Bulls n Bears Daily Market Commentary : 28 October 2021

Thu Oct 28 17:37:51 CAT 2021

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Bulls n Bears Daily Market Commentary : 28 October 2021

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ZSE commentary

The ZSE continued on its losing streak as October monthly inflation accelerated to its highest rate. Market bias was negative as 25 stocks declined against 13 advancers while seven of the active stocks remained unchanged. Activity levels was at 569 trades. Medtech was the most active stock at 40 trades followed by Econet and Bindura at 38 and 24 trades respectively. FML anchored volume aggregate trading 1 471 500 shares and National Foods anchored value aggregate with a value of ZW$34.2 million.

The All-Share Index lost 1.13% to 11 329.48 points. The Top 10 Index shaded 0.95%. The Top 15 Index pared 1.11%. The Medium Cap Index lost 1.84% to 21 942.11 points whilst the Small Cap Index added 3.00% to 330 018.90 points. Leading the shakers pack of the day was Truworths shading 16.20% and Mashonaland Holdings  lost 15.66%. Medtech Holdings pared 14.70% and First Mutual Holdings lost 14.39% to 2311.49c. Nampak  was down by 7.65%. Mitigating the losses were gains in CFI Holdings and Zimplow which added 19.89% and 2.78% respectively. RTG was up by 2.51% to 584.29c. Meikles and Axia Corporation added 2.42% and 2.23% respectively. The Old Mutual Top Ten ETF closed at 450c down by 0.47% after 16 769 units were traded worth ZW$75 460 in 37 trades. On the VFEX, Padenga (PHL.vx) traded 4 335 shares worth US$845.33 to close 11.36% down at US 19.5 cents.-wealthaccess

Global Currencies & Equity Markets

South Africa

Rand weakens to two-week low over strong dollar, softer commodity prices

THE RAND yesterday weakened to a two-week low, briefly breaching the R15/$1 mark as a stronger dollar and softer commodity prices weighed on emerging markets currencies.

The dollar was holding steady yesterday ahead of the European Central Bank meeting later this week, but all other currencies weakened.

The rand briefly touched R15.02 to the greenback at lunchtime, before returning 0.74 percent weaker to R14.97 in the afternoon by 3pm.

Lower prices for platinum, gold, and steel also dragged the rand lower after a rally it had at the beginning of the week on the back of a risk-on sentiment in global financial markets.

The rand currently has averaged R14.82 to the dollar so far this month. Investec chief economist Annabel Bishop said the rand was facing headwinds this week.

Mining stocks on the JSE also slid yesterday, save for Royal Bafokeng Platinum, which jumped 16 percent after it announced a planned acquisition by Impala Platinum.

Energy stocks fell 1.4 percent after the state-owned power utility, Eskom, announced further electricity shedding across the country due to additional shortages in generation capacity.

TreasuryONE's currency strategist, Andre Cilliers, said the rand had closed weaker at R14.80 on Tuesday after having tested the R14.85 technical level earlier.

BUSINESS REPORT ONLINE

Nigeria

Naira Appreciates as Cryptos 
The Naira appreciated against the US Dollar at the Investors and Exporters (I&E) window of the foreign exchange (FX) market by 0.01 per cent or 3 kobo on Wednesday, October 27.

The local currency sold for N415.07/$1 yesterday, according to data obtained from FMDQ Securities Exchange and at the previous trading day, the exchange rate was N415.10/$1.

It was observed that the decline in the demand for forex at the segment supported the appreciation the domestic currency recorded at the midweek trading session.

The turnover for the day stood at $147.44 million in contrast to the $200.74 million published at the preceding session, indicating a $53.3 million or 26.6 per cent slide in the daily turnover.

However, at the interbank segment of the market, the Nigerian currency recorded no price movement against the American Dollar as it closed flat at N411.02/$1.

But it was not the same scenario against the British Pound Sterling at the interbank window as the local currency depreciated by N2.14 to trade at N567.50/£1 compared to N565.36/£1 it traded on Tuesday.

Similarly, the Naira lost 44 kobo against the Euro as it closed on Wednesday at N477.56/€1 in contrast to N477.12/€1 it finished a day earlier.

At the cryptocurrency market, only a week ago, Bitcoin (BTC) hit an all-time high of nearly $67,000, but recently, investors are leaving the world’s most valuable cryptocurrency in favour of the latest market darling, Shiba Inu.

Shiba Inu, a Dogecoin spinoff, is close to surpassing Elon Musk’s favourite crypto as it has surged more than 30 per cent in the last 24 hours, hitting a record high above $0.00006 having more than doubled in price in the last week.

In Naira equivalent, the most popular of the digital coins, BTC, sold for N33,467,596.47 after it depreciated by 3.0 per cent, though it was not the heaviest loser yesterday.

Dash (DASH) went down by 11.8 per cent to sell for N103,024.01, Ripple (XRP) depreciated by 10.6 per cent to trade at N580.00, while Cardano (ADA) decreased by 8.9 per cent to N1,152.82.

