Bulls n Bears Daily Market Commentary : 27 January 2022

Fri Jan 28 07:13:33 CAT 2022

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Bulls n Bears Daily Market Commentary : 27 January 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

The ZSE shares closed today's session in the positive headlined by
heavyweight counters for a second day in a row. Liquidity and activity
levels however improved. Activity levels were lower at 471 trades. OK
Zimbabwe was the most active stock at 40 trades followed by Star Africa and
Delta at 33 each and Econet at 22 trades. Investor sentiment was flat after
the session yielded 17 advancers against 17 fallers while six of the active
stocks remained unchanged. Cassava anchored both volume and value aggregate
trading 809 700 shares with a value of ZW$41.81 million.

The All-Share Index added 2.63% to close at 12 103.19 points. The Top 10
Index gained 3.69%. The Top 15 Index also added 3.43%. The Medium Cap Index
was down by 0.28% to 21 112.08 points whilst the Small Cap Index added 0.20%
to 368 770.93 points. Leading the risers pack of the day was CBZ Holdings
adding 9.79%. Delta  was up by 9.57%. Econet added 9.20% and Seed Co. added
7.35% to 12200c. Get Bucks was up by 3.51%. Mitigating the gains were losses
Mashonaland Holdings and African Sun which shaded 16.49% and 12.08%. Edgars
was down by 11.83%. Dairibord Holdings and Unifreight shaded 5.35% and 4.74%
respectively. The ETFs traded 219 318 units worth ZW$2 231 356.77 in 68
trades. The Old Mutual Top 10 ETF added 0.49% to close at 702.56c while the
Morgan and Co Multi Sector ETF added 0.91% to close at 1310.60c. On the
VFEX, Padenga traded 13 150 shares to close unchanged at US$
0.21c..-wealthaccesssecurities

Global Currencies & Equity Markets

Kenyan, Zambian currencies seen weakening

(Reuters) - Kenyan and Zambian currencies are expected to weaken against the
U.S. dollar in the coming week while those of Uganda and Tanzania are likely
to hold steady.

KENYA 

Kenya's shilling KES= is expected to be undermined by increased demand from
general goods importers and oil companies.

Commercial banks quoted the shilling at 113.45/65 per dollar, compared with
last Thursday's close of 113.40/60.

The shilling is just off a fresh all-time low of 113.55/75 hit on Jan. 20
and Jan. 25, according to Refinitiv data.

UGANDA

The Ugandan shilling UGX= is seen trading within a broadly stable range in
the coming days on the back of typical end of month inflows amid low
importer appetite.

At 0942 GMT commercial banks quoted the shilling at 3,515/3,525, unchanged
from last Thursday's close.

The local unit, he said, is expected to trade between 3,500-3,520.

TANZANIA

Tanzania's shilling TZS= is expected to hold steady next week as inflows
from exports match the dollar demand in the market.

Commercial banks quoted the shilling at 2,305/2,315 on Thursday, nearly the
same levels recorded at last week's close.

NIGERIA

The Nigerian naira is seen range-bound in the coming week, as higher oil
prices provide support for the central bank to boost dollar sales, traders
said.

The currency firmed to 570 naira to dollar on the parallel market NGNP= on
Thursday but was steady last week at 572 naira. On the official market NGN=,
it traded at a range of 411-417 naira.

Oil prices have been rising which could provide more dollar inflow for the
central bank to support the currency. But the country needs to be able to
maintain steady production, one commercial bank trader said.

ZAMBIA

The kwacha ZMW= is likely to remain broadly weak against the dollar in the
coming week, driven down by limited supply of hard currency.

On Thursday, commercial banks quoted the currency of Africa's second-largest
copper producer down at 17.8500 per dollar from 17.4000 at the close of
business a week ago.

South Africa

South African rand weaker as central bank signals gradual approach

(Reuters) - South Africa's rand weakened on Thursday as the central bank
raised interest rates by the expected margin and suggested it would only
increase rates gradually in the future.

By 1610 GMT, the rand ZAR=D3 traded at 15.3850 against the dollar, 0.3%
weaker than its previous close.

Governor Lesetja Kganyago told a news conference that a hike larger than 25
basis points was not discussed at this week's monetary policy committee
meeting.

Also contributing to rand weakness, the dollar .DXY soared to its highest
levels since July 2020, powered by bets the U.S. Federal Reserve could
deliver faster and larger rate hikes in the months ahead.

Shares on the Johannesburg Stock Exchange, which had opened heavily weaker
after the Fed overnight flagged rate hikes beginning in March, recovered
most of the lost ground in afternoon trade after the South African central
bank's comments.

Local economy-focused stocks such as banks, financials, retail and real
estate did well.

The benchmark All-share index .JALSH closed down 0.4% to end at 73,504
points. The blue-chip index of top 40 companies .JTOPI was down 0.44% to
67,070 points at the end of the day's trade.

The banking index .JBANK was up 0.92% while the index of real estate
investment trusts (REITs) .JREIT closed up 0.42%.

