Bulls n Bears Daily Market Commentary : 05 May 2022

Thu May 5 22:37:37 CAT 2022

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Bulls n Bears Daily Market Commentary : 05 May 2022

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ZSE commentary

Market slips back into the red.

The market reversed prior session's gains in the session amidst constrained
demand in selected counters. The All-Share and the Industrial indices lost a
similar 0.90% to see the former close at 27589.62pts while, the latter ended
pegged at 91024.55pts. The Blue-chip Index slumped 0.57% to 18379.40pts as
the Mid-Cap Index further extended its losses by 1.93% to end at
44679.17pts. Retailer OK Zimbabwe led the losers of the day as it dropped
11.29% to $52.3302, followed by Axia that shed 7.70% to $163.5357. Fast
foods retailer Simbisa retreated 5.90% to $301.9663 as bankers NMB let go of
5.28% to trade at $35.0000. Property concern First Mutual Properties dipped
4.77% to settle at $9.5165 as it capped the top five worst performers of the
day.

Agricultural concern Zimplow headlined the gainers of the day on a 14.10%
advance to $27.9550, trailed by

sugar manufacturer Hippo that ticked up 9.23% to $557.0968. First Mutual
Holdings reversed prior losses as it put on 6.04% to $21.0526 while, First
Capital Bank extended its gains to $10.5064 following a 3.50% rise. Zimre
holdings capped the top five best performers of the day on a 2.77%
improvement to $5.5603. Volumes traded dropped 22.02% to see 3.20m shares
exchange hands as Zimplow and Econet claimed 58.59% and 11.50% of the
aggregate respectively. Value traded declined 52.71% to $325.89m as Econet,
Zimplow, Delta and Innscor contributed a combined 77.28% of the turnover.
The three ETFs declined in the session, Datvest MCS went down 2.16% to
$2.7044, Morgan & Co ETF eased 0.59% to $23.5585 and Old Mutual Top Ten lost
0.91% to $10.8488. On the VFEX, Bindura was 0.40% up at US$0.0500 as 3.33m
shares were swapped in the name. Elsewhere, Axia announced that it has
acquired a 50% stake in National Foods Limited logistics business, which
provides warehousing and distribution requirements, as the group seeks to
expand its portfolio.-EFE Securities

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Global Currencies & Equity Markets

Currencies - Zambia's currency seen firm, Kenya, Nigeria's weaker

LUSAKA - Zambia's currency is next week likely hold firm against the dollar,
while Kenya's and Nigeria's are set to weaken. Ugandan and Tanzanian
currencies are expected to hold steady.

ZAMBIA

The kwacha is projected to maintain a bullish trend against the dollar in
the coming week as hard currency supply continues to outweigh demand.

On Thursday, commercial banks quoted the currency of Africa's second-largest
copper producer at 16.9750 per dollar from 16.9870 at the close of business
a week ago.

"The market has witnessed less forex demand which continues to be relatively
met by offloads from corporates and the central bank," Access Bank said in a
note.

KENYA

Kenya's shilling is expected to weaken, undermined by increased importer
dollar demand from various sectors, especially energy.

Commercial banks quoted the shilling at 115.85/116.05 per dollar, from last
Thursday's close of 115.70/90. During Thursday's session, the shilling
touched an all-time low of 115.90/116.10, according to Refinitiv data.

"We expect it to remain under pressure. We are seeing a lot of (dollar)
demand, from the energy sector mainly. There is quite some demand in the
market," a trader at one commercial bank said.

NIGERIA

Nigeria's naira could ease on the black market in the coming week as
increased political spending ahead of month-end election primaries hits the
currency, traders said.

The currency traded at 589 naira per dollar on Thursday on the unofficial
market, recovering from a record low of 590 naira. The unit traded within a
range of 413 to 417 naira on the official market.

A stronger dollar could hurt the naira, traders said.

"With the U.S. Federal Reserve lifting interest rates by half a percentage
point, its biggest hike in more than two decades, we expect there will be
increased pressure on the naira in the near term," Murega Mungai of African
currency broker AZA, wrote in a note.

