Bulls n Bears Daily Market Commentary : 19 September 2022

Tue Sep 20 07:26:05 CAT 2022

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Bulls n Bears Daily Market Commentary : 19 September 2022

 <mailto:info at bulls.co.zw> 

ZSE commentary

ZSE retreats further in new week.

The market commenced a new week in losses as twenty -one bears charged on
five bulls to record a negative breadth of sixteen. The Blue-Chip Index
suffered the heaviest knock of 5.21% to end at 5410.90pts while, the
mainstream All Share Index trimmed 3.78% to 9982.48pts. The Mid-Cap Index
shed 1.31% to 25505.83pts while, the ZSE  griculture Index let go 1.04% to
64.73pts. Proplastics was the top laggard of the day after dropping 14.99%
to close at $15.9500. Trailing was cable manufacturers Cafca that dipped
14.85% to $166.0500 as conglomerate Innscor plunged 14.84% to settle at
$166.1603. Fast foods group Simbisa tumbled 14.20% to $99.8707. Axia held
the fifth position on the fallers' table as it retreated 12.96% to $23.2724.
Agriculture concern Ariston headlined the risers' pack on a 6.67% uplift to
close at $3.2000 while, brick manufacturer Willdale improved 5.27% to
$1.8417. Zimre Holdings Limited put on 4.42% to trade at $4.0000 while,
banking group First Capital rose 2.93% to $8.2303. Apparel retailer
Truworths completed the winners of the day on a 0.13% loss to $1.9575.

Volumes traded surged 53.63% to 3.65m shares as Delta and Axia anchored the
aggregate with respective contributions of 37.32% and 27.37%. Turnover
garnered 75.63% to $279.16m as Delta and Innscor claimed a combined 77.61%
of the outturn. Nickel miner Bindura traded 10,543 shares at a stable price
of USD$0.0307. The ETFs traded mixed in the session as the duo of Cass
Saddle and MIZ gained 0.56% and 0.09% to close at $1.7900 and $1.2111
apiece. The Old Mutual ETF slumped 7.64% to $3.7095 while, Datvest MCS lost
3.11% to close at $1.4034. Morgan & Co MCS was down 0.21% at
$26.5000.efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

Rand eyes R18.00 to the dollar as load shedding and rate uncertainty bite

The rand has come under immense pressure on Monday (19 September) as the
country feels the pressure of stage 6 load shedding, and markets look ahead
to interest rate hikes from major central banks.

TreasuryOne noted on Monday that the power crisis in South Africa has
continued to worsen, with Eskom warning of "the risk of an unprecedented
level of power outages," which will likely weigh on the local currency in
the week ahead.

Nedbank economists, meanwhile, said that the intensification of power cuts
late in the week pushed the local currency to its weakest level against the
US dollar since August 2020.

However, despite the impact of load shedding, the local currency is still
being led by movements in major markets of the US and UK.

Nedbank said that the rand has been particularly hurt by global headwinds -
with emerging market currencies dragged lower by US inflation data released
on Wednesday (14 September), which pointed toward the US Federal Reserve
hiking its policy interest rate aggressively at this week's meeting.

"This week all eyes will be on US Fed's policy meeting on Tuesday and
Wednesday. The Fed has maintained its hawkish rhetoric over the past few
weeks, with Chair, Jerome Powell, stating that the Fed is moving its policy
stance purposefully to a level that will be sufficiently restrictive to move
inflation to its 2% target," Nedbank said.

The Fed is widely expected to hike interest rates by 75 bps on Wednesday.
Meanwhile, The Bank of England will also hold its monetary policy meeting
this week - given the upside risks to inflation, it is also expected to hike
by 75 bps.

This view was echoed by Investec chief economist Isabelle Bishop, who said
the rand is eyeing R18.00 to the dollar, feeding off this negative
sentiment.

"Financial markets have started to factor in more than a 75bp hike in the
US, which has negatively affected risk sentiment, causing the rand to weaken
towards R18.00/USD on substantial US dollar strength, with the dollar
breaching parity with the euro already in August," she said.

Markets are increasingly concerned that the Fed's tone may become even more
hawkish, with the outside chance of a 100bp hike feared, she said.

"The US monetary policy decision.will lead the decision for South Africa's
interest rates at the Monetary Policy Committee meeting on 22nd September.
South Africa is not expected to hike by more than the US, and this adds to
rand weakness too."

Bishop said that the coming Fed meeting would be key in determining the
market going forward, as markets were hoping that the fourth quarter would
begin seeing lower US rate hike moves.

"However, global financial markets are starting to re-evaluate their
expectations, causing uncertainty to rise, negatively affecting risk assets
as risk aversion increases. Volatility in emerging market currencies has
increased over last week."

