Bulls n Bears Daily Market Commentary : 20 April 2022

Thu Apr 21 07:13:43 CAT 2022

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Bulls n Bears Daily Market Commentary : 20 April 2022

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ZSE commentary

The All-Share index gained 412.39 points (1.81%) to close at 23,250.54
points. MEIKLES rose by $31.2832 to close at $191.3808, LAFARGE CEMENT added
$25.7500 to $162.0000 and INNSCOR was $12.5510 firmer at $424.3351. TANGANDA
TEA COMPANY also increased by $12.5000 to $220.0000 and OK ZIMBABWE traded
$9.3588 stronger $59.3346. Trading in the negative: AXIA lost $6.5498 to
$159.3896, FIRST MUTUAL HOLDINGS eased $4.3310 to $21.7023 and NMB BANK  was
$3.4783 weaker at $20.7525. AMALGAMATED REGIONAL TRADING also decreased by
$1.7651 to $24.0179 and TURNALL was $1.0000 lower at $7.0000. EXCHANGE
TRADED FUNDS OLD MUTUAL ZSE TOP 10 gained $0.0862 to close at $11.1015,
DATVEST MODIFIED CONSUMER STAPLES ETF retreated by $0.0327 to $1.8106 and
MORGAN & CO MULTI-SECTOR ETF  rose by $0.7624 to $19.4072.-zse 

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

Nigeria

Naira down to three-month low against dollar

At the parallel market in Abuja, dealers exchanged the naira at N583.00 and
sold at N585.00 to a dollar on Wednesday.

Naira touched a three-month-low Wednesday, falling 0.32 per cent against the
U.S. dollar at the official market.

The currency closed at N418.33 to a dollar on the second day of business
following the Easter break, according to data published by FMDQ, where forex
is officially traded.

This represents a N1.33 decline from N417.00 it exchanged in the previous
session on Tuesday.

It is the weakest rate the naira exchanged officially with the dollar in the
past three months. Its lowest was on January 5 when it closed at N422.67 to
a dollar.

Within the past three months, the local unit has been hovering within the
range of N416.00- N417.00 and above mark amidst fluctuating forex supply and
market sentiments.

The naira, which opened trading at N418.25 per $1, reached an intraday high
of N410.00 and a low of N444.00 before closing at N418.33 on Wednesday.

Foreign exchange turnover dipped slightly by 2.90 per cent with $151.07
million recorded as forex turnover at the close of business on Wednesday
against $155.44 million posted on Tuesday.

At the parallel market in Abuja, dealers exchanged the naira at N583.00 and
sold at N585.00 to a dollar on Wednesday.

 <mailto:info at bulls.co.zw> 

Global Markets

Yen rises from 20-year trough vs dollar as U.S. yields retreat

(Reuters) - The Japanese yen bounced from a fresh two-decade low on
Wednesday after the Bank of Japan stepped into the market again to defend
its ultra-low interest-rate policy, drawing a sharp contrast with the
Federal Reserve's aggressive tightening path.

Increased nervousness around verbal intervention and growing speculation
around an impending bilateral meeting between U.S. Treasury Secretary Yellen
and her Japanese counterpart also prompted traders to pare back short bets
on the yen.

The U.S. dollar hit 129.43 yen on Wednesday for the first time since April
2002 earlier in the session, before easing to 127.79 yen, down 0.8%.

"Many are watching 130 as a key level, but we view 135+ as a more formidable
line in the sand," wrote Mazen Issa, senior FX strategist, at TD Securities
in a research note.

"This upleg broke the post-Plaza Accord multi-decade trendline, which keeps
dollar/yen ordinates higher and exposes upside potential to 150," he added,
referring to a previous multi-country agreement among developed economies to
depreciate the dollar against their respective currencies.

The BOJ again offered to buy unlimited amounts of Japanese government bonds
to check the rise in Japanese 10-year yields, which were butting against its
0.25% tolerance ceiling. read more

"Unless the Fed abandons hikes or the BOJ unlikely adopts them, dollar/yen
will be at the beck and call of the Fed's terminal rate, which likely
remains too low and will not be established until well into the tightening
cycle," Issa said.

Traders also said the dollar's fall against the yen also coincided with a
slide in U.S. Treasury yields. After hitting three-year peaks earlier in the
session just off the 3% mark, benchmark 10-year yields slid nearly 7 basis
points to 2.8455% .

"U.S. yields backed off and that gave an excuse for dollar/yen to come off
the highs," said Erik Bregar, director, FX & precious metals risk management
at Silver Gold Bull in Toronto. "That also gave an excuse for euro/dollar to
bounce because that is also yield-sensitive."

Still, positioning in derivatives and currency futures suggest the yen
weakness has more room to run. read more

In contrast, 10-year Treasury yields had earlier marched to three-year highs
while inflation-adjusted bond yields hit positive territory for the first
time since March 2020, as hawkish comments by policymakers reinforced
expectations of hefty U.S. interest rate hikes.

Elsewhere, the euro was the other big gainer after media reports that some
ECB policymakers were forecasting a first rate hike as early as July. The
single currency was last up 0.5% at $1.0839.

