Bulls n Bears Daily Market Commentary : 11 February 2022

Sat Feb 12 07:00:56 CAT 2022

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Bulls n Bears Daily Market Commentary : 11 February 2022

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ZSE commentary

The ZSE shares continued to gain significantly as wage and exchange rate pressures continues. Activity levels were at 508 trades. Star Africa was the most active stock at 61 trades followed by Delta and Tanganda at 56 and 26 trades respectively. Investor sentiment was positive after the session yielded 18 risers against 15 decliners while one of the active stocks remained unchanged. Star Africa anchored volume aggregate trading 4 077 300 shares and Delta anchored value aggregate with a value of ZW$121.04 million. The All-Share Index added 3.95% to close at 14 077.59 points. The Top 10 Index added 4.97%. The Top 15 Index also added 4.69%. The Medium Cap Index was up by 0.97% to 22 583.29 points whilst the Small Cap Index shaded 0.80% to 397 070.92 points. Leading the risers pack of the day was Hippo closed at 33 489.33c and Edgars was up by 10.33%. Meikles added 9.42% and Seed Co added 9.19% to 14 265.62c. Masimba was up by 8.70%. Mitigating the gains were losses in Mashonaland Holdings  and First Mutual Holdings which both shaded 7.77% General Beltings was down by 7.51%. Unifreight and Star Africa shaded 3.23% and 3.22% respectively.

The ETFs traded 331 982 units worth ZW$2 764 167.95 in 73 trades. The Old Mutual Top 10 ETF added 2.75% to close at 805.35c while the Morgan and Co Multi Sector ETF shaded 0.67% to close at 1361.27c. On the VFEX, Padenga remained unchanged at US 21c after 18 800 shares were traded.- wealthaccesssecurities

Global Currencies & Equity Markets

South Africa

Strong dollar weighs on South African rand, faster rate hike bets hit stocks

(Reuters) - South Africa's rand ended the week largely flat with hotter-than-expected U.S. inflation prompting more bets on interest rate hikes, lifting the dollar and dampening the rand.

At 1440 GMT, the rand was at 15.1600 against the dollar, 0.1% stronger than its closing level on Thursday, though slightly higher than its level in earlier trade as the dollar lost some gains.

The greenback was however still up 0.3% against a basket of currencies, boosted by data showing U.S. consumer prices increased 7.5% year-on-year in January, higher than the forecasts for a 7.3% rise. read more

That fuelled speculation that the Fed will increase rates by 50 basis points, rather than 25, in March.

These global factors put pressure on the rand even after a closely watched speech by President Cyril Ramaphosa on Thursday, which analysts interpreted as pro-business.

Ramaphosa used his State of the Nation Address to reaffirm pledges for fundamental reform, extend a social grant put in place to cushion the impact of the COVID-19 pandemic and promise new intensity for the fight against corruption. read more

The government's benchmark 2030 bond dropped, with the yield rising 4 basis points to 9.210%.

Stocks ended the week in the red after investors were dealt another inflation blow, which Craig Erlam, a senior market analyst at OANDA, said cooled sentiment once more.

The Johannesburg All-Share index (.JALSH) fell 0.26% to 76,382 points, while the Top-40 index (.JTOPI) closed 0.38% weaker at 69,681 points.

Higher U.S. interest rates tend to hit inflows into risk assets, and with other developed market central banks also turning hawkish, investors in these assets are bracing for a tough year.

The Thomson Reuters Trust Principles.

Nigeria

Naira Crashes to N574.15/$1 at P2P Market, N416.67/$1 at I&E

The value of the Naira to the Dollar crashed by N3 or 0.53 per cent at the peer-to-peer (P2P) market segment of the foreign exchange (forex) market on Thursday.

At the market window, the exchange rate of the Nigerian currency to its American counterpart closed at N574/$1 compared with N571/$1 it traded at the midweek trading day.

The P2P market is a marketplace where buyers and sellers exchange their currencies through different means, including bank transfers and others.

The rate is mostly affected by the price of cryptocurrencies and yesterday after inflation figures from the United States were released, the market confirmed that it was evident that the interest rate will increase next month.

