Bulls n Bears Daily Market Commentary : 25 April 2022

Mon Apr 25 18:34:40 CAT 2022

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Bulls n Bears Daily Market Commentary : 25 April 2022

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ZSE commentary

The All-Share opened the week higher at 25,742.59 points after gaining 1,215.52 points (4.96%). MEIKLES rose by $43.8661 to $268.0000, ECONET added $38.9702 to $276.3393 and TANGANDA TEA COMPANY  was $37.9952 higher at $296.0822. SIMBISA also increased by $17.3008 to $317.9705 and DELTA went up by $13.6014 to $390.3141. 

Trading in the negative: ZB FINANCIAL HOLDINGS eased $3.3800 to $63.0000, ZIMPLOW lost $1.9399 to end at $23.4559 and OK ZIMBABWE traded $1.7314 weaker at $57.2114. NAMPAK also decreased by $0.8000 to $24.0000 and RTG was $0.033 lower at $7.4070.-zse

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Global Currencies & Equity Markets

South Africa

South African rand dragged lower by strong dollar

At 0650 GMT, the rand traded at 15.6650 against the U.S. currency, 0.3% weaker than its Friday close and at its weakest in around three months

The South African rand was pushed lower by a strong dollar early on Monday, as investors sought safety amid uncertainty over the global growth outlook.

At 0650 GMT, the rand traded at 15.6650 against the U.S. currency, 0.3% weaker than its Friday close and at its weakest in around three months.

Other emerging market currencies were also under pressure on fears about whether the global economy can withstand an increasingly hawkish U.S. Federal Reserve, worries about Chinese growth due to COVID-19 lockdowns, and the commodity shock caused by the Russia-Ukraine war.

The rand was pummelled last week, losing more than 6%, with concerns about the South African economy heightened amid severe power cuts by struggling state utility Eskom, and devastating floods which caused more than 10 billion rand of damage to infrastructure in the KwaZulu-Natal province.

Analysts say it could take a few days for the rand to settle after such a steep loss last week. Further out, commodities prices and policy signals from the South African central bank could re-emerge as pillars of support.

The government's benchmark 2030 bond was slightly weaker in early deals, with the yield rising 1 basis point to 9.865%.

Nigeria

Naira appreciates against US dollar after CBN rejects IMF, World Bank reform  

The Nigerian currency appreciated against the United States currency after the Central Bank of Nigeria (CBN) boldly rejected the call by International Monetary Fund (IMF) and World Bank to allow market forces to determine the exchange rate.

Data from FMDQ securities at the last trading day of last week showed naira closed at $418.33 to a dollar compared to the N419.50/$ it exchanged a day before.

The improved performance on Friday last week happened on the back of improved forex supply at the official market.

CBN on Friday pumped $169.06 million to the official market to meet Investors’ and Exporters’ forex needs.

Godwin Emefile, CBN governor had last week insisted on a homegrown solution to managing Nigeria’s exchange rate and continue with its intervention in the forex market despite IMF, World bank saying it was putting pressure on the naira.

“The IMF and World Bank provide advice that we work with. But even at some of our private meetings, we realise that there are challenges, leading us to adopt homegrown solutions to address them. We cannot adopt what is being proposed; we cannot adopt a free float of our currency,” Emefiele said.

Read also: Naira drops further to new low at official market as CBN defends policies

Similarly, the value of the naira also appreciated against the British Pound Sterling on Friday by N6.70 to N536.58/£1 from N543.28/£1

Naira also gained against the Euro, by 29 kobo closing Friday at N450.28/€1 compared with the previously quoted value of N450.57/€1.

At the Peer-to-Peer (P2P) segment, the Naira gained 0.17 per cent or N1 against the American currency last week to trade at N585/$1 in contrast to the previous day’s N586/$1.

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U.S. dollar climbs to two-year peak as risk appetite tumbles; yuan drops

(Reuters) - The U.S. dollar struck a two-year high on Monday as a wave of risk aversion hit global markets, while the Chinese yuan was set for its biggest three-day losing streak in nearly four years on growing worries of an economic slowdown in China.

With war in Ukraine entering a third month and growing concerns of a China-wide COVID-19 outbreak sparking a rout in Chinese stocks, investors dumped currency market darlings like the Australian dollar and the offshore Chinese yuan .

