Bulls n Bears Daily Market Commentary : 28 April 2022

Fri Apr 29 06:37:27 CAT 2022

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Bulls n Bears Daily Market Commentary : 28 April 2022

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ZSE commentary

The All-Share Index retreated by 413.93 points (1.41%) to close at 29,026.92
points. TANGANDA TEA COMPANY led the shakers by $66.0506 to $270.0446,
INNSCOR lost $21.1188 to $592.8453 and AXIA was $10.5478 lower at $199.0232.
CBZ HOLDINGS also decreased by $8.7111 to close at $155.2889 and DELTA was
$7.1734 weaker at $451.8952. Trading in the positive: ZB FINANCIAL HOLDINGS
rose by $12.6000 to $75.6000, PROPLASTICS added $7.6090 to $90.8824 and
MASIMBA was $5.2500 stronger at $80.0000. MEIKLES also increased by $3.1953
to $274.9365 and TSL gained $2.0000 to end at $140.0000 

EXCHANGE TRADED FUNDS (ETF)

OLD MUTUAL ZSE TOP 10 eased $0.1399 to $11.8278, MORGAN & CO MULTI-SECTOR
ETF rose by $0.9987 to $21.0761 and DATVEST MODIFIED CONSUMER STAPLES ETF
was down by $0.1790 to $1.8059.zse

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

Rand pressured by strong dollar

In early trade the rand was at R15.93 against the dollar, around 0.4% weaker
than its previous close.

The South African rand was under pressure from a strong dollar early on
Thursday, as the US currency struck multi-year peaks against a basket of
currencies.

At 0705 GMT, the rand traded at R15.93 against the dollar, around 0.4%
weaker than its previous close.

The dollar has been bolstered by bets that the Federal Reserve will hike
interest rates aggressively this year, starting with a 50 basis point move
in May.

The rand lost more than 6% against the greenback last week as severe power
cuts by struggling utility Eskom and devastating floods reminded investors
of the constraints to South Africa's growth outlook. It has fallen almost 2%
more this week.

Around 0930 GMT on Thursday, Statistics South Africa will release producer
inflation data, providing further clues about price pressures. On Friday
money supply, budget and trade figures are due.

On the Johannesburg Stock Exchange, the Top-40 index was up 1.2% in early
trade. The government's benchmark 2030 bond dropped slightly, with the yield
rising 3.5 basis points to 9.920%.

Zambia

Supply of US dollars on market cushions Kwacha

IMPROVED United States (US) dollar supply by corporates on the market on
Tuesday helped the Kwacha reverse some of the losses to trade between K16.97
and K17.02. 

In its daily treasury newsletter, Zanaco Plc states that Tuesday's trading
session saw the local unit trade relatively stable against the US dollar as
pockets of supply from corporate players and the Bank of Zambia matched out
demand for the greenback. 

The Kwacha was quoted at K17.00 and K17.05 on Tuesday morning and stayed
unchanged for the rest of the trading day. "However, the local unit was
quoted a whisker weaker at K17.02 and K17.07 as at close of business. In
today's (yesterday's) trading, the Kwacha is expected to trade sideways,"
Zanaco stated. Absa Bank Zambia Plc said the Kwacha is expected to trade
range bound in the near term given the current market dynamics. 

On Tuesday, commercial banks quoted the Kwacha at K17.00 and K17.05,
unchanged from the previous day's close.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar index hits highest level since 2002

The dollar index hit its highest level since 2002 on Thursday as the dollar
shot to two-decade highs on the yen after the Bank of Japan (BOJ)
doubled-down on its super-low yield policy by offering to buy endless
amounts of bonds every session as needed.

That saw the U.S. currency vault 2.16% to 131.2 yen, levels not seen since
2002. It also brought the dollar's gains for April to more than 6%, while
the dollar index rose to 103.85.

There had been some market speculation the BOJ might step back a little
given inflation was rising and other major central banks were tightening,
but it showed no hesitation.

The uber-dovish decision set it far apart from the Federal Reserve, where
markets are priced for 150 basis points (bps) of hikes in just three
meetings, and triggered a fresh rush of funds into the dollar ahead of all
else.

"After weeks of confusing comments about the yen from government officials,
the BOJ has cut through with a clear message - the global inflation surge is
ex-Japan, so zero rates will remain," said Sean Callow, a senior currency
strategist at Westpac in Sydney.

"USD/JPY 130 may be a round number but it cannot be a red line, with
attention likely to turn quickly to 135, the 2002 high," he added. "The yen
is not being ignored, but it is mostly a side effect for the BOJ."

While the BoJ keeps yields near zero, markets are wagering the Fed will hike
rates by 50 bps in May, June and July, and ultimately reach 3.0% by the end
of the year.

Yields on 10-year notes have climbed 45 bps this month alone to 2.80%,
opening a gulf between Japanese debt.The euro also slid to $1.05.

The currency is now perilously close to huge chart support levels stretching
from $1.05 down to a trough from 2017 at $1.0344. A break would take it to
depths not seen since 2002 and risk a damaging decline below parity.

The slide only adds to Europe's economic troubles as it raises the cost of
energy priced in dollars, just as natural gas costs soar on Russia's move to
cut off supplies to Poland and Bulgaria.

"This appears to be the first overt act of energy warfare," warned Helima
Croft, head of global commodity research at RBC Capital Markets.

"The question now is whether the cut-off will extend to other major
importers in what could quickly become a stark test of European resolve to
support Ukraine in the face of surging energy prices and rising recession
risks."