This affected the prices of digital coins as they fell, with Ripple (XRP) losing 5.8 per cent to trade at N483.94, Ethereum (ETH) sliding by 5.1 per cent to N1,764,841.66 and Litecoin (LTC) declining by 4.1 per cent to sell at N76,033.22.

Furthermore, Dogecoin (DOGE) retreated by 3.5 per cent to N89.21, Cardano (ADA) pointed south by 2.9 per cent to trade at N660.73, Tron (TRX) made a 2.5 per cent loss to sell for N38.90, Bitcoin (BTC) lost 1.3 per cent to trade at N24,809,779.78, Dash (DASH) also slid by 1.3 per cent to N76,033.22, Binance Coin (BNB) dropped 1.0 per cent to quote at N173,107.30, while the US Dollar Tether (USDT) decreased by 0.7 per cent to sell for N572.78.

Meanwhile, at the Investors and Exporters (I&E) window, the local currency lost 67 kobo or 0.16 per cent against the United States Dollar to sell for N416.67/$1 in contrast to N416.00/$1 of the previous session.

The Naira closed weaker despite the market segment witnessing a lower turnover as the value of trades went down by 35.8 per cent or $61.19 million to $109.75 million from the previous day’s turnover of $170.94 million, according to data obtained by Business Post.

It was observed that the Naira also depreciated against the British Pound Sterling at the session by N1.31 to trade at N566.73/£1 versus Wednesday’s closing rate of N565.42/£1 and lost 67 kobo against the Euro to settle at N477.42/€1 compared with N476.75/€1 it traded on Wednesday.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar gains as Ukraine tensions rise after U.S. warning

(Reuters) - The dollar rose along with other safe-haven assets on Friday after the United States said Russia has massed enough troops near Ukraine to launch a major invasion.

A Russian attack could begin any day and would likely start with an air assault, White House national security adviser Jake Sullivan told a media briefing. read more

The dollar had been trading mostly sideways when the U.S. warning hit markets. The dollar index , a measure of the greenback against six major currencies, rose 0.258%.

U.S. crude futures jumped more than 5% to $94.66 a barrel, the highest since 2014, while gold rose more than 2% to a near two-month high at one point. read more

The dollar's rise was due to Sullivan's comments, as well as reports that Russian President Vladimir Putin had decided to invade Ukraine, which the White House later disputed, said Bipan Rai, head of FX strategy at CIBC Capital Markets in Toronto.

That move up, along with moves in other safe-haven assets such as U.S. Treasuries and the Japanese yen, indicates the market is growing more and more concerned about the prospect of an invasion, said Rai.

The Japanese yen strengthened 0.63% versus the greenback at 115.29 per dollar, while the Canadian dollar weakened as the potential for an imminent Russian attack triggered a sell-off in risk-sensitive assets.

Russia's currency, already lower for the day, fell further on the news. The rouble was last down 2.73% versus the greenback at 77.00 per dollar.

Washington urged all U.S. citizens to leave the country within 48 hours. Other countries -- including Britain, Japan, Latvia, Norway and the Netherlands -- told their citizens to leave Ukraine immediately.

The euro , meanwhile, weakened as markets processed the news, and was set for a weekly decline after European Central Bank President Christine Lagarde said in an interview that raising rates now would not bring down record euro zone inflation but only hurt the economy.

The greenback had struggled to pick a direction earlier in the day as investors digested the University of Michigan’s preliminary consumer sentiment index for February.

That report found that U.S. consumer sentiment fell to its lowest level in more than a decade in early February amid expectations that inflation would continue to rise in the near term. Economists polled by Reuters had forecast the index edging up. read more

The market's lack of clarity as to how interest rate hikes might progress has contributed to frenzied sessions this week as the dollar remains undecided on the future, said Erik Nelson, a currency strategist at Wells Fargo Securities.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price looks to take $1,850 as markets fear emergency Fed move

(Kitco News) Gold is catching a bid as markets worry the Federal Reserve could opt for an emergency rate hike before the March meeting to try and tame inflation.

Gold is up nearly 2% on the week as more investors turn to the precious metal amid a widespread risk-off sentiment in the marketplace. At the time of writing, April Comex gold futures were trading at $1,841.30, up 0.21% on the day.

This week's shockingly high U.S. inflation report has added more uncertainty regarding the Fed's tightening plan.

