorded in the previous session on Tuesday.

This disparity between the official market and the unofficial market rates is pegged at N94.50, leaving a margin of 18.70 per cent as of the close of business Wednesday.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar holds gains after hawkish Fed comments

LONDON (Reuters) - The dollar held most gains against basket of currencies on Thursday after hawkish comments from the U.S. Federal Reserve led markets to move forward the likely timing of a policy tightening.

The euro ticked higher at $1.1848, having recoiled from a top of $1.1899 overnight after failing to crack resistance around $1.1910. The dollar also reached 109.75 yen, from a trough of 108.71 on Wednesday, negating what had been a bearish break to the downside.

On Wednesday, Fed Vice Chair Richard Clarida said conditions for an interest rate hike could be met in late 2022, setting the stage for a move in early 2023.

He and three other Fed members also signalled a move to taper bond buying later this year or early next depending on the labour market over the next few months.

Predicting the jobs report with any confidence remains tricky as the spread of the Delta variant and labour bottlenecks roil the market.

Thus, the median forecast for payrolls is 870,000 while the range of estimates stretches from 350,000 to 1.6 million.

Mixed data on Wednesday added to the uncertainty as a surprisingly weak ADP report on private hiring clashed with the strongest reading yet for U.S. services.

Clarida’s comments led investors to price in slightly higher chances of a hike in late 2022/early 2023 and to a flattening of the Treasury yield curve as short-term yields rose.

Such a move would likely precede any tightening by the European Central Bank, which is battling to get inflation near its target.

In contrast, the Bank of England is nearer to tapering and could expand on timing at a policy meeting later on Thursday.

That outlook helped the pound rally early in the year, although it has traded largely sideways over the last couple of months. It was last pinned near support at $1.3884, having repeatedly failed to clear resistance above $1.3980.

All these central banks are laggards compared with the Reserve Bank of New Zealand (RBNZ), which seems likely to hike rates at its next policy meeting on Aug. 18, making it the first in the developed world to move since the pandemic hit.

A super-strong jobs report on Wednesday added to the case for New Zealand tightening and sent the kiwi to a one-month peak of $0.7088 overnight, before steadying at $0.7041.

He recommended buying the kiwi on any pullback to $0.7005, for a target of $0.7300.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper falls on firm dollar, virus surge sparks demand fears

(Reuters) - Copper prices fell on Thursday amid worries that spreading COVID-19 outbreaks would hit demand for base metals and a stronger dollar, which makes greenback-priced metals more expensive to other currency holders.

The most-traded September copper contract on the Shanghai Futures Exchange closed down 1.1% at 69,220 yuan a tonne. Three-month copper on the London Metal Exchange was little changed at $9,463 a tonne at 0704 GMT.

A resurgence in infections due to the highly transmissible Delta variant in some major economies — including top metals consumer China and the world’s largest economy the United States — sparked fears of weaker demand for metals.

Meanwhile, the dollar was pushed higher by hawkish comments from the Federal Reserve that led markets to bring forward the likely timing of a U.S. policy tightening.

China's spot copper premium SMM-CU-PND was at a two-week low of 295 yuan a tonne as of July 29, SMM data showed.

FUNDAMENTALS

* LME aluminium rose 0.6% to $2,581 a tonne, lead fell 0.4% to $2,371 a tonne, and ShFE zinc edged up 0.2% to 22,090 yuan a tonne.

* ShFE nickel dropped 0.5% to 142,580 yuan a tonne and ShFE lead shed 1.1% to 15,730 yuan a tonne.

* The premium of LME cash lead over the three-month contract CMPB0-3 jumped to $60 a tonne, the largest premium since February 2020, indicating tightening nearby supplies as LME inventories MPBSTX-TOTAL fell to a two-year low of 59,250 tonnes.

Gold price today in India remains weak for 5th day in row, silver rates drop

Gold struggled for fifth day in a row in India amid rangebound movement in global rates. On MCX, gold futures were down moderately at ₹47,888 per 10 gram, extending losses to about ₹700 per 10 gram in five days. Silver also struggled with futures down 0.1% to ₹67531 per kg. Global gold rates were subdued after the dollar firmed and remarks from a top U.S. Federal Reserve official signaled the possibility of bringing forward policy tightening, says Jigar Trivedi, Research Analyst- Commodities Fundamental, Anand Rathi Shares & Stock Brokers.

In global markets, spot gold prices fell 0.1% to $1,809.96 per ounce while silver was flat at $25.34 per ounce, after hitting a near three-week peak in the previous sessions.

Higher interest rates raise the opportunity cost of holding non-interest bearing gold. The dollar index firmed on the hawkish comments, making gold more expensive for holders of other currencies.

For intraday, MCX Gold October future is expected to decline during the session since the dollar has rebounded after Fed Vice-Chair's hawkish statements on rate hike, he said.

Fed Vice Chairman Richard Clarida said that the “necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022." Clarida also noted he’d be in favor of the Fed making an announcement later this year that it will begin to scale back its bond purchases, in case growth stays strong.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

Counters trading under cautionary

ART

Seed co Int.

Dairibord

Starafrica

Medtech

Turnall

Seed co

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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