UGANDA

The Ugandan shilling is seen trading rangebound in the coming days as
month-end inflows of hard currency balance out demand from energy and other
importers.

At 1045 GMT commercial banks quoted the shilling at 3,545/3,555, compared
with last Thursday's close of 3,550/3,560.

"Demand from some importers like energy firms is strong but being around
end-of-month inflows should also be able to sufficiently absorb this
demand," said an independent foreign exchange trader in the capital Kampala.

He said the shilling would likely change hands between 3,540-3,570 levels in
the coming days.

TANZANIA

Tanzania's shilling is expected to hold steady next week with inflows from
agricultural exports and non-governmental organisations matching the demand
for the dollar from the energy and manufacturing sectors.

Commercial banks quoted the shilling at 2,320/2,330 on Thursday, the same
levels recorded a week earlier.

"We expect the shilling to remain stable over the coming week," said Terry
Karanja, a treasury associate at AZA, a Nairobi-based forex trading
firm.-zawya

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar index hits 20-year high, sterling tumbles on dovish BoE

(Reuters) - The dollar hit a 20-year high against a basket of currencies on
Thursday as a sharp stocks selloff boosted demand for the safe-haven
currency and as the Federal Reserve was seen as tightening monetary policy
more than peers.

Stocks tumbled on Thursday as investors fretted the Fed might need to take
more drastic action to bring inflation under control.  

The greenback dropped on Wednesday, and stocks gained, after Fed Chair
Jerome Powell told reporters that policymakers were not actively considering
75-basis-point moves in the future. It came after the U.S. central bank
hiked rates by 50 basis points, as was widely expected.  

"Markets cheered the Fed's decision which came at the dollar's expense as it
helped to quell fears about aggressive rate hikes pushing the economy into
recession," Joe Manimbo, senior market analyst at Western Union Business
Solutions said in a report.

"The dollar bounced back, though, as rates still appeared on a path to more
than double (1.9%) by July and potentially triple (2.7%) by year-end, a
solidly hawkish outlook that sets the Fed apart from its major rivals," he
added.

The dollar index reached 103.94, the highest since Dec. 2002, before falling
back to 103.73, up 1.16% on the day.

Sterling fell to its lowest level since June 2020 after the Bank of England
raised interest rates to their highest since 2009 but warned that the
economy was at risk of recession.  

"The Bank of England was extremely dovish," said Erik Nelson, a macro
strategist at Wells Fargo in New York. They are "basically telling the
markets they are completely overpricing where the path of the bank rate is."

The British currency was last down 2.25% at $1.2351.

The euro was also dented after German data showed that industrial orders in
March suffered their biggest monthly drop since last October.  

The single currency has fallen as the region struggles with weaker growth
and energy disruptions due to sanctions imposed on Russia after its invasion
of Ukraine.

It fell to $1.0518, down 0.98%, and is holding just above a five-year low of
$1.0470 reached last Thursday.

Investors will be focused on U.S. inflation data for further clues on how
aggressive the Fed will be in tightening policy.

This week's major U.S. economic release will be the government's jobs report
for April released on Friday, while consumer price data is also due on
Wednesday.

New claims for U.S. unemployment benefits increased to a more than two-month
high last week, but remained at a level consistent with tightening labor
market conditions and further wage gains that could keep inflation hot for a
while, data on Thursday showed.  

 <mailto:info at bulls.co.zw> 

Commodities Markets

Copper falls as dollar climbs to near 20-year high

LONDON - Copper prices fell on Thursday as the dollar surged to its highest
level since 2002 after disappointing industrial data from Germany, the
latest in a slew of weak economic readings from major nations.

Benchmark copper on the London Metal Exchange (LME) was down 0.3% to $9,445
a tonne by 1650 GMT, having climbed as high as $9,770. A stronger dollar
makes assets priced in the greenback less attractive to buyers holding other
currencies.

The metal, which is used a gauge for global economic health, was on track
for its third weekly decline.

German industrial orders fell more than expected in March, driven mainly by
a reduction in orders from abroad as the war in Ukraine hit manufacturing
demand in Europe's biggest economy, data showed on Thursday.

