Bulls n Bears Daily Market Commentary : 18 June 2021

Fri Jun 18 13:35:30 CAT 2021

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Bulls n Bears Daily Market Commentary : 18 June 2021

 <https://www.cbz.co.zw/> 

ZSE commentary

The ZSE closed this week near flat in the negative with the benchmark all
share index further sliding below the 6 000 mark. Penny stocks however
registered marginal gains mainly driven by retail investors. Turnover was
near flat at ZW$110 million compared to yesterdays' from a trade of over 4.3
million shares with Delta contributing 33% of total turnover. Activity
levels were higher at 503 trades. OK Zimbabwe was the most active stock at
53 trades followed by Medtech and Star Africa. The market breadth was
negative after 17 stocks depreciated against 15 that appreciated in a total
of 39 stocks which traded. Wildale was the most liquid counter as it
anchored volume aggregate trading 814 200 shares and Delta anchored value
aggregate trading 524 200 shares with a value of ZW$35.9 million.

The benchmark All Share Index was down 0.52% and the Top 10 Index also down
by 0.89% with losses in Delta, National Foods and OK Zimbabwe. The Top 15
Index shaded 1.35%. The Medium Cap Index traded lower to 15 626.42 points
whilst the Small Cap Index added 0.89% to close at 116 880.97 points.
Leading the shakers pack of the day was National Foods which shaded 12.61%
and Fidelity which shaded 11.79% to 661.54c. OK Zimbabwe and Zimplow also
pared 6.43% and 5.70% respectively. Cassava lost 2.06% to 1543.495c. Leading
in the risers' pack was General Beltings adding 20.00%. RTG added 17.02% and
Star Africa was up 12.41%. ZIMRE Holdings added 11.61%. Please find a
summary of the market activity as shown below; The Old Mutual Top Ten ETF
closed at 189.14c down 0.53% from a trade of 80 679 units worth ZW$152
593.31 in 5 trades. wealthaccess

Global Currencies & Equity Markets

South Africa

Rand trades flat overnight

The rand sank to a four-week low, in tandem with the broader asset class of
risk-sensitive currencies, after the Fed indicated on Wednesday that its
policy pivot has commenced with forward guidance shifting from "extremely
dovish and patient" to "moderately dovish and bullish", according to NKC
Research.

The Fed refrained from making a policy announcement in its June FOMC policy
statement, but its economic and median interest rate projections revealed a
marginally less dovish stance.

The Fed expects a summer boom in activity and higher inflation through 2021,
in line with our forecast. Inflation is also expected to be "stickier" in
2022. Core and headline inflation are expected to moderately surpass the 2
percent target through 2023.

The median dot plot expectation was slightly more hawkish with two rate
hikes expected in 2023 (11 participants) and seven participants expecting at
least one rate hike in 2022. Meanwhile, Chair Powell walked a fine line
during the press conference.

Powell said the labour market recovery remained uneven and incomplete. He
echoed the Fed's more bullish economic projections showing the economy
meeting rate lift-off conditions earlier than expected.

At the close of local trade, the rand quoted 0.80 percent weaker, at
R14.06/$, after trading in range of R13.93/$ to R14.16/$. The rand traded
flat overnight.

South African bourse

The JSE All Share (-1.08 percent) ended lower yesterday, dragged by losses
in large resources (-3.33 percent) and financial (-2.43 percent) stocks. In
the overall emerging market sphere, the MSCI Emerging Market Index (-0.5
percent) traded in the red.

Brent crude oil

A firmer dollar placed pressure on Brent oil prices yesterday, but losses
were capped by a drop in US oil inventories. At the close of local trade,
benchmark Brent crude futures quoted 0.38 percent lower at $73.85pb. Crude
prices extended losses during Asian trade this morning.

BUSINESS REPORT ONLINE

Nigeria

Naira sees major gain at parallel market

Naira gained against the U.S. dollar at the official Investors and Exporters
(I&E) window and the black market on Thursday.

The currency closed at N411.50 per dollar, a 0.12 per cent appreciation from
N412.00 it traded in the previous session on Wednesday.

The Naira witnessed a forex turnover of $138.20 million, this translates to
a 4.81 per cent rise from $131.86 million posted in the previous session on
Wednesday.

The domestic currency reached an intraday low of N412.00 and a high of
N400.00 before closing at N411.50 on Thursday. The last time the currency
touched N411.00 and above at the Nafex window was on June 15 when it closed
at N411.75 per $1.

Similarly, the Naira gained against the U.S. dollar at the parallel market
segment on Thursday, data posted on abokiFX.com, a website that collates
parallel market rates in Lagos showed.

According to the data published, the local unit closed at N493.00 at the
black market, this represents a N9.00 or 1.80 per cent appreciation from
N502.00, the rate it traded in the previous session on Wednesday.

As a result of this, the spread between the black market and official market
rates stood at N81.50, translating to a margin of 16.53 per cent as of the
close of business on Thursday.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar heads for best week in nine months

The dollar was headed for its best week since last September, while gold was
on course for its worst in 15 months, after US central bank officials
brought forward their projections for the first post-pandemic interest rate
rise.

The dollar index, which measures the buck against major currencies, traded
flat on Friday but had gained 1.5 per cent over the week in response to Fed
policymakers' projections on Wednesday that interest rates would rise from
record low levels in 2023, from an earlier forecast of 2024.

