Bulls n Bears Daily Market Commentary : 04 February 2022

Sat Feb 5 08:22:52 CAT 2022

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Bulls n Bears Daily Market Commentary : 04 February 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE shares closed the week with gains across major indices as liquidity
and activity levels improved significantly ahead of the monetary policy
presentation next week. Activity levels were at 470 trades. Tanganda was the
most active stock at 55 trades followed by Star Africa and Econet at 46 and
37 trades respectively. Investor sentiment was positive after the session
yielded 19 decliners against 9 advancers while five of the active stocks
remained unchanged. Econet anchored both volume and value aggregate trading
6 504 400 shares with a value of ZW$684.61 million.

The All-Share Index added 1.83% to close at 12 529.84 points. The Top 10
Index added 1.94%. The Top 15 Index also added 2.12%. The Medium Cap Index
was up by 2.19% to 21 435.43 points whilst the Small Cap Index shaded 0.02%
to 388 887.56 points. Leading the risers pack of the day was Axia closed at
5000c and ZB Holdings  was up by 11.20%. First Mutual Properties added 8.44%
and OK Zimbabwe added 5.12% to 2628.58c. Econet was up by 4.91%. Mitigating
the gains were losses in Tanganda  and Cassava which shaded 10.38% and
1.12%. Meikles was down by 1.09%. Edgars and Wildale shaded 0.58% and 0.56%
respectively. The ETFs traded 102 244 units worth ZW$747 132.10 in 117
trades. The Old Mutual Top 10 ETF shaded 5.45% to close at 642.04c while the
Morgan and Co Multi Sector ETF shaded 1.68% to close at 1350.25c. .-
wealthaccesssecurities

Global Currencies & Equity Markets

South Africa

Rand pares weekly gain as US jobs number boost dollar

The rand weakened on Friday, paring its weekly advance, after a report
showed US jobs growth exceeded estimates, thereby creating more room for the
Federal Reserve to begin raising interest rates to curb inflation without
worrying about derailing the economic recovery.

SA's currency slipped 1.4% to R15.4777/$ as of 5.15pm local time, paring its
weekly advance to just 0.8%, after non-farm payrolls data showed the US
economy added 467,000 jobs in January and an upwardly revised 510,000 in
December. While the report also showed the US unemployment rose slightly to
4%, average hourly earnings also rose, resulting in an advance in the dollar
and a rise in Treasury yields.

The fact that US jobs numbers far exceeded the median estimate of economists
polled by Bloomberg of 125,000 new jobs, underscores statements by Fed chair
Jerome Powell who last week indicated the economy is strong enough to begin
withdrawing monetary support. With US inflation accelerating at the fastest
pace in four decades, banks have forecast four 25-basis point rate hikes in
the US in 2022.

Though the rand weakened on Friday it is still among the best performing
emerging market currencies against the dollar this year, having advanced 3%
against the greenback so far.

The JSE all-share index closed 0.25% higher at 75,206, extending its rise in
the past five trading sessions to 2.4%, its first weekly advance in three.
That kept the index within about 1,000 points of its all-time high of
76,233.26 reached on January 20.

Gains on the JSE were led by PSG Konsult, which rallied 6.8% to R15, and
resources counter Kumba Iron Ore, which jumped 5.8% to R600.66.

Coal miner Thungela Resources rose 3.2% to R101.15 while Northam Platinum
advanced 3.1% to R202. Harmony rose 2.7% to R55.70 while Sasol climbed 2.9%
to R350.28.

Nigeria

Naira falls at P2P market as FX liquidity improves to $162.7 million at I&E
window

Naira appreciated marginally against the US dollar on Thursday with a 0.04%
gain to close at N416.07/$1 compared to N416.25/$1 recorded as of the close
of trading activities on Wednesday, 2nd February 2022.

On the other hand, the exchange rate depreciated at the Peer-to-Peer (P2P)
forex market, trading at a minimum of N572.8 to a dollar on Friday morning
compared to N569.9/$1 recorded in the previous trading session.

Forex turnover at the official market surged by 59.4% to $162.7 million,
which is the highest daily turnover at the official window in over 3 weeks.

The exchange rate at the P2P market depreciated on Friday morning, trading
at a minimum of N572.8/$1 compared to N569.9/$1 recorded on Thursday
morning.

Naira closed lower at N569/$1 at the parallel market, compared to N568/$1
recorded on Wednesday. This is according to information obtained from BDC
operators interviewed by Nairametrics.

Nigeria's foreign reserve declined by $26.94 million on Wednesday to close
at $39.98 billion as of 2nd February 2022, representing a 0.07% decline
compared to $40.01 billion recorded as of 1st February.

Trading at the official NAFEX window

The exchange rate at the Investors and Exporters window closed at N416.07/$1
on Thursday, 3rd February 2022, which represents a 0.04% marginal
appreciation compared to N416.25/$1 recorded in the previous trading session

The opening indicative rate closed at N415.68/$1 on Thursday, which
represents 11 kobo depreciation compared to N415.5/$1 recorded in the
previous trading session.