The dollar index , which measures the currency against six major peers
including the yen, matched Tuesday's high at 101.03 - a level not seen since
March 2020 - before slipping to 100.36, down 0.6% on the day.

An index of currency market volatility (.DBCVIX) firmed above 8% but still
well below 2022 highs of 10% hit in March.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Is gold the next big play? Gold price heading to $2,100 - Wells Fargo

(Kitco News) It is not the time to be disappointed by gold's
underperformance versus some other commodities, according to Wells Fargo,
which sees gold as the next potential big play.

With high inflation, geopolitical uncertainty and stocks not performing
well, more investors are looking for store-of-value type assets. And despite
Bitcoin getting most of the attention over the past year, it looks like 2022
could be gold's year, said Wells Fargo's head of real asset strategy John
LaForge.

"On the store-of-value front, bitcoin has been getting much of the attention
lately, but we think gold may be the next play. Gold's price chart appears
to be slowly grinding higher, while bitcoin's price has been stuck in a wide
$30K to $69K range for the past 12 months," LaForge said in a note this
week.

Without getting too much into the debate about which asset is a better
hedge, LaForge said gold is looking to hit $2,100 an ounce by the year-end.

"We believe bitcoin has gold beat in ease of use, storage, and
verifiability, but gold can be physically held, is universally recognized,
and has had one-quarter of the volatility. In the not too distant future, if
bitcoin financial products mature as we expect, investors may choose to own
a little bit of both gold and bitcoin for their store-of-value
diversification needs," he said. "The bottom line is that we still like gold
and are maintaining our 2022 year-end target price range of $2,000-$2,100
per ounce."

The recent underperformance of U.S. stocks has investors worried about
returns. And this is when assets like gold and Bitcoin usually come in,
LaForge added.

"We believe that investors are actively looking for assets that can add
diversification to portfolios. Store-of-value assets, such as bitcoin and
gold, are floating to the top of the list, as they have often moved to the
beat of their own drummer over the long-term," he said.

Chance of recession at 35% in next two years, says Goldman

Gold's fundamentals on the supply side are also working in favor of higher
prices, pointing to a major rally ahead.

"Supply is dropping below the five-year average, which has been a bullish
sign for gold prices historically. Historically, each time this has
happened, a multi-year gold price rally followed," LaForge noted. "Clearly,
there is no guarantee that this will happen again, but we like the odds that
it might."

Overall, Wells Fargo likes gold right now and in the long term. "Gold's
recent price dormancy does not spook us. It was one of the best-performing
commodities during the last commodity bull super-cycle (1999-2011), and we
suspect it could be again this cycle," LaForge explained.

Gold attempted to breach the $2,000 an ounce level twice this year - once in
March and then again at the beginning of this week. Both times were
unsuccessful, but the important thing was that major support levels were
held. June Comex gold futures were last trading at $1,955.00, down 0.20% on
the day.

"Since moving to favorable on March 4, 2020, gold prices have gone up 17%,
while the Bloomberg Commodity Total Return Index has gained 77%," LaForge
wrote. "In our view, the performance difference is more about the average
commodity performing unusually well than about gold prices performing
poorly."

Copper retreats as firmer dollar, China lockdowns weigh

Copper prices slipped on Wednesday, weighed down by a stronger U.S. dollar,
with continued lockdowns in top metals consumer China adding to global
growth worries.

Benchmark three-month copper on the London Metal Exchange (LME) was down
0.4% at $10,319 a tonne, as of 0711 GMT, erasing early gains.

The most-active May copper contract on the Shanghai Futures Exchange SCFcv1
ended daytime trading down 0.9% at 74,480 yuan ($11,617.53).

China surprisingly kept its benchmark lending rates steady on Wednesday,
with markets seeing the move as Beijing's cautious approach to rolling out
more easing measures as the economy slows due to COVID-19 lockdowns.

"The market keeps on looking to China for policy hints. I think policymakers
are reluctant to stimulate housing sectors until COVID restrictions are in
place," said Stephen Innes, managing partner at SPI Asset Management.

"On a positive note, once those restrictions have been lifted, mainland
regulators encourage banks to throw a lot of cash at the housing market."

Making greenback-denominated metals more expensive for buyers using other
currencies, the dollar index =USD held firm near a two-year peak against its
rivals.

Still, hopes of more stimulus from China limited losses. Suspension of
operations at Las Bambas mine in Peru, which accounts for 2% of global
copper supply, also stocked concerns over shortages.

China's central bank urged financial institutions to step up support for the
contact-intensive service sector and small firms affected by the COVID-19
crisis, it said in a statement on Wednesday.

IMF: Dampening market appetite, the International Monetary Fund slashed its
forecast for global economic growth, citing the Russia-Ukraine conflict.

NICKEL: Vale Indonesia's nickel matte output in January-March stood at
13,827 tonnes, 9% lower than the 15,198 tonnes produced in the year-ago
period.

INVESTORS DIARY 2022

Company

Event

Venue

Date & Time

Counters trading under cautionary

ART

Seed co Int.

Starafrica

Medtech

Turnall

Seed co

Invest Wisely!

Bulls n Bears 

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