Bulls n Bears Daily Market Commentary : 21 April 2022

Fri Apr 22 09:06:49 CAT 2022

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Bulls n Bears Daily Market Commentary : 21 April 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE closed with gains as heavyweights continue to lift the market with a
significant contribution to turnover. Activity levels were at 623 trades.
Econet was the most active stock at 61 trades followed by Delta and OK
Zimbabwe at 45 and 34 trades respectively. Market bias was positive as 24
stocks gained against 16 losers while three (3) of the active stocks
remained unchanged. Econet anchored both volume and value aggregate trading
1,918,000 shares with a value of ZW$428.28 million. The All-Share Index
closed 1.01% higher at 23,486.38 points. The Top 10 Index added 0.75%. The
Top 15 Index also added 1.10%. The Medium Cap Index was up by 1.78% to
40,322.85 points whilst the Small Cap Index added 1.98% to 503,410.23
points.

Leading the risers pack of the day was Zeco Holdings adding 20.00% and Rio
Zimbabwe Limited up by 19.94%. Proplastics gained 13.13% and First Mutual
Holdings gained 12.89% to 2,450c. FBC Holdings was up by 10.95%. Mitigating
the gains were losses in First Capital Bank and First Mutual Properties
shading 11.66% and 8.01% respectively. Zimplow Holdings which shaded 4.13%.
Star Africa was down by 2.78% to 198.19c. The Old Mutual Top Ten ETF closed
at 1100.23c down by 0.89% and the Morgan & Co Multi Sector ETF shaded 4.00%
to 1863.06c whilst the Datvest Modified Consumer Staples Index shaded 4.02%
to 173.79c. On the VFEX, Bindura traded 1,671,000 shares worth US$83,550 to
close unchanged at US$ 5 cents.-wealthaccess

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

Here's why the rand is taking a beating right now

The rand has weakened almost 4% against the US dollar since the start of the
week and is currently testing the 200-day moving average, says Matthew
Axelrod, head of risk at DG Capital Forex.

If the local currency closes above R15.10/dollar it would be a bearish
signal with the next resistance level at R15.25 and then R15.50, he said.

"We feel the market is pricing South African Reserve Bank rate hikes more or
less fairly, but maybe being somewhat over-zealous on US Federal Reserve
hike pricing.

"In the short term, the rand could continue to weaken to around R15.50 and
then, if the Federal Reserve disappoints on 4 May, it could pull back to
around R15.00."

Axelrod noted that there are several reasons for the currency slipping this
week:

Stage 4 load shedding is one of them;

The intense floods in KZN and the damage caused is another;

The inflation print came in below expectations, implying less upward
pressure on local interest rates; and

The US dollar has also been strong as the market is pricing in quite a
hawkish Federal Reserve in two weeks' time.

"Load shedding has a negative effect on the rand as the economy cannot
function efficiently without power. The higher the stage we need to enter,
the more negative the effect will be. This week we have had to move to Stage
4, which sees a significant amount of power removed from the grid."

"Although inflation printed right at the top end of the South African
Reserve Bank (SARB) target band, it was slightly below expectation, while
core inflation was still below the midpoint, which points to weak
demand-side inflation pressure.

"These prints suggest that the SARB can continue gradually hiking rates, and
that aggressive hikes aren't necessary, which is rand negative, while the US
Federal Reserve is currently relatively hawkish."

At 14h10 the rand was trading at these levels against major currencies:

R15.24/USD

R16.59/EUR

R19.86/GBP

AFRICA-FX-Kenya, Uganda units may edge down, Tanzania shilling steady

Kenya's shilling is seen edging lower against the dollar in the week to next
Thursday while its Ugandan counterpart is also seen struggling due to
typical end-of-the-month demand. 

KENYA
Kenya's shilling is expected to continue edging lower due to strong dollar
demand from fuel importers and other sectors, while dollar supplies from
tourism and remittances remain muted.

Commercial banks quoted the shilling at 115.45/65 per dollar, compared with
last Thursday's close of 115.30/50. "The fundamentals point to a stronger
dollar. The shilling will continue to see pressure for the next week," a
trader at one commercial bank said. 

ZAMBIA 
The kwacha is likely to hold steady against the dollar mostly due to subdued
demand for hard currency.

On Thursday, commercial banks quoted the currency of Africa's second-largest
copper producer at 17.4000 per dollar, the same level as at the close of
business a week ago. "The local unit is expected to maintain a stable trend
against the greenback as the market remains relatively liquid and demand for
the hard currency remains moderate as many buyers of forex anticipate lower
levels," Access Bank said in a note.

UGANDA 
The Ugandan shilling is seen trading with a weakening tone in the next few
days, undercut by typical month-end demand from manufacturers and energy
importers. At 1033 GMT commercial banks quoted the shilling at 3,525/3,535,
compared with last Thursday's close of 3,515/3,525.