Petrochemicals major Sasol SOLJ.J continued to outperform the broader market
by a wide margin with the stock up 3.7% driven by the oil price LCOc1
nearing $90 a barrel.

The government's benchmark 2030 bond ZAR2030= gained, with the yield falling
1.5 basis points on the day to 9.335%.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar jumps as markets brace for larger, faster rate hikes

The dollar soared to highs last seen in July 2020 against other major
currencies on Thursday, a day after the Federal Reserve said it could
deliver faster and larger interest rate hikes in the months ahead.

With the Fed flagging that it was ready to start lifting rates in March to
contain surging inflation, money markets moved to price in as many as five
quarter-point increases by year-end.

The Fed's hawkish tone on Wednesday brought dollar bulls out in force. The
dollar index , which measures the greenback's value against other major
currencies, rose to 97.299, the highest since July 2020. The 0.8% jump was
the biggest single-day gain in more than two months.

The euro slumped 0.95% to $1.1133 , its lowest since June 2020. The
greenback also hit its highest levels in more than a year against the New
Zealand dollar, a seven-week peak against Australia's currency and rose
broadly against emerging market currencies.

The outlook for aggressive rate hikes has led to a major reset globally,
said Ed Moya, senior market analyst at OANDA.

While there is optimism that inflation will subside by midyear, it could get
worse and lead to more aggressive Fed action, he said, adding, "you got a
little bit more left in this dollar move."

The Fed indicated it was likely to raise rates in March, as widely expected,
and reaffirmed plans to end its bond purchases that month before
significantly reducing its asset holdings.

The Fed also said it may be warranted to increase the federal funds rate
"sooner or at a faster pace" than had been earlier anticipated.

Chair Jerome Powell later stressed at a news conference that no decisions
had been made, but in response to a question about whether the central bank
would consider a 50-basis point hike, he did not rule it out.

Much of the Fed's outlook depends on an economy that may be weaker than it
appears. U.S. gross domestic product increased at a 6.9% annualized rate in
the fourth quarter of 2021, and the economy grew 5.7% in 2021, its strongest
since 1984, the Commerce Department reported on Thursday. read more

Robust growth supports a rate hike in March. But inventory rebuilding
accounted for almost three-quarters of the strong GDP number, noted Joe
LaVorgna, chief economist for the Americas at Natixis. "This is not the
stuff of a robust economy," he said.

Yuan hit

Rising U.S. Treasury yields at the short end provided a further impetus to
the dollar's gains. The two-year Treasury yield, which typically moves in
step with rate expectations, rose 7.9 basis points to 1.170%.

After rallying 0.7% against the yen on Wednesday in its sharpest rise in
more than two months, the dollar firmed further, leading the yen to weaken
0.49% to 115.21 per dollar.

The rouble jumped off a near 15-month low hit on Wednesday to extend gains
after Russia said even the idea of war with Ukraine was unacceptable,
soothing fears of increased tensions. The rouble strengthened 2.09% to 77.77
per dollar. 

Elsewhere, China's yuan took a hit as data showed Chinese industrial profits
grew at their slowest pace in more than 18 months, bolstering the case for
policy support. 

In offshore trade, the yuan was down 0.52% against the dollar at 6.3668 , on
track for its biggest one-day fall since last July.

After a battering last week, volatile cryptocurrencies held their ground in
the wake of the Fed's meeting, with bitcoin slipping 1.5% to $36,276.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold spirals down as hawkish Fed boosts U.S. dollar

(Reuters) - Gold prices slid over 1% to more than a two-week low on
Thursday, as the dollar rallied after robust U.S. economic data strengthened
the case for an interest rate hike by the Federal Reserve in March.

Spot gold was down 1.3% at $1,794.30 an ounce by 14:04 EST (1904 GMT), after
hitting a low of $1,790.20. U.S. gold futures fell 2% to $1,793.10.

The drop in gold prices is a continuation of Wednesday's selloff as markets
further digest Fed Chair Jerome Powell's comments on raising rates, said
Philip Streible, chief market strategist at Blue Line Futures in Chicago.
read more

U.S. economic growth accelerated in the fourth quarter to post its best
performance in nearly four decades in 2021. read more

Further hurting safe-haven gold's appeal for overseas buyers, the dollar
(.DXY) soared to its highest levels since July 2020.

Gold prices will drift lower in 2022 and 2023 as central banks raise
interest rates, lifting bond yields and making non-yielding bullion less
attractive, a Reuters poll showed.

Bullion has declined more than 3% since hitting its highest price in 10
weeks on Tuesday on the back of safe-haven buying driven by Russia-Ukraine
tensions. read more

Menke added that he did not see a broad-based move into gold from safe-haven
seekers but rather some selective buying which should remain the case as
long as the economic backdrop does not sharply deteriorate.

Spot silver dropped 3.3% to $22.71 an ounce, and was set for its for biggest
one-day decline since the end of September.

Platinum fell 0.9% to $1,022.15 an ounce and palladium gained for the eighth
straight session, rising 1.9% to $2,372.20.

A Reuters survey showed that palladium prices are expected to gradually fall
as automakers switch to using platinum in autocatalysts to cut costs.

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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