Gold, which often moves inversely to the dollar because the metal is priced
in the US currency, traded at $1.788 an ounce on Friday morning, a decline
of about 4 per cent from the start of the week.

The price of Brent crude, the international oil benchmark that is traded in
dollars, also fell for a second day on Friday, losing 0.4 per cent to $72.77
a barrel.

While the Fed on Wednesday also upgraded its economic growth and inflation
forecasts for the US, equity and bond markets traded calmly on Friday as
investors viewed the earlier than expected rate rise as a signal the central
bank had become more willing to step in to control runaway price rises.

The FTSE World index of developing and emerging market shares dipped 0.2 per
cent lower but remained close to its all-time high reached on June 14. The
Stoxx Europe 600 index also declined 0.2 per cent but was less than 1 per
cent below its June 15 closing record.

The yield on the benchmark 10-year US Treasury bond, which moves inversely
to its price, was 0.02 percentage points lower at 1.495 per cent as traders
bought the debt.

This yield has climbed from about 0.9 per cent at the start of the year but
moderated in recent months as investors decided a 5 per cent leap in
headline US inflation for the 12 months to May would either not be repeated
or would be controlled by the central bank. Persistent inflation erodes the
returns on fixed interest securities such as government bonds.

Elsewhere in markets, the euro was steady against the dollar at $1.11916 but
has lost about 1.7 per cent against its US counterpart this week. Sterling
fell 0.2 per cent to $1.389.

The UK's FTSE 100 index lost 0.5 per cent, dragged lower by energy stocks.
In Asia, Hong Kong's Hang Seng index lost 0.9 per cent, with energy groups
also leading the decline. Japan's Nikkei 225 was flat.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold set for worst week since March 2020 after hawkish Fed

(Reuters) - Gold prices edged higher on Friday, but were on track for their
worst week since March 2020 after the U.S. Federal Reserve's hawkish message
on monetary policy bolstered the dollar and bond yields, while denting
bullion's appeal as an inflation hedge.

FUNDAMENTALS

* Spot gold was up 0.3% at $1,779.11 per ounce, as of 0100 GMT. However,
prices have fallen 5.2% so far this week.

* U.S. gold futures edged 0.2% higher to $1,779 per ounce.

* The dollar index hit a two-month high and was headed for its best week in
nearly nine months, making gold more expensive for holders of other
currencies.

* The benchmark 10-year yield held firm above 1.50%, increasing the
opportunity cost of holding non-interest bearing gold.

* Fed officials have begun telegraphing an exit from the central bank's
extraordinarily easy monetary policy that so far is smoother and signalled
to be speedier than when the reins were tightened after the last crisis.

* Higher interest rates will dull gold's appeal as they translate into a
higher opportunity cost of holding it.

* Indicative of sentiment, SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.4% to 1,041.99 tonnes on
Thursday.

* A sharp spike in energy prices and more expensive services boosted euro
zone consumer inflation in May as expected, data confirmed on Thursday,
taking the rate of price growth just above the European Central Banks
target.

* The Bank of Japan is expected to maintain its massive stimulus and may
extend a deadline for its pandemic-relief programme at the end of its
two-day policy meeting on Friday.

* The White House will consider arranging talks between U.S. President Joe
Biden and his Chinese counterpart, Xi Jinping, as the two countries spar
over issues including human rights, a top U.S. official said.

* Silver rose 0.7% to $26.12 per ounce, palladium gained 0.7% to $2,513.88,
while platinum climbed 1% to $1,068.40.

LME copper eyes biggest weekly drop in 15 mths on China sale plan, dollar

(Reuters) - London copper prices were set on Friday for their biggest weekly
fall since March 2020 as the dollar firmed on the prospect of U.S. interest
rate hikes and after China announced a plan to sell part of its reserves of
the metal.

Three-month copper on the London Metal Exchange was down 0.8% at $9,242.50 a
tonne by 0710 GMT, pushing its loss for the week to 7.6% and putting it on
track for its steepest weekly fall since March last year, when the
coronavirus hit demand.

The most traded July copper contract on the Shanghai Futures Exchange
dropped to 66,960 yuan ($10,394) a tonne, its lowest since April 15, before
paring some losses to close at 67,260 yuan a tonne, still down 2.6%.

The dollar was headed for its biggest weekly gain in nearly nine months as
investors scrambled to price in a sooner-than-expected ending to
extraordinary U.S. monetary stimulus in the days after a surprise shift in
tone from the Federal Reserve.

A stronger dollar makes greenback-priced metals more expensive and less
appealing to holders of other currencies.

Prices had already been under pressure after top metals consumer China
announced a plan on Wednesday to sell state reserves of copper, aluminium
and zinc in an effort to curb a strong price rally in commodities.

FUNDAMENTALS

* LME aluminium fell 0.3% to $2,392 a tonne, nickel rose 1% to $17,345 a
tonne, ShFE aluminium dropped 1.8% to 18,380 yuan a tonne and zinc shed 3.1%
to 21,935 yuan a tonne.

* The speculative net long in SHFE copper declined to 9.5% of open interest
on Thursday, the lowest since Nov 24 last year and down from a mid-May high
of 54.7%, Marex Analytics data showed.

* A single party controls 50%-80% of available zinc stocks and short-term
futures, LME data showed.

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
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