Bulls n Bears Daily Market Commentary : 11 May 2022

Thu May 12 07:41:53 CAT 2022

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Bulls n Bears Daily Market Commentary : 11 May 2022

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ZSE commentary

Market weakness persists .

Market weakened further in midweek trades as the primary All share Index
lost 6.10% to settle at 24117.59pts. The ZSE Top Ten Index was 7.41% weaker
at 15700.19pts while, the Industrial Index shed 6.14% to 79503.10pts. The
Mid-cap Index gave up 2.15% to finish at 41718.34pts. Twenty-two stocks fell
against eight that gained, leaving the market with a negative breadth of
fourteen. Turnall was the top faller after slumping 14.85% to $6.5000 as
brick manufacturer, Willdale followed on a 14.23% retreat to $3.2508. Fast
foods group Simbisa tumbled 13.67% to end at $256.7616 as clothing retailers
Edgars fell 11.22% to $5.2083, reversing previous day gains. Packaging group
Nampak trimmed 11.04% to cap the top five fallers' category at $22.2411.

Headlining the gainers' list was Ariston that surged 7.38% to $3.9630 while,
life assurer Fidelity overturned prior session losses to record a 2.78% gain
as it ended at $18.5000. Construction group Masimba holdings was 1.09%
firmer at $70.8026 while, insurer First Mutual ticked up 0.62% to $21.8000.
General Beltings completed the top five winners of the day on a 0.42% rise
to $2.1991. Activity aggregates were mixed as value outturn jumped 226.11%
to record a high of $1.09bn while, volume of shares traded went down 89.00%
to 4.38m shares. National Foods, Delta and Econet were the major value
drivers of the day as the trio contributed a total of 83.24% of the outturn.
Volume drivers of the day were Delta, First Capital and Fbc Holdings with
respective contributions of 24.53%, 12.43% and 11.72%. On the VFEX, Bindura
traded 24,942 shares worth USD$1,184.74 and closed at USD$0.0475. The Morgan
and Co ETF advanced 6.56% to $22.3788 on 264 units, as the Old Mutual ETF
let go 4.31% to $9.9895 while, the Datvest ETF eased 5.65% to $2.1425.EFE
Securities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

Rand strengthens, eyes on US inflation data

In early trade the rand was at R16.09 per dollar, 0.14% firmer than its
previous close.

The rand firmed in early trade on Wednesday, but gains were limited as
investors awaited monthly US inflation data that could provide clues on the
Federal Reserve's monetary policy stance.

At 0613 GMT, the rand traded at R16.09 per dollar, 0.14% firmer than its
previous close.

"The foreign exchange markets are confined to exceptionally limited trading
ranges as the markets contemplate various central bank actions, the
situation in Ukraine, and the effects of the escalation in the number of
Covid-19 infections," Nedbank analysts said.

US consumer price index (CPI) data for April is due at 1230 GMT.

After the Fed raised its benchmark overnight interest rate by 50 basis
points last week, the largest hike in 22 years, investors have been
attempting to assess how aggressive the US central bank will be.

Higher interest rates in the United States may lead to capital outflows and
currency depreciation in emerging markets like South Africa.

In fixed income, the yield on the benchmark 2030 government bond was down 6
basis points at 10.19%, reflecting firmer prices.

Nigeria

Naira further weakens against dollar at I&E window

The naira on Wednesday depreciated at the Investors and Exporters window,
exchanging at N418.75 to the dollar, a 0.12 per cent depreciation, weaker
than N418.25 traded on Tuesday.

The open indicative rate closed at N417.70 to the dollar on Wednesday.

An exchange rate of N444.00 to the dollar was the highest rate recorded
within the day's trading before it settled at N418.75.

The Naira sold for as low as 410 to the dollar within the day's trading.

A total of 115.78 million dollars was traded in foreign exchange at the
official Investors and Exporters window on Wednesday.

Meanwhile, Ndubisi Nwokoma, a Professor of Financial Economics and Director
of the Centre for Economic Policy Analysis and Research of the University of
Lagos, attributed the currency's loss to shortfall in reserve.

Mr Nwokoma said: "this is a clear case of uncertainty in the foreign
exchange market and in the economy at large.

"A development where we see fluctuating prices on daily basis in the
official foreign exchange market indicates shortfalls in reserves (supply),
as well as bottlenecks in the supply chain coupled with speculative
activities on the demand side."

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar slips after CPI data as Fed expectations in check

The dollar was lower on Wednesday after economic data showed inflation
remained high but was unlikely to lead the Federal Reserve to shift to a
more aggressive path of monetary policy.