With consumer prices rising 7.5% in January, the highest in 40 years, Goldman Sachs is now projecting seven 25 basis points hikes this year. There is also growing consensus for a 50 basis point hike in March. And some are even not ruling out an emergency move by the Federal Reserve prior to the March meeting.

Federal Reserve Bank of St. Louis President James Bullard further encouraged these hawkish views, stating he supports the fed funds rate hitting 1% after just three meetings.

In the meantime, the 10-year Treasury yield surged further above 2%, a level not seen since August 2019.

A 50 basis points hike is possible in March, but what's even more likely is the Fed choosing to do a rate hike in between the FOMC meetings.

While odds are increasing for the 50 basis points hike, RJO Futures senior market strategist Frank Cholly told Kitco News that an emergency pre-meeting rate increase is unlikely.

"The 50 basis points hike in March is more probable. But gold has not fully priced that in yet. Treasuries have done that, but gold still moved higher. Gold is still looking for the Fed to remain dovish," Cholly noted.

Gold price remains down as annual U.S. CPI rises 7.5% in January; another 40-year high

The level gold will be looking to breach next week will be $1,850 an ounce. The precious metal already attempted to approach this resistance numerous times in the past several weeks but was unsuccessful.

In the meantime, gold's safety range is between $1,800 and $1,850. Longer-term, Cholly is looking for the precious metal to move above $1,900 by the middle of the year.

FOMC meeting minutes and other data to watch

The big item on the agenda next week is the January FOMC meeting minutes. Markets will be looking for clues in terms of how aggressive the U.S. central bank could allow itself to be.

Powell's semi-annual testimony would be the more appropriate venue to deliver some major policy shifts, added Ashworth.

Oil soars 3% to 7-yr highs on Ukraine jitters, tight supplies

(Reuters) - Oil prices ended 3% higher on Friday at fresh seven-year highs as escalating fears of an invasion of Ukraine by Russia, a top energy producer, added to concerns over tight global crude supplies.

Russia has massed enough troops near Ukraine to launch a major invasion, Washington said, as it urged all U.S. citizens to leave the country within 48 hours. read more

Britain also advised its nationals to leave Ukraine as Prime Minister Boris Johnson impressed the need for NATO allies to make it absolutely clear that there will be a heavy package of economic sanctions ready to go, should Russia invade Ukraine. read more

Brent crude futures settled $3.03, or 3.3%, higher at $94.44 a barrel, while U.S. West Texas Intermediate crude rose $3.22, or 3.6%, to $93.10 a barrel.

Both benchmarks touched their highest since late 2014, surpassing the highs hit on Monday, and posted their eighth consecutive week of gains on growing concerns about global supplies as demand recovers from the coronavirus pandemic.

Trading volumes spiked in the last hour of trading, with volumes for global benchmark Brent climbing to their highest in more than two months.

The International Energy Agency raised its 2022 demand forecast and expects global demand to expand by 3.2 million barrels per day (bpd) this year, reaching an all-time record 100.6 million bpd.

The energy watchdog's report follows the Organization of the Petroleum Exporting Countries' warning earlier this week that world oil demand might rise even more steeply this year on a strong post-pandemic economic recovery.

The IEA added that Saudi Arabia and the United Arab Emirates could help to calm volatile oil markets if they pumped more crude, adding that the OPEC+ alliance produced 900,000 bpd below target in January.

The two OPEC producers have the most spare production capacity and could help to relieve dwindling global oil inventories that have been among factors pushing prices towards $100 a barrel, deepening inflation worldwide.

The Biden administration responded to high prices by again stating this week that it has been talking with large producers about more output, as well as the possibility of additional strategic releases from large consumers, as it did late last year.

Indirect U.S.-Iran nuclear talks resumed this week after a 10-day break. A deal could see the lifting of sanctions on Iranian oil and ease supply tightness.

In the United States, drillers added the most oil rigs in a week in four years, with the rig count, an indicator of future production, rising 19 to 516, its highest since April 2020, energy services firm Baker Hughes Co said.

The Thomson Reuters Trust Principles.

INVESTORS DIARY 2022

Company

Event

Venue

Date & Time

Cafca

AGM

Feb 24, 12PM  

Ariston

AGM

Royal Harare Golf Club

Feb 24, 3PM

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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