Bulls n Bears Daily Market Commentary : 23 May 2022

Tue May 24 05:42:43 CAT 2022

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Bulls n Bears Daily Market Commentary : 23 May 2022

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ZSE commentary

Mash Holdings anchors activity aggregates.

Mashonaland Holdings highlighted Monday's trading session as 20.29m shares
worth $81.17m exchanged hands. The shares represented 92.76% of the total
volumes that traded and 29.66% of the value outturn. Other notable value
drivers of the day were Econet, Delta and Innscor with a combined
contribution of 50.17% to the aggregate. Volume of shares traded ballooned
1415.52% to 21.88m as turnover jumped 77.04% to $274.58m. Banking group NMB
was the major casualty of the day having dipped 14.93% to end pegged at
$29.3500. TSL dropped 13.24% to settle at $85.0250 while, NTS trimmed 12.20%
to $12.0000. Property concern FMP came off 12.18% to $6.1348, as Zimplow
capped the top five shakers on a 8.49% retreat to $23.4261. Brick
manufacturers Willdale headlined the winners of the day on a 9.42% surge to
$2.8040, trailed by Mashonaland Holdings that advanced 5.82% to $4.0000. ART
followed on a 4.75% rise to $21.9970 while, retailer OKZIM grew 2.81% to
trade at $38.3217. Star Africa capped the top five gainers' list after
putting on 1.54% to $1.9513.

Fallers outweighed gainers by a count of five, leaving the market with a
negative breadth. The mainstream All Share Index and Industrial Index let go
a similar 0.29% to close at 20737.29pts and 68427.09pts respectively. The
Mid-Cap Index shed 2.61% to end pegged at 36391.87pts. Contrastingly, the
ZSE Top Ten Index went up 0.04% to settle at 13364.87pts as selected
blue-chip counters rebounded. The ETF family ended mixed as the Datvest ETF
added 0.65% to $2.1431 while, the Old Mutual ETF slipped 0.24% to $9.4815. A
total of 65,629 units worth $213,000.72 traded in the ETFs. The VFEX market
recorded no trades in the session.   EFE Securities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

Rand gets ratings boost

South Africa's rand traded firmer at R15.75 on Monday (23 May) after ratings
agency S&P Global upgraded the country's outlook from 'neutral' to
'positive' while keeping both the local and foreign currency ratings
unchanged, says financial services firm TreasuryOne.

The ratings agency cited South Africa's positive terms of trade as well as
fiscal discipline as reasons for the change in outlook.

"The rand is further being supported by a slightly softer dollar and firmer
commodity prices this morning. A (sustained) break below R15.75 is needed to
open up further strength toward R15.50 in the short term," TreasuryOne said.

"Headwinds for the rand lie in the current precarious state of the
electricity supply, the fresh flood damage in KZN, and fears of new
lockdowns in Beijing due to rising Covid cases."

This was echoed by Bianca Botes, director at Citadel Global, who noted that
the dollar is trading lower this morning as investors appear to be betting
against further dollar gains.

"Economic uncertainty remains the focal point for market participants, as
central banks wage war on inflation by hiking interest rates," she said.

Is the dollar done? 

Global asset manager Schroders argues that the freezing of Russia's foreign
exchange reserves could be partly responsible for the cooling of the
dollar's dominance as a reserve currency.

Last month the Russian government missed a payment on a Eurobond because
financial sanctions meant that it was unable to service its debt. Russia
managed to evade a default by making a payment shortly before a 30-day grace
period elapsed. It is believed Russia used some of its now limited foreign
exchange (FX) reserves to make this payment.

"Whereas Russia started the year with FX reserves sufficient to cover all of
its external debt tenfold - both public and private - sanctions imposed by
the US and its allies have rendered those assets useless," said David Rees,
senior emerging markets economist at Schroders.

"We recently argued that, outside of a handful of frontier markets, the near
term spillover from a Russia default and tighter global financial
conditions, in general, are manageable in the rest of the emerging world,"
said Rees.

Nigeria

Naira Slides To N610 Per Dollar At Parallel Market

THE nation's currency, Naira, slid to N610 to a dollar over the weekend at
the parallel market in Lagos and Abuja, thus widening the gap between the
official and parallel market exchange rates to N191. 

The exchange rate hovered between N600 and N605 to the dollar in other
cities such as Ibadan, Abeokuta and Benin City. 

The official rate at the Investors and Exporters window as of Friday was
419.02. Although the Central Bank of Nigeria (CBN) has relentlessly
campaigned against patronizing the parallel market operators, scarcity of
the greenback at the official channels often pushes those in need of dollars
to black market operators. 

According to bureau de change sources, the recent rise in the exchange rate
of dollar at the black market is due to heightened political activities as
the political parties will hold their primary elections this week. -NIGERIAN
TRIBUNE

 <mailto:info at bulls.co.zw> 

Global Markets

Euro climbs as ECB eyes rate hikes, dollar slides

(Reuters) - The dollar index fell on Monday while the euro rallied after the
European Central Bank indicated a move from negative interest rates, and
riskier currencies gained ground along with equities.