The consumer price index rose 0.3% last month, the smallest gain since
August, the Labor Department said on Wednesday, versus the 1.2%
month-to-month surge in the CPI in March, the largest advance since
September 2005.

On an annual basis, CPI climbed 8.3%, higher than the 8.1% estimate but
below 8.5% the prior month.

The data signaled inflation may have peaked but was unlikely to quickly cool
and derail the Fed's current plans to tighten monetary policy.

The dollar index , which had touched a four-session low of 103.37 ahead of
the report, immediately strengthened to a session high of 104.13 following
the data, just below the two-decade high of 104.19 reached on Monday.

"Hope springs eternal here but at the end of the day markets are correct in
thinking these inflation pressures are ultimately transitory, that we should
see a diminishment in supply chain issues and demand as well for the coming
months," said Karl Schamotta, chief market strategist at Cambridge Global
Payments in Toronto.

"Essentially to me, the challenge here is inflation expectations are well
anchored across the spectrum ... ultimately traders will look through this
and we will see a bit of a reversal in the trend that we are seeing right
now."

The greenback has climbed more than 8% this year as investors have
gravitated towards the safe haven on concerns about the Fed's ability to
tamp down inflation without causing a recession, along with worries about
slowing growth arising from the war in Ukraine and rising COVID-19 cases in
China.

Still, the dollar was choppy in the wake of the data as it retreated from
its session high and last fell 0.029% at 103.890, with the euro down 0.07%
to $1.052.

After the Fed raised its benchmark overnight interest rate by 50 basis
points last week, the largest hike in 22 years, investors have been
attempting to assess how aggressive the central bank will be. Expectations
are completely priced in for another hike of at least 50 basis points at the
central bank's June meeting, according to CME's FedWatch Tool.

Atlanta Fed President Raphael Bostic said on Wednesday that rising interest
rates on home mortgages, U.S. Treasury bonds and other credit instruments
show the central bank remains credible in its attempts to thwart rising
inflation.

Investors will get another look at inflation data on Thursday in the
producer price index for April, with expectations of a monthly increase of
0.5% versus the 1.4% jump in March. On an annual basis, expectations are for
a jump of 10.7% compared with the 11.2% surge the prior month.

The euro gained as European Central Bank has firmed up expectations that it
will raise its benchmark interest rate in July for the first time in more
than a decade to fight record-high inflation, with some policymakers even
hinting at further hikes after the first.

The Japanese yen strengthened 0.48% versus the greenback at 129.79 per
dollar, while sterling was last trading at $1.2258, down 0.52% on the day.

In cryptocurrencies, bitcoin last fell 3.88% to $29,797.31, after falling
below $30,000 for the first time since July on Tuesday.

Ethereum , last fell 6.79% to $2,168.69.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price moves higher after US inflation report

Gold climbed higher on Wednesday after hotter-than-expected US inflation
fueled expectations that the Federal Reserve will maintain a path of
aggressive interest-rate hikes.

Spot gold gained 0.8% to $1,853.84 per ounce by 12:20 p.m. ET, but is still
tracking lower on a weekly basis. US gold futures were 0.6% higher at
$1,851.60 per ounce.

According to Labor Department data released Wednesday, the core consumer
price index, which excludes food and energy, increased 0.6% from a month
earlier and 6.2% from April 2021, exceeding the median forecasts of
economists.

The broader CPI rose 0.3% from the prior month and 8.3% on an annual basis,
a slight cooling but still among the highest readings in decades.

Treasury yields spiked following the print, while the US dollar initially
rallied before giving up its gains.

"The market saw the print and went 'SELL, SELL, SELL.' But gold has since
bounced back with the thinking that the data is higher than expected, but
not horrifying," Tai Wong, an independent metals trader in New York, told
Reuters.

"The Fed won't get more hawkish with this report, but definitely won't ease
off either," Wong added.

"After investors digested the latest inflation report, the overall takeaway
is that it still won't change Fed policy over the short-term and considering
how bad gold has been beaten up over the past few weeks, prices appear to be
finding some support here," Ed Moya, senior market analyst at Oanda, wrote
in a Bloomberg note.

Bullion has been under pressure as the Fed tightened monetary policy to
fight accelerating consumer-price gains. That helped push bond yields higher
and has propelled a gauge of the US currency up around 6% since the end of
March, weighing on gold.

(With files from Bloomberg and Reuters)

INVESTORS DIARY 2022

Company

Event

Venue

Date & Time

Counters trading under cautionary

ART

Seed co Int.

Starafrica

Medtech

Turnall

Seed co

Invest Wisely!

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