Bulls n Bears Daily Market Commentary : 02 November 2022

Thu Nov 3 04:15:27 CAT 2022

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Bulls n Bears Daily Market Commentary : 02 November 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

ZSE records slight gains.

The market recorded negligible gains in the mid-week session as the primary
All Share Index added 0.10% to 15204.84pts while, the Blue-Chip Index
improved a mere 0.001757% to 8945.57pts. The ZSE-Agriculture Index dropped
0.015% to 76.45pts as the Mid-Cap Index advanced by 0.37% to  3659.56pts.
Banking group First Capital headlined the winners of the day on a 12.96%
jump to $10.5500, followed by Masimba Holdings that rose 4.00% to settle at
$78.0000. Packaging group Nampak rallied 1.38% to $8.8200 as hotelier RTG
grew 0.83% to $8.0667. Capping the top five gainers' list was NMBZ with a
0.64% lift to $24.1538. Zimbabwe Newspapers led the laggards of the day on a
11.30% slump to close at $2.6611 while, Mashonaland Holdings declined 3.52%
to $7.7188. Clothing retailer Edgars slipped 1.32% to $7.5000 as African Sun
trimmed 1.25% to close at $25.6659. Axia completed the top five losers of
the day on a 1.14% fall to end pegged at $81.0078. The market closed with a
negative breadth of two as eleven counters lost ground against nine that
advanced.

Activity aggregates were depressed in the session as volumes succumbed
44.90% to 1.02m while, turnover retreated  50.72% to $129.82m. The top
volume drivers of the day were Axia, Econet, Delta and Simbisa which
contributed a combined 81.49% of the aggregate. Delta, Simbisa, Axia and
Econet Wireless anchored the value aggregate with respective contributions
of 26.54%, 23.17%, 21.58% and 14.85%. Foreigners were net sellers in the
session as they amounted to $9.57m with nil purchases recorded. Morgan and
Co MCS ETF inched up 3.14% to settle at $21.6585 while, Old Mutual ETF
advanced 2.00% to $5.3219. In the same vein, the Datvest ETF rose 0.10% to
$1.750. Contrastingly, MIZ ETF slipped 7.02% to $1.0600. On the VFEX market,
Bindura and Padenga lost 1.64% and 2.63% apiece. SeedCo International was
stable at USD$0.3500 as 10,184 shares exchanged hands..-efesecurities

Global Currencies & Equity Markets

Nigeria

Naira falls to N855 per dollar 

Despite the Economic and Financial Crimes officials' crackdown on Bureau D
Change operators in Abuja on Tuesday, the value of Nigeria's naira
deteriorated further against the dollar at the parallel market. 

The naira traded at N855 per dollar as of Wednesday afternoon, Peoples
Gazette reports.

The naira's free fall could reach N1,000 per dollar in a matter of weeks
despite government's frantic jackboot interventions, analysts say.

In 2021, the CBN prohibited the sale of foreign exchange to BDC operators in
a bid to arrest the fast fall of the country's currency. The apex bank had
accused the BDCs of unauthorised sales of foreign exchange above the market
they were authorised to serve.

On Tuesday, the Economic and Financial Crimes Commission raided the offices
of black-market currency dealers in Abuja, arresting BDC merchants in an
attempt to halt the country's currency's ongoing depreciation.

The raid came barely a week after the Godwin Emefiele-led apex bank
announced plans to redesign the naira, giving Nigerians till January 31,
2023, to return their old currencies to the bank's vault.

However, experts have anticipated that politicians will overwhelm BDC
operators with the old currencies that they have accumulated at home in an
effort to avoid direct transactions with the bank, which will increase
demand for dollars.

The dollar has continued to rise since the apex bank announced plans to
redesign the naira.

South Africa

South African rand strengthens ahead of Fed decision

JOHANNESBURG: South Africa's rand strengthened in early trade on Wednesday,
as investors await the US Federal Reserve's policy decision later in the day
that could give clues on future interest rate hikes.

At 0642 GMT, the risk-sensitive rand traded at 18.1550 against the dollar,
0.25% stronger than its previous close.

The dollar index, which measures the greenback against six rivals, was last
down 0.12% at 111.35.

Markets widely expect the Fed to raise its benchmark overnight interest rate
by 75 basis points but the focus will be on its commentary on inflation and
any clues on the pace of future rate hikes.

"The Fed will hike by a further 75bp today and will signal more to come, but
probably at a slower pace," ETM Analytics said in a research note.

South African rand weakens as Fed decision looms

The South African government's benchmark 2030 bond was stronger in early
deals, with the yield down 4 basis points to 10.770%.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar slips after Fed seen tilting dovish following statement

The dollar slid broadly against major currencies on Wednesday after the
Federal Reserve signaled that future interest rate increases to battle high
inflation could be made in smaller increments.

The Fed, as expected, raised its key lending rate by 75 basis points for the
fourth straight time at the end of its two-day policy meeting on Wednesday.