Against a basket of its rivals , the dollar gained 0.6% to 101.75, a level it last tested in March 2020.

"This dollar dominance can only be explained by the fears of COVID continuing to influence China's lack of activity," said Juan Perez, director of trading at Monex USA in Washington.

"Chinese data has been OK, supposedly, per economic figures, but there is growing concern that the No-COVID or zero-COVID measures are creating the need to revise outlooks further downward. China's shutdowns are killing global optimism," he added.

China's yuan fell to a one-year low against the dollar and was last down 0.9% at 6.4575 yuan per U.S. dollar.

The Aussie, which was one of the biggest gainers in currencies in the first quarter of 2022 thanks to surging commodity prices, fell widely. It dropped 1.5% against the U.S. dollar to US$0.7138 and fell 2.1% versus the Japanese yen .

The Norwegian crown also fell nearly 2% versus the U.S. dollar, which last traded up at 9.1235.

Broader currency market volatility gauges ticked higher , with an index rising to its highest levels in more than a month.

BofA Securities strategists said that despite the pickup in currency market volatility, investors were long the Canadian dollar, Aussie, and euro.

The euro's tiny gains after French President Emmanuel Macron's comfortable election victory over far-right rival Marine Le Pen quickly dissipated, with the single currency down 0.9% at $1.0716, against a resurgent dollar.

Latest positioning data for last week showed hedge funds trimmed their long euro bets.

FX positions

Hawkish comments by various policymakers last week also raised the risks of aggressive policy tightening by global central banks. Money markets expect the U.S. Federal Reserve to raise interest rates by a half point at the next two meetings and the European Central Bank to raise interest rates by 25 basis points in July. ,

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Commodities Markets

Gold prices today fall for sixth day in a row, down ₹1,800 in a week

Gold prices were under pressure for the sixth straight day in Indian markets as global rates remained subdued amid firm US dollar and bond yields. On MCX, gold futures were down 0.75% to ₹51,874 per 10 gram while silver futures slumped 1.3% to ₹65,745 per kg. In six days, gold has so far fallen about ₹1,800 per 10 gram. 

In international markets, gold languished near two-week lows amid elevated US dollar and firm bond yields. Spot gold was down 0.1% at $1,928.08 per ounce, the lowest since April 7.  The dollar index edged higher to 101.265, making gold less attractive for buyers holding other currencies. Among other precious metals, spot silver dipped 0.2% to $24.10 per ounce, platinum eased 0.2% to $928.77, and palladium fell 2.3% to $2,319.78.

Firm US dollar and bond yields are weighing on gold amid signs of faster policy tightening by the Federal Reserve, says Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

On the other hand, he says, higher global inflation prospects and slower economic growth outlook due to Russia-Ukraine crisis and higher inflation is supporting precious metals at lower levels. Gold is seen as a safe store of value during economic and political crises.

“We expect some more weakness in gold price in today’s session. Gold has support at $1917-1905, while resistance at $1940-1948. Silver has support at $23.80-23.62, while resistance is at $24.34-24.55. In rupee terms, gold has support at ₹51,920–51,770, while resistance is at ₹52,420–52,550. Silver has support at ₹66,050- 65,710 while resistance is at ₹66,890–67,270," Kalantri added. 

The US 10-year Treasury yields, however, were off recent highs, limiting losses in zero-yield gold. China’s worsening Covid situation amplified concerns about a slowdown in demand in the world’s second-largest economy. And the country's covid-zero policy is spooking investors worried about disruptions to the global supply chain and demand. The US dollar extended advance as investors opted for safe havens.

China concerns also impacted oil prices which fell below $100 a barrel.

Gold has been under pressure as traders bet that the US Fed will go for bigger in subsequent months after Chair Jerome Powell endorsed a 50 basis-point increase next month. Though the Ukraine crisis continues to weigh on risk sentiment, gold is highly sensitive to rising US short-term interest rates and higher yields, which increase the opportunity cost of holding non-yielding bullion. 

INVESTORS DIARY 2022

Company

Event

Venue

Date & Time

Counters trading under cautionary

ART

Seed co Int.

Starafrica

Medtech

Turnall

Seed co

Invest Wisely!

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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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