An exchange rate of N444/$1 was the highest rate recorded during intra-day
trading before it settled at N416.07/$1, while it sold for as low as N408/$1
during intra-day trading.

Forex turnover at the official window surged by 59.4% to $162.7 million on
Thursday, 3rd February 2022.

According to data tracked by Nairametrics from FMDQ, forex turnover at the
I&E window increased from $102.07 million recorded on Wednesday 2nd February
2022 to $162.7 million on Thursday 3rd January 2022.

Cryptocurrency watch

The crypto market started the day on a positive note with $30 billion boost
in the industry's market capitalization, representing a 1.88% increase to
stand at $1.73 trillion. Flagship crypto asset and the most valuable crypto,
bitcoin also gained 1.51% to trade at $37,909.1.

Similarly, Ethereum gained 4.01% to trade at $2,805, while Solana with 3.29%
gain traded at $105.2625 as of press time. Terra gained 0.33% and Uniswap
gained 2.6% to trade at $51.2957 and $10.65 respectively.

Crude oil market

The crude oil market maintained a bullish stands as the price of brent crude
oil increased by 0.3% in the early hours of Friday to trade at $91.38 per
barrel, following the decision of the OPEC+ to stick to monthly increases of
400,000 barrels per day in output despite pressure from consumers to
increase supply.

West Texas Intermediate in the same vein recorded a gain of 0.51% in price
to trade at $90.73 per barrel, while Natural gas on the flip side dipped
0.2% to trade at $4.878 a barrel. The rally at the crude market can be
attributed to the tight supply stance adopted by the oil-producing nations
as well as geopolitical tensions, boosting crude prices over 10%
year-to-date.

Bonny Light also gained 1.35% in price to close at $91.3 per barrel on
Thursday, while Brass River and Qua Iboe, both Nigerian crude product dipped
nu 0.46% to close at $90.92 per barrel.

External reserve

Nigeria's external reserve dropped by 0.07% on Wednesday, 2nd February 2022
to close at $39.98 billion, which represents a decline of $26.94 million
from the $40.01 billion recorded as of the previous day.

The continuous decline in the country's reserve level can be attributed to
the Central Bank's intervention in the official market in ensuring the
stability of the exchange rate and the inability of Nigeria to meet crude
oil production quota.

It is worth noting that the nation's foreign reserve gained $5.99 billion in
the month of October, as a result of the $4 billion raised by the federal
government from the issuance of Eurobond in the international debt market.

Nigeria's reserve level declined by $481.37 million in January 2022
following the $66.17 million dip recorded in the previous month.
Year-to-date, Nigeria's reserve has declined by $535.67 million despite the
rally at the global crude oil market.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar rises from two-week low after U.S. jobs surprise

(Reuters) - The U.S. dollar advanced from two-week lows on Friday after data
showed the world's largest economy created far more jobs than expected,
raising the chances of a larger Federal Reserve interest rate increase at
the March policy meeting.

The dollar index, a gauge of its value against six major currencies, rose
0.1% to 95.446, after falling to a two-week low of 95.136 earlier amid a
resurgent euro.

But the dollar was still down 1.8% on the week, on pace for its largest
weekly percentage decline since November 2020.

Data showed U.S. nonfarm payrolls grew 467,000 jobs last month. Data for
December was revised higher to show 510,000 jobs created instead of the
previously reported 199,000. read more

Economists polled by Reuters had forecast 150,000 jobs added in January.
Estimates ranged from a decrease of 400,000 to a gain of 385,000 jobs.

Market participants were prepared for a weaker-than-forecast reading given
the decline in the ADP U.S. private payrolls report released earlier this
week. That report showed a decline due to the impact of the Omicron
coronavirus variant. read more

Average hourly earnings, a measure of wage inflation and a closely-watched
metric, also rose 0.7% last month, and 5.7% on a year-on-year basis.

The dollar also tracked the surge in U.S. Treasury yields.

U.S. two-year and five-year yields, both of which reflect interest rate
expectations, rose to 1.2970% , the highest since late February 2020, and
1.79% , its best level since July 2019, respectively.

In the afternoon session, U.S. rate futures implied more than five rate
hikes this year, or about 134.4 basis points in policy tightening. The
probability of a 50 basis-point increase next month rose to nearly 40%, from
just 18% before the data release.

The euro was still up on the day, rising 0.1% at $1.1455 . It was up 1.7% on
the week, on track for its best weekly performance since late March 2020,
benefiting from a hawkish turn by the European Central Bank (ECB) on
Thursday.

The euro stalled around the resistance level of $1.1480 because of dollar
gains following the U.S. employment report.