The U.S. central bank acknowledged in a statement the debate around its
policy tightening, its impact on the U.S. and world economies, and the
danger that more large rate hikes could stress the financial system or
trigger a recession.

"The market has interpreted this as a dovish statement," said Marc Chandler,
chief market strategist at Bannockburn Global Forex.

"Instead of hiking 75, this reaffirms the market's idea the Fed will slow
down the hikes to 50 basis points" when it meets in December, he said.

The euro was 0.54 % higher against the dollar at $ 0.9927 , while against
the Japanese yen, the dollar fell 1.2 % to 146.405 yen.

The Fed's battle against inflation running at four-decade highs has
unleashed the most aggressive hiking campaign in more than a decade.

"What a world we live in when a 50-basis-point hike is somehow dovish,"
Chandler said.

Future markets kept bets high that the Fed might still hike rates by more
than 50 basis points in December as key reports on the labor market and the
consumer price index could change the outlook.

Fed funds futures priced in a 98.4% probability that the Fed will raise
rates by 75 basis points when it meets Dec. 13-14, a hike that would lift
its policy rate to a range of 4.50%-4.75%.

Growing expectations that the Fed would dial down the aggressiveness of its
rate hikes have weighed on the dollar in recent weeks.

The dollar's long rally

Sterling was little changed on the day at $1.1525, ahead of a policy
decision on Thursday by the Bank of England, which is also expected to
announce a 75-basis-point rate increase.

The yen has slipped about 22% against the dollar this year, leading traders
to be on alert for a possible intervention.

Japanese authorities are widely considered to have intervened in FX markets
several times since September to pull the yen back from 32-year lows.

Japan's currency interventions have been stealth operations in order to
maximize the effects of its forays into the market, Finance Minister
Shunichi Suzuki said on Tuesday, after the government spent a record $43
billion supporting the yen last month.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices move near session highs as Federal Reserve raises interest rates
75 basis points

(Kitco News) - The gold market is seeing some new buying momentum as the
Federal Reserve looks to slightly adjust its aggressive monetary policy
stance.

In a widely anticipated move, the Federal Reserve raised its Fed Funds rate
by 75 basis points. This is the fourth consecutive supersized rate hike this
year. While the central bank remains focused on bringing inflation down, it
does appear to be adjusting its stance.

"The Committee anticipates that ongoing increases in the target range will
be appropriate in order to attain a stance of monetary policy that is
sufficiently restrictive to return inflation to 2 percent over time. In
determining the pace of future increases in the target range, the Committee
will take into account the cumulative tightening of monetary policy, the
lags with which monetary policy affects economic activity and inflation, and
economic and financial developments.

Analysts and economists expected the Federal Reserve to signal a slowdown in
its tightening cycle in December and through the early part of 2023.

December gold futures last traded at $1,661.70 an ounce, up 0.77% on the
day. "The market read that statement as leaning less hawkish on U.S.
monetary policy going forward," said Jim Wyckoff, senior technical analyst
at Kitco.com.

Katherine Judge, senior economist at CIBC, said that the more nuanced
messaging in the statement gives the central bank a platform to slow the
pace of rate hikes. However, she added that terminal rate expectations
remain in place.

"Today's statement is still consistent with the median dot plot projections
released back in September, which showed rates reaching 4.25-4.50% by year
end (i.e. a further 50bp hike in December), and between 4.50-4.75% next
year," she said in a note. "Our own forecast doesn't include that final 25bp
hike in 2023, as we expect to see evidence that GDP and employment growth is
slowing more than the Fed previously anticipated by then."

Some economists note that the Federal Reserve still sees resilient strength
and high inflation in the economy. The Fed reiterated its stance that it is
committed to brining inflation back down to its 2% objective.

"Recent indicators point to modest growth in spending and production. Job
gains have been robust in recent months, and the unemployment rate has
remained low. Inflation remains elevated, reflecting supply and demand
imbalances related to the pandemic, higher food and energy prices, and
broader price pressures," the statement said. "The Committee is highly
attentive to inflation risks."

Paul Ashworth, Chief North America Economist at Capital Economics, said that
with interest rates in restrictive territory the U.S. central bank has room
to slow the pace of its tightening.

"Barring another upside inflation surprise in the October and November CPI
reports, which we can't completely rule out, it looks like the Fed is laying
the groundwork to shift down to a 50bp hike in December and, if we're right
that core inflation will start to show signs of slowing soon, a 25bp rate
hike at the January meeting next year," he said.

INVESTORS DIARY 2022

Company

Event

Venue

Date & Time

National Unity Day

December 22

Christmas Day

December 25

Boxing Day

December 26

Counters trading under cautionary

CBZH

Meikles

Fidelity

TSL

FMHL

Turnall

GBH

ZBFH

GetBucks

Zeco

Lafarge

Zimre

Invest Wisely!

Bulls n Bears 

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