In addition, Tron (TRX) went down by 6.6 per cent to trade at N53.80, Litecoin (LTC) sold for N103,501.00 after it lost 5.6 per cent, Binance Coin (BNB) recorded a 5.3 per cent depreciation to trade at N185,508.03, Dogecoin (DOGE) went down by 2.4 per cent to sell at N142.42, while Ethereum (ETH) fell by 1.4 per cent to trade at N2,399,957.92.

However, the US Dollar Tether (USDT) moved up by 0.2 per cent during the trading session to finish at N568.31.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar falls on euro strength after ECB meeting as rates move

NEW YORK/LONDON (Reuters) - The euro rose sharply against the U.S. dollar on Thursday as foreign currency traders sorted through moves in the interest rate markets and comments by the European Central Bank President Christine Lagarde.

The euro rose nearly 0.7% to at $1.168 at 1425 GMT. The dollar index of major currencies fell 0.6% to 93.3560.

The volatility came in a busy day of central bank-driven activity that started in Australia and Japan and precedes a meeting of the U.S. Federal Reserve next week.

Exchange rate movements picked up on Wednesday when the Bank of Canada made hawkish comments. The markets had been on pause early at the start of the week.

A contributing factor to the volatility, Issa said, is the approaching end of the month when more investment managers rebalance their portfolios across currencies.

Currency traders are trying to predict the direction of interest rates and their inflation-adjusted differences across currencies.

Interest yield curves have flattened, suggesting to some that central banks will have to sacrifice some support for the pandemic recovery by allowing interest rates to rise to try to hold back inflation.

Before Lagarde spoke in a press conference, the euro moved little as the ECB, as expected, kept policy unchanged, reaffirming its plan to keep buying bonds and hold down interest rates for years to come.

But some saw Lagarde’s comments as not as forceful in affirming the ECB’s dovish position as the market expected.

Earlier on Thursday the Reserve Bank of Australia declined to buy a government bond at the heart of its stimulus programme and the Aussie dollar fell in response to speculation the central bank will allow rates to rise earlier than expected. [L1N2RO015]

The Aussie initially fell 0.5% after the RBA statement but soon erased those losses and was 0.3% against the U.S. dollar at 1425 GMT.

The Bank of Japan, as expected, stuck with its dovish stance at its meeting and the yen showed no reaction.

Against the yen the dollar gained about 0.4% to 113.38 per dollar.

The BoJ cut its consumer inflation forecast for the year ending in March 2022 to 0% from 0.6% and, as expected, the overall takeaway reinforced market bets it will lag other central banks in dialling back crisis-mode policies.

A U.S. government report of third-quarter gross domestic product showed no immediate impact on the dollar. The report had been expected to be weak but not matter much to the greenback because more recent economic data has been stronger.

In cryptocurrencies, bitcoin rose 5% to $61,423.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper price approaches the key support – Analysis 

Copper price resumed the correctional negative attempts yesterday, recording the suggested targets, approaching the key support at 4.3060 that forms the chance to stop the negative actions and regain the bullish bias again. 

Also, stochastic reach to the oversold areas confirms the beginning of getting rid of the negative pressures, providing chances to gather the positive momentum, expecting to start targeting the positive levels that start at 4.5300 as long as the key support remains intact. 

The expected trading range for today is between 4.3060 and 4.4850 

The expected trend for today: Bullish

Gold gains on softer U.S. bond yields, ECB keeps policy unchanged

Gold prices rose on Thursday, drawing support from softer U.S. bond yields and the European Central Bank’s decision to keep policy unchanged as expected, which allayed investor fears of an imminent interest rate hike.

Spot gold was up 0.3% to $1,802.60 per ounce at 1238 GMT. U.S. gold futures gained 0.5% to $1,806.90.

The ECB left policy unchanged, holding fire before a set of crucial decisions in December on ending pandemic emergency stimulus and returning policy to a more normal setting.

Earlier in the day, the Bank of Japan also retained its easy monetary policy settings.

It seems major central banks are not likely to tighten monetary policy too aggressively even if inflation remains elevated, Razaqzada added.

Also helping gold, benchmark 10-year U.S. Treasury yields held close to a two-week low.

Gold is traditionally seen as an inflation hedge. However, reduced stimulus and interest rate hikes would push government bond yields up, translating into a higher opportunity cost for holding gold, which pays no interest.

Analysts also said the U.S. Federal Reserve’s meeting on Nov. 2-3 would be more crucial for gold after chief Jerome Powell’s recent comments on tapering asset purchases.

Spot silver rose 0.1% to $24.06 per ounce, platinum gained 0.4% to $1,014.45, and palladium climbed 1.7% to $1,997.52. 

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

National Unity Day

December 22

Christmas Day

December 25

Boxing Day

December 26

Public Holiday in lieu of Boxing Day falling on a Sunday

December 27

Counters trading under cautionary

ART

Seed co Int.

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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