Such risks could also make the European Central Bank reluctant to tighten
aggressively, leaving it lagging far behind the Fed. Markets currently see
the ECB maybe reaching 0.5% by Christmas.

One possible pothole for the dollar will be data on U.S. gross domestic
product due later on Thursday.

While the market forecast is for growth of 1.1%, the risk is to the downside
after the U.S. trade deficit blew out to a record and implied a large drag
from net exports.

Analysts at NatWest Markets now fear GDP may have actually contracted by an
annualized 1.3% in the first quarter. Any negative reading could temper the
dollar's ascent, if only temporarily.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold hovers close to 10-week low on dollar advance

April 28 (Reuters) - Gold prices lingered close to a 10-week trough on
Thursday, hurt by a robust dollar and expectations of faster U.S. rate
hikes.

Spot gold was up 0.3% at $1,890.90 by 1822 GMT. It hit its lowest level
since Feb. 17 at $1,871.81 earlier in the session. U.S. gold futures settled
up 0.1% at $1,891.30.

"There is a slight uptick in prices as we are currently seeing some short
coverings after the recent losses. Shorter-term speculators are taking some
profits on their short positions," said Kitco senior analyst Jim Wycoff.

"It has lately been more downside for gold as the U.S. dollar index hits
highs and bond yields rise ... The economy remains in pretty good shape and
inflation needs to be brought under control."

The dollar index rallied on Thursday to its highest level since December
2002 amid widespread weakness in its major rivals.

"With the Fed seen hiking interest rate by 50 basis points and possibly 75
basis points in the next two meetings after the May 4, the dollar is going
to remain in demand ... It's very difficult to be bullish on gold at the
moment," said Fawad Razaqzada, market analyst at City Index.

Gold has declined about 2.7% this month, which could be its biggest monthly
fall since September, on expectations of an aggressive monetary policy
tightening by the U.S. Federal Reserve and a stronger dollar.

Rapid rate hikes will increase the opportunity cost of holding non-yielding
bullion.

The U.S. economy contracted in the first quarter amid a resurgence in
COVID-19 cases and a drop in pandemic relief from the government. Meanwhile,
weekly jobless claims fell 5,000 to 180,000. read more

In other metals, spot silver fell 0.8% to $23.10 per ounce, having hit its
lowest level since Feb. 11.

Platinum rose 0.3% to $919.92 per ounce and palladium gained 1.1% to
$2,227.15.

The Thomson Reuters Trust Principles.

Oil prices settle up on increased chance of EU embargo of Russian oil

(Reuters) - Oil settled higher on Thursday on the increased likelihood that
Germany will join other European Union member states in an embargo on
Russian oil, which could further tighten supplies in the already stressed
global crude market.

Traders were reacting to media reports of comments on Tuesday from German
Economy Minister Robert Habeck, who said the EU's largest economy could cope
with an EU embargo on Russian oil imports and Germany hoped to find ways to
replace Russian oil with other supply. read more

"The apparent decision by Germany to remove its opposition to a Russian oil
sanction would appear to go a long way in an overall EU ban that would
further reduce Russian oil availability in a global market," said Jim
Ritterbusch, president of Ritterbusch and Associate in Galena, Illinois.

Brent crude futures rose $2.27 to settle at $107.59 a barrel while U.S. West
Texas Intermediate crude rose $3.34, or 3.3% to $105.36.

Germany relies heavily on Russian energy imports and had opposed a full ban.

Before the war in Ukraine, Russian oil accounted for about a third of
Germany's supply. A month ago, Habeck said the country had reduced its
dependence on Russian oil to 25% of imports.

"As a result of this, oil from the free world is going to be more expensive,
and Iron Curtain oil will plunge further in value and be discounted more
heavily," said John Kilduff, partner at Again Capital LLC in New York.

Moscow has started to use energy exports as a cudgel following the response
by the United States and allies over Russia's invasion of Ukraine.

Russia has cut off gas supply to Poland and Bulgaria and is trying to push
the EU to adopt its new gas payments system that involves opening accounts
at Gazprombank where payments in euros or dollars would be converted into
roubles. read more

Russian oil production could fall by as much as 17% in 2022, according to an
economy ministry document seen by Reuters, as the country contends with
Western sanctions. read more

Despite this expected shortfall, the OPEC+ group of producers comprising the
Organization of the Petroleum Exporting Countries and allies led by Russia
is expected to maintain its modest pace of increasing output when it meets
on May 5, sources told Reuters. read more

The U.S. dollar surged to its highest levels in two decades on Thursday,
propelled by weakness in its major rivals, such as the yen and the euro. A
stronger dollar is usually bearish for oil prices which are priced in the
greenback, as it makes it more expensive to holders of other currencies.

In China, Beijing closed some public spaces and stepped up COVID-19 checks
at others as most of the city's 22 million residents embarked on more mass
testing in an effort to avert a Shanghai-like lockdown. The most recent
lockdown has disrupted factories and supply chains, raising fears over the
country's economic growth. read more

But Asia's biggest oil refiner, Sinopec Corp (600028.SS), expects the
country's demand for refined oil products to recover in the second quarter
as COVID-19 outbreaks are gradually brought under control. read more

A slowdown in global growth owing to higher commodity prices and an
escalation in the Russia-Ukraine conflict could further exacerbate oil
demand fears.

The Thomson Reuters Trust Principles.

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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