The data followed on the heels of somber manufacturing activity data in
China, the world's top metals consumer, and the United States in April,
clouding the outlook for base metals demand.

"Demand in China has been slowing; property and auto are the key concerns,"
analysts at Bank of America said as they lowered their 2022 price forecast
for copper by 4.3% to $9,999 a tonne.

The move to a lower-carbon economy will, however, require more copper and
support prices in the long term, the bank said.

DOVISH: Preventing further losses in metals was a less hawkish tone from the
Federal Reserve regarding upcoming U.S. interest rate increases.

That stance led to an earlier risk rally in equities and commodities, said
Amelia Fu, Bank of China International's (BOCI) head of global commodities
strategy.

INVENTORIES: Copper stocks in LME-approved warehouses rose by 14,325 tonnes
to 168,800 tonnes. Inventories have more than doubled from February, when
they reached their lowest level since 2005.

POSITIONS: Funds are betting that copper will fall, as evidenced by rising
short positions in Comex copper, said brokerage Marex.

As of May 2, the Comex copper short position was the largest since April
2020, totalling 24,000 lots, or 13.5% of open positions, it said.

OTHER METALS: LME aluminum fell 0.8% to $2,929 a tonne, zinc slipped 2.1% to
$3,880, lead shed 0.1% to $2,279, tin fell 0.1% to $40,595 and nickel was
down 1.9% at $30,070. 

Oil edges up on supply jitters as EU plans Russian oil ban

(Reuters) - Oil prices edged up on Thursday on supply worries after the
European Union (EU) laid out plans for new sanctions against Russia
including an embargo on crude.

Pressure from a stronger dollar and a drop in global stock markets, however,
kept oil prices in check.

Brent futures rose 76 cents, or 0.7%, to settle at $110.90 a barrel, while
U.S. West Texas Intermediate (WTI) crude rose 45 cents, or 0.4%, to settle
at $108.26.

That was the highest close for WTI since March 25 and the highest settle for
Brent since April 18.

U.S. gasoline futures , meanwhile, closed at their highest since settling at
a record high on March 8.

The U.S. dollar

A strong dollar makes oil more expensive for holders of other currencies.

Wall Street stocks tumbled as investors shed risky investments, worried the
Fed might hike rates more this year to tame inflation. [nL2N2WX1Z4] read
more

The EU sanctions proposal, which needs unanimous backing from the 27
countries in the bloc, includes phasing out imports of Russian refined
products by the end of 2022 and a ban on all shipping and insurance services
for transporting Russian oil. read more

"The oil market has not fully priced in the potential of an EU oil embargo,
so higher crude prices are to be expected in the summer months if it's voted
into law," Rystad Energy head of oil markets research Bjornar Tonhaugen
said.

Japan said it would face difficulties in immediately cutting off Russian oil
imports. read more

The Organization of the Petroleum Exporting Countries, Russia and allied
producers (OPEC+) agreed to another modest monthly oil output increase. read
more Ignoring calls from Western nations to hike output more, OPEC+ agreed
to raise June production by 432,000 barrels per day, in line with its plan
to unwind curbs made when the pandemic hammered demand.

A U.S. Senate panel advanced a bill that could expose OPEC+ to lawsuits for
collusion on boosting oil prices. Congress has failed to pass versions of
the legislation for more than two decades, but lawmakers are worried about
rising inflation and high gasoline prices. read more

Prices for near-term Brent and WTI oil futures are much more expensive than
for future months, a situation known as backwardation. Robert Yawger,
executive director of energy futures at Mizuho, said futures for both
benchmarks were in "super-backwardation" through at least April 2023 with
each future month at least $1 a barrel below the prior month.

Yawger said that situation could change as the U.S. government buys crude to
replenish strategic crude reserves.

"The back of the curve will arguably have a strong tailwind in coming
months, with the Biden Administration announcing today that the Department
of Energy would start the process sometime this fall of buying back 60
million barrels of crude oil to refill the Strategic Petroleum Reserve,"
Yawger said. 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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