"Firms from sectors like manufacturing and energy usually exert higher
demand around the end of the month so we anticipate that dynamic in the
coming days," said a trader at one commercial bank. He said the shilling
would likely trade around 3,530-3,550 in the coming days.

TANZANIA
Tanzania's shilling is expected to hold steady next week as dollar demand
from oil marketing companies and manufacturers matches the inflows from
agricultural exports. Commercial banks quoted the shilling at 2,317/2,327 on
Thursday compared with 2,316/2,326 at last week's close.

"We expect the shilling to remain steady in the coming days as dollar supply
continues to match demand," said one forex trader.

 <mailto:info at bulls.co.zw> 

Global Markets

U.S. dollar climbs from one-week low as Fed's Powell backs hefty rate hike

(Reuters) - The U.S. dollar rose from a one-week low on Thursday after
Federal Reserve Chair Jerome Powell all but confirmed a half a
percentage-point tightening at the policy meeting next month, including
consecutive rate increases this year.

The dollar index , which gauges the strength of the currency versus a basket
of rivals, gained 0.2% to 100.53, after trading lower for most of the
session. The index has advanced 2.3% so far this month, on pace for its best
monthly gain since June 2021.

Powell said a half-point interest rate increase will be "on the table" when
the Fed meets on May 3-4 to approve the next in what is expected to be a
series of rate increases this year. read more

Fed funds futures have started to price in bets of three straight 50
basis-point hikes starting with next month's policy meeting, with an implied
rate of about 2.71% in December.

"Rising fears over an increasingly aggressive Fed policy posture weighed
heavily on Treasuries, especially at the short end, and the pop in rates
knocked Wall Street lower," Action Economics said in its blog after Powell's
comments. "However, the dollar was the beneficiary."

The euro slid from a more than one-week high after European Central Bank
President Christine Lagarde said the ECB may need to cut its growth outlook
further as the fallout from Russia's invasion of Ukraine weighs on
households and businesses.

Lagarde's comments were in contrast to hawkish comments from ECB officials
who seemed to suggest European Central Bank officials raised bets that euro
zone interest rates will rise soon.

Joachim Nagel, president of Germany's Bundesbank, joined a chorus of
policymakers in saying the ECB could raise interest rates at the start of
the third quarter..

Money markets, which had eased rate hike bets following last Thursday's ECB
meeting, were now pricing in a more than 20 basis-point (bps) rise by July
and over nearly 80 bps of tightening by year-end.

That would take benchmark interest rates above zero for the first time since
2013.

European political news was also supportive, with French President Emmanuel
Macron clearing a major hurdle ahead of Sunday's runoff election with a
combative performance in a TV debate against far-right candidate Marine Le
Pen. read more

With the deciding vote just four days away, some 59% of viewers found Macron
to have been the most convincing in the debate, according to a snap poll for
BFM TV, suggesting Macron's 10 percentage point lead in the polls was not
under threat.

In late trading, the euro fell 0.2% to $1.0832, after hitting $1.0936, its
highest level since April 11.

The dollar rose 0.3% against the yen to 128.30 .

Against the Swiss franc, the dollar rose 0.5% to 0.9532 francs .

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold set for first weekly drop in three as yields, dollar strengthen

(Reuters) - Gold prices were flat on Friday, pressured by the strength in
U.S. Treasury yields and the dollar, which also put bullion on course for
its first weekly loss in three.

Spot gold held its ground at $1,952.17 per ounce, as of 0501 GMT. U.S. gold
futures were up 0.3% at $1,953.90.

"The outlook for gold is subdued as rising rates obviously weigh, but until
we break the trading range (between $1,930 to under $2,000) in a convincing
manner . we really don't have much of a direction for gold," said Michael
McCarthy, chief strategy officer at Tiger Brokers, Australia.

Benchmark U.S. 10-year Treasury yields extended gains as Federal Reserve
officials took a hawkish tone on tightening policy, cementing the view that
the U.S. central bank will hike interest rates aggressively as it fights
soaring inflation. [US/]

Gold is highly sensitive to rising U.S. short-term interest rates and higher
yields, which increase the opportunity cost of holding non-yielding bullion.

A stronger U.S. dollar could also pressure gold, while on the other hand,
the geopolitical uncertainty remains a support and the gold price is stuck
in the middle of those two conflicting currents, McCarthy said. [USD/]

A firmer dollar makes greenback-priced gold less attractive for overseas
buyers.

Gold is down about 1.2% so far this week. Prices rose to near the key mark
of $2,000 per ounce on Monday on safe-haven demand and mounting worries over
inflation, but have since pulled back to hit a two-week low in the previous
session.

"With stagflation moving from a potential tail risk to reality, investors
worldwide are turning to gold as a keen portfolio diversifier," Stephen
Innes, managing partner at SPI Asset Management said in a note.

Spot silver fell 0.4% to $24.54 per ounce, while platinum firmed 0.1% to
$968.79, with both poised for weekly losses. Palladium rose 0.4% to
$2,430.95.

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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