Bulls n Bears Daily Market Commentary : 25 April 2023

Wed Apr 26 05:04:40 CAT 2023

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Bulls n Bears Daily Market Commentary : 25 April 2023

 <https://www.cloverleaf.co.zw/> 

ZSE commentary

The ZSE All Share index soared 877.43 points to close at 38,326.89 points. Trading in the positive: BRITISH AMERICAN TOBACCO LIMITED added $775.7500 to close at $5952.0000, HIPPO VALLEY ESTATES LIMITED increased by $66.9637 to $695.0000 and MASIMBA HOLDINGS LIMITED went up by $21.7500 to $166.7500. ECONET WIRELESS LIMITED added $13.9694 to close at $227.0754 whilst PROPLASTICS LIMITED traded $8.9642 higher at $118.9641. 

Losses were recorded in CFI HOLDINGS LIMITED which gave up $13.6607 to close at $663.4393, SEED CO LIMITED went down $9.4949 to $190.5051 and MEIKLES LIMITED  traded $2.5780 lower at $385.0842. DELTA CORPORATION LIMITED lost $1.0932 to $796.0129 and ZIMPLOW HOLDINGS LIMITED  decreased by $0.5000 to $36.0000.-zse

Global Currencies & Equity Markets

 <https://www.cloverleaf.co.zw/> 

South Africa

Rand takes a knock as recession worries loom

South Africa’s rand slipped this Tuesday against a slightly stronger dollar as lending data from the South African Reserve Bank (SARB) decreased for the third consecutive month.

Reuters reported that the central bank’s lending indicator for February is a leading indicator for the business cycle and decreased by 0.7% month on month.

The indicator collects data on vehicle sales, business confidence, money supply and other factors to gauge the outlook for the country.

On top of this, the dollar index, which measures the greenback against six rivals, was up roughly 0.1%, adding pressure to the rand.

The rand remains volatile and at the whim of the global economy, specifically decisions made by the US Federal Reserve.

According to Reuters, global investor sentiment has been cautious in a busy week for corporate earnings and economic data – combatting the risky rand.

Investec’s chief economist Annabel Bishop said that markets continue to worry that the US will fall into recession in the second half of this year as its interest rate hike cycle overshoots.

“With at least a two to three-quarter lag between interest rate changes and the impact on the economy, further, US hikes are entrenching recession concerns,” Bishop said.

Bishop reported that last week’s US Purchasing Managers’ Index (PMI) showed stronger demand conditions supported sharper growth in April but also brought renewed inflation momentum.

“Output rose at the sharpest pace for almost a year, as stronger demand conditions, improving supply, and a steeper uptick in new orders supported the expansion. … The increase in output was the third in as many months.”

“In the US, core CPI inflation (CPI excluding food and energy) rose to 5.6% y/y in the latest print, up from 5.5% y/y, obdurately high, and the PMI data raised some concerns it would further support Fed hawkishness. The core PCE deflator is due this week,” Bishop said.

Rand impacted by US uncertainty

Over the past year, South Africa’s rand weakness has been driven by increased uncertainty and downgrades to the global economic outlook.

Financial markets are factoring in almost a 100% chance of a 25bp hike in the US next week. At the same time, expectations of a recession are a lot lower, at 44%, according to NABE (National Association of Business Economics), said Bishop. Uncertainty is elevated.

Despite this, Bishop said that even if uncertainty is elevated, another sharp depreciation in the rand is not what is expected from financial models.

“With global risks, and particularly a meaningful chance of US recession factored in (although likely not fully), the rand remains at risk of further weakness but is not expected to lose another R4/USD over the next twelve months.”

US Recession

According to the National Association of Business Economics (NABE), the likelihood of a US recession has decreased from 54% in January to 44%.

Forbes’ recession tracker, however, shows that various data points are drifting into neutral territory, which could indicate a possible recession. Factors such as GDP growth, inflation rates, and unemployment rates are playing a crucial role in determining if a recession will occur.

While the US business cycle is expected to slow in the second half of 2023, it is uncertain whether it will lead to an NBER-defined recession. Global financial market risk perceptions will also impact the situation, said Bishop.

The rand is currently trading at:

R18.23/$

R20.12/€

R22.72/£

Nigeria

Dollar To Naira Exchange Rate For Today 25 April 2023

The exchange rate between the Naira and the US dollar according to the data released on the FMDQ Security Exchange the official forex trading portal showed that the Naira opened at ₦462.90 per dollar on Thursday, April 20, 2023, and closed at ₦463.67 per $1 on Thursday, April 20, 2023.

Even though the dollar opened in the parallel market for ₦737 per $1, the CBN does not recognise the parallel market, otherwise known as the black market. The apex bank has therefore directed anyone who requires forex to approach their bank, insisting that the I&E window is the only known exchange.

 <mailto:ibc at zitf.co.zw> 

Global Markets

US Dollar, Japanese Yen Rise as First Republic Bank Woes Spook Markets, Dow Jones Sinks

Risk Aversion Brings in Demand for the US Dollar and Japanese Yen

The anti-risk US Dollar and Japanese Yen outperformed their major counterparts on Tuesday amid a spike in financial market volatility as investors turned risk-averse and sought shelter. On Wall Street, the Dow Jones, S&P 500 and Nasdaq Composite sank -1%, -1.6%, and -1.9%, respectively. The VIX market ‘fear gauge’ surged 11.08%. Further gains might hint at breaking a stock sector diversification strategy.

Declines on Wall Street accelerated shortly in the aftermath of an earnings report from First Republic Bank (FRC). While beating expectations, the troubled regional bank reported deposits plunging 36% y/y. To help shore up assets, FRC announced that it is exploring a $100 billion asset sale. Still, investors did not take this news kindly, punishing the stock as the share price plunged almost 50%.

Virtually everything in markets over the past 24 hours screamed a classic risk-averse scenario. Traders flocked to the safety of Treasuries, bidding up prices as yields plunged. This dynamic held up gold prices despite a surging US Dollar. In the currency space, the sentiment-linked Australian and New Zealand Dollars underperformed against their major counterparts.

There was an increase in dovish Federal Reserve monetary policy expectations, but the interest-rate-sensitive tech sector plunged. In fact, a lot of the market reaction today was reminiscent of the early phase of a recession. In a somewhat upside twist, earnings from Microsoft and Alphabet surprised higher, alleviating volatility after the close.

Where does this leave the US Dollar and sentiment going forward