ECB President Christine Lagarde said in a blog post that the bank was likely
to lift the euro area deposit rate out of negative territory by the end of
September and could raise it further if it saw inflation stabilizing at 2%.
read more

After declining last week, U.S. equities followed European stocks higher on
Monday.

The euro's rally came as the dollar fell broadly after already selling off
last week. FRX

Investors had more appetite for riskier assets on Monday as they reacted to
Lagarde's comments and easing worries that a European recession was imminent
while the U.S. outlook looked less inspiring, according to Erik Nelson,
macro strategist at Wells Fargo, New York.

"We're seeing more optimism around global growth - European growth, Chinese
growth, UK growth, and a little bit less optimism about U.S. growth. So the
growth divergence theme is really a big thing and moving out of favor for
the dollar," Nelson said.

Fx market positions

The euro was the big gainer, last up 1.13% at $1.0687 , having risen as much
as 3.4% from its multi-year intraday low of $1.0349 on May 13.

The U.S. dollar index , which had hit a two-decade high of 105.01 on May 13,
was last down 0.82% at 102.09.

"Investors are still interested in the greenback, but foreign currency
pressure to the upside has created a little bit of a headwind for the U.S.
dollar," said JB Mackenzie, managing director of futures and forex at
Charles Schwab.

In particular, Mackenzie pointed to the euro's rise after the ECB indication
that it would become more hawkish.

"Everybody else has been hiking interest rates. The ECB has been the last
one to do that so that was what put pressure on the euro. Now all of a
sudden, you're starting to hear that they're going to be changing their
policy route," Mackenzie said.

Whether the dollar is taking a breather or keeps falling will depend on news
from the U.S. Federal Reserve, according to Mackenzie, who will be watching
closely for policy clues in minutes from the Fed meeting, due to be released
this week.

The greenback has already soared this year but with expectations for
repeated rate hikes already priced in, Wells Fargo's Nelson said it may
trade sideways for some time.

Last week speculators' net long positioning on the U.S. dollar slipped,
after hitting their highest level since late November in the previous week,
according to calculations by Reuters and U.S. Commodity Futures Trading
Commission data released on Friday.

The Australian dollar, which initially showed a muted reaction to the
victory for the center-left Labor Party in national elections at the
weekend, was up 0.77% at $0.7106 .

SWISS FRANC GAINS

Meanwhile the Swiss franc was gaining against the dollar after Swiss
National Bank governing board member Andrea Maechler said in an interview
published on Monday that the bank will tighten monetary policy if inflation
in Switzerland remains persistently high. The dollar was last down 0.89%
against the Swiss franc after hitting its lowest level since late April.
read more

Sentiment around China also helped riskier currencies. Shanghai is edging
out of a pandemic-related lockdown, and an unexpectedly big rate cut in
China last week reassured investors. Also China will broaden its tax credit
rebates, postpone social security payments and loan repayments, roll out new
investment projects and take other steps to support the economy, state
television quoted the Cabinet as saying on Monday.  

The yuan had its best week since late 2020 last week and in offshore markets
on Monday firmed to 6.704 per dollar , its strongest since early May.

Geopolitics are also in focus in Asia this week as U.S. President Joe Biden
tours the region. 

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Prices Today: Yellow metal to edge higher amid weak dollar and high
fuel prices; buy on dips

"A pullback can be seen so buying can be initiated at lower levels where
gold has resistance at Rs 51100 and support at Rs 50500. Silver has
resistance at Rs 62300 and support at Rs 60500," said Nirpendra Yadav,
Senior Commodity Research Analyst at Swastika Investmart.

Gold prices touched a more than one week high on Monday in international
markets as an easing dollar continued to support greenback-priced bullion
although higher US Treasury yields capped gains. Spot gold rose 0.2 percent
to $1,848.96 per ounce by 0201 GMT.

At 9:35am, gold contracts were up 0.3 percent at Rs 50,984 for 10 gram on
the Multi-Commodity Exchange (MCX) while silver added 0.49 percent at Rs
61,705 a kilogram.

Gold prices traded higher on Monday with spot gold prices at Comex trading
around half a percent up near $1854 per ounce. Gold prices continued upside
on weaker dollar which fell below 103 on Monday. Economic growth worries and
higher fuel prices may support yellow metal as inflation hedge, said Tapan
Patel, Senior Analyst (Commodities), HDFC Securities.

"We expect gold prices to trade up with Comex spot gold support at $1820 and
resistance at $1870 per ounce. MCX Gold June support lies at Rs 50600 and
resistance at Rs 51200 per 10 gram," he said.