HSBC's Maher said the euro/dollar pair is likely to resume its upward
momentum given that the market seems more fixated on the ECB's hawkishness,
which surprised markets, than the Fed.

Sterling also has been among the big currency movers this week, after the
Bank of England raised rates to 0.5% on Thursday - marking the first
back-to-back increases by the central bank since 2004. read more

The pound though fell 0.5% to $1.3536 . On the week, it was up 1% this week.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold firms as inflation risks counter higher U.S. yields, dollar

(Reuters) - Gold prices edged higher in choppy trade on Friday as growing
inflation worries helped cushion pressure from a firmer dollar and higher
U.S. Treasury yields after a surprisingly upbeat U.S. jobs data.

Spot gold was up 0.1% at $1,805.95 per ounce by 13:41 EST (1841 GMT), after
hitting a one-week high earlier in the session. Bullion is up 0.8% so far
this week.

U.S. gold futures settled 0.2% higher at $1,807.80.

An unexpected jump in U.S. job growth in January fanned fears around
inflation and weighed on risk sentiment among investors. Data showed U.S.
nonfarm payrolls increased by 467,000 jobs last month. read more

Oil prices also surged to seven-year highs, adding to existing inflationary
pressures.

Gold is considered a hedge against inflation, but interest rate hikes would
raise the opportunity cost of holding non-yielding bullion.

Meanwhile, benchmark 10-year yields hit their highest in over two years
after upbeat U.S. jobs data bolstered the case for rate hikes by the Fed.
The dollar (.DXY) gained and made bullion expensive for overseas buyers.

Gold prices have retreated since scaling a 1-1/12 month high in late-January
after the Fed signalled an interest rate hike in March.

On the technical front, "the $1,800 level is key for gold and if gold can
continue to hover around it, that would be very positive for bullion bulls,"
Edward Moya, senior market analyst at brokerage OANDA, wrote in a note.

Silver rose 0.2% to $22.44 per ounce, platinum dropped 1.1% to $1,021.96 and
palladium declined 1.2% to $2,297.63.

The Thomson Reuters Trust Principles.

Oil hits seven-year highs as rally extends to a 7th week

(Reuters) - Oil prices surged to seven-year highs on Friday, extending their
rally into a seventh week on ongoing worries about supply disruptions fueled
by frigid U.S. weather and ongoing political turmoil among major world
producers.

Brent crude rose $2.16, or 2.4%, to settle at $93.27 a barrel having earlier
touched its highest since October 2014 at $93.70.

U.S. West Texas Intermediate crude ended $2.04, or 2.3%, higher at $92.31 a
barrel after trading as high as $93.17, its highest since September 2014.

Brent ended the week 3.6% higher, while WTI posted a 6.3% rise in their
longest rally since October.

The market's surge accelerated in the last two days as buyers piled into
crude contracts due to expectations that world suppliers will continue to
struggle to meet demand.

U.S. jobs figures were surprisingly strong in January, despite the presence
of the Omicron variant of the coronavirus. read more

Crude prices, which have already rallied about 20% so far this year, are
likely to surpass $100 per barrel due to strong global demand, market
strategists said this week. read more

Reflecting that bullish view, money managers raised their net long U.S.
crude futures and options positions in the week to Feb. 1 by 6,616 contracts
to 304,013, the U.S. Commodity Futures Trading Commission (CFTC) said.

Some, however, see risks to the rally. Citi Research said it expects the oil
market to flip into surplus as soon as the next quarter, putting the brakes
on the rally.

Winter storms bringing icy conditions in the United States, particularly in
Texas, also fueled supply fears as extreme cold could cause production to
shut temporarily, similar to what happened in the state a year ago. read
more

Tight oil supplies pushed the six-month market structure for WTI into steep
backwardation of $9.06 a barrel on Friday, its widest since September 2013.

Backwardation exists when contracts for near-term delivery are priced higher
than those for later months - and is reflective of near-term demand that
encourages traders to release oil from storage to sell it promptly.

The number of U.S. oil rigs, an early indicator of future output, rose two
to 497 this week, its highest since April 2020, energy services firm Baker
Hughes Co said.

Even though the oil rig count has climbed for a record 17 months in a row,
the weekly increases have mostly been in single digits and production is
still far from pre-pandemic record highs as many companies focus more on
returning money to investors rather than boosting output.

Oil markets have also gained support from geopolitical risks as major oil
producer Russia has amassed thousands of troops on Ukraine's border, and is
accusing the United States and its allies of fanning tensions.

The Organization of the Petroleum Exporting Countries and allies led by
Russia, together known as OPEC+, agreed this week to stick to moderate
output increases, with the group already struggling to meet existing targets
and despite pressure from top consumers to raise production more quickly.
read more

Iraq, OPEC's second-largest oil producer, pumped well below its OPEC+ quota
in January, while OPEC+ member Kazakhstan wants to keep more of its oil
output at home to tackle rising fuel prices. read more

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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