A reduction in Fed hawkishness would reduce the risk-off environment
somewhat, Bishop said, while more hawkish communications would increase risk
aversion and cause risk assets to weaken further.

On Monday the rand was trading at the following levels against major
currencies:

ZAR/USD: R17.77

ZAR/EUR: R17.75

ZAR/GBP: R20.22

Nigeria

Naira down 0.06%, exchanges at 436.50 to dollar

The figure represents a depreciation of 0.06 per cent compared with N436.25
to the dollar at the close of business on September 16.

The open indicative rate closed at N434.38 to the dollar on Monday.

An exchange rate of N437.10 to the dollar was the highest rate recorded
within the day's trading before it settled at N436.50.

The Naira sold for as low as N434 to the dollar within the day's trading.

A total of 41.02 million dollars was traded at the official Investors and
Exporters window on Monday.

(NAN)

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar firm as markets brace for another big Fed rate hike

The dollar remained firm below a two-decade high versus major peers on
Tuesday, as investors braced for the Federal Reserve to continue its
aggressive interest-rate-hiking campaign to rein in overheated inflation.

The dollar index, which measures the greenback against six counterparts, was
little changed at 109.53, stable for the moment after pulling back from as
high as 110.79 earlier this month, a level not seen since June 2002.

The two-year U.S. Treasury yield, which is extremely sensitive to policy
expectations, rose as high as 3.970% overnight for the first time since
November 2007. The 10-year yield reached a high of 3.518%, a level not seen
since April 2011.

Investors have fully priced another 75 basis point bump by the Federal Open
Market Committee for Wednesday, and lay 19% odds for a super-sized full
percentage point increase.

While still elevated, those bets have come down from around 38% on
Wednesday, when they were shocked higher by a surprise acceleration in U.S.
consumer prices for August.

The dollar eased 0.15% to 142.96 yen, continuing a week-long consolidation
following two attempts at 145 this month that took it as high as 144.99 on
Sept. 7 for the first time in 24 years. The dollar-yen currency pair tends
to track the long-term yield spread between U.S. and Japanese government
bonds.

The Bank of Japan decides policy on Thursday, and is widely expected to keep
its ultra-easy stimulus settings unchanged. They include pinning the 10-year
yield near zero.

"We have to see the FOMC," said Tohru Sasaki, a strategist at J.P. Morgan in
Tokyo.

"Dollar-yen will eventually break above 145, but the speed depends on how
hawkish the Fed is, and developments in interest rate differentials."

The euro was little changed at $1.0030, after grinding slowly higher over
the past week and strengthening its position above parity. It dropped as low
as $0.9864 on Sept. 6 for the first time in two decades.

Sterling was flat at $1.14295, finding its feet after a drop to a 37-year
low of $1.13510 at the end of last week.

The Bank of England will decide policy on Thursday. Investors are split over
whether a 50 or 75 basis point hike is on the way.

The risk-sensitive Australian dollar slipped 0.07% to $0.6722 and the New
Zealand dollar fell 0.23% to $0.59435.

Bitcoin eased 0.48% to $19,445, after swinging between a two-month low of
$18,540 and a 3 1/2-week high of $22,781 over the past two weeks.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price slips as Fed fears swirl before Powell's decision day

Gold slipped as investors brace for a Federal Reserve interest-rates
decision that risks putting more pressure on the precious metal. Uncertainty
over the Fed's move is leaving gold traders unsure themselves as to where
bullion will go.

The metal slid as much as 0.9% Monday, reversing earlier gains, to extend
September's slump in the face of the dollar's gains. The decline comes after
Thursday saw gold sink to its lowest price since 2020. Market expectations
are for the Fed to raise interest rates by 75 basis points, though last
week's hot inflation data prompted some traders to bet on an even larger
hike.

"If they aren't as hawkish, you're gonna see gold prices rebound back from
its flow," Phil Streible, chief market strategist at Blue Line Futures, said
in an interview. "On any kind of softer tone in Jerome Powell's press
conference, you could see gold futures rise on that."

Bullion has slumped this year as the Fed's aggressive monetary policy
undermines non-interest bearing assets while boosting the dollar. Meanwhile,
the European Central Bank is also expected to continue lifting rates in
October and beyond, said Bundesbank President Joachim Nagel. London's gold
market is closed Monday due to the state funeral of Queen Elizabeth II,
which will likely reduce liquidity.

Investors have slashed bullish bets, with hedge funds trading the Comex
flipping to a net-short position last week, according to data from the
Commodity Futures Trading Commission.

Spot gold fell 0.2% to $1,672.87 an ounce at 11:54 a.m. in New York. The
Bloomberg Dollar Spot Index rose 0.1%. Spot silver fell 1.1% while platinum
and palladium rose.

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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