Gold prices snapped a four-week losing trend, managing to close on a higher
note. Last week gold prices gained around two percent while silver prices
recovered around six percent from their lows amid a fall in the dollar index
and US bond yields. Last week, the dollar index witnessed a steep fall after
failing to sustain around the fresh 19 year high at 105. The index eased
more than two percent from recent highs and US 10-year bond yields also
cooled off and slipped below 2.80 percent. Bullion prices also got support
from weak US data. Unemployment claims rose again and existing home sales
and the Philly Fed manufacturing index disappointed.

This week investors' focus will remain on the release of the Fed Open Market
Committee (FOMC) report, which is due on Friday. Gold has support at
$1832-1820 while resistance is at $1858-1870. Silver has support at
$21.48-21.20 while resistance is at $22.10-22.38. In rupee terms gold has
support at Rs 50,640-50,410 while resistance is at Rs51,140-51,350. Silver
has support at Rs 61,010-60,750 while resistance is at Rs 62,350-62,610.

Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart

Due to continued selling pressure in global stock markets, investors have
turned towards precious metals. Gold and silver have registered an increase
after a month of continuous decline. The dollar has retreated from
two-decade highs and rising concerns over US economic growth have turned
investors to safe-haven assets. However, the US Federal Reserve's aggressive
rate hikes and balance sheet cuts will still offer major resistance to
gold's bullishness. The cut in the five-year loan prime rate by the People's
Bank of China has supported the prices of industrial metals and crude oil,
which has also boosted the prices of the precious metals last week.

On MCX, a pullback can be seen so buying can be initiated at lower levels
where gold has resistance at Rs 51100 and support at Rs 50500. Silver has
resistance at Rs 62300 and support at Rs 60500.

Amit Khare, AVP- Research Commodities, Ganganagar Commodity

Gold and silver prices showed mixed movement on May 20 on the
Multi-Commodity Exchange (MCX); June gold contracts closed up by 0.56
percent at Rs 50,829 for 10 grams. July contract Silver futures closed at Rs
61,407 a kilogram, down 0.26 percent. As per technical chart, gold and
silver are making bottom and we can see a huge short covering rally in the
coming future; momentum indicator RSI is also indicating the same on the
hourly as well as daily chart. Traders are advised to create fresh buy
positions near given support levels and should focus on important technical
levels.

June Gold closing price Rs 50829, Support 1 - Rs 50700, Support 2 - Rs
50500, Resistance 1 - Rs 51000, Resistance 2 - Rs 51250.

July Silver closing price Rs 61407, Support 1 - Rs 61000, Support 2 - Rs
60600, Resistance 1 - Rs 62000, Resistance 2 - Rs 62500.

Weak dollar, China demand hopes lift copper to over 2-week high

Copper prices rose to a more than two-week high on Monday, helped by a
weaker U.S. dollar and as support measures and plans to end COVID-19
lockdowns in top metals consumer China lifted hopes for a recovery in
demand.

Benchmark three-month copper CMCU3 on the London Metal Exchange (LME) was up
0.8% at $9,497.50 a tonne, as of 0711 GMT, after hitting its highest since
May 5 at $9,532 in early Asian trade.

The most-active June copper contract on the Shanghai Futures Exchange SCFcv1
ended daytime trading up 0.4% at 72,050 yuan ($10,813.77) a tonne, after
touching its highest since May 6.

"Larger than expected China rate-cut is targeted at stimulating the property
sector, which will provide a short-term bounce," said Stephen Innes,
managing partner at SPI Asset Management.

"Last week, everyone turned worried about stagflation and commodities are
not immune to that cyclical slowdown. So, we could be seeing short covering
or some re-entering on China demand."

Shanghai, in its seventh week of lockdown, has been slowly allowing more
people to leave their homes in recent days and plans to lift its city-wide
lockdown and return to more normal life from June 1.

China cut its benchmark reference rate for mortgages by an unexpectedly wide
margin on Friday, as Beijing seeks to revive the ailing housing sector to
prop up the economy.

DOLLAR: The dollar USD= fell to 0.2% to a near two-week low hit last week,
making greenback-denominated metals less expensive for buyers using other
currencies.

COLUMN-Another year of lead surplus but not for everybody: Andy Home

IRONORE: India raised export duties for iron ore and steel intermediates,
sending benchmark iron ore futures in China up about 7% on Monday.

COPPER: Operations have been suspended at Khoemacau Zone 5 copper and silver
mine in Botswana after an underground accident killed two people on Friday.

Inventories: Copper inventories in warehouses monitored by the Shanghai
Futures Exchange fell 1.7% from a week ago, the exchange said on Friday.

OTHER METALS: LME aluminium CMAL3 gained 1.5% to $2,989.50 a tonne, zinc
CMZN3 rose 0.8% to $3,737, nickel CMNI3 slipped 1.7% to $27,505, lead CMPB3
climbed 1% to $2,180.50, while tin CMSN3 eased 0.1% to $34,620.

Shanghai aluminium SAFcv1 added 0.7%, zinc SZNcv1 fell 1.1%, nickel SNIcv1
slipped 1%, lead SPBcv1 gained 1%, while tin SSNcv1 eased 0.5%.

Source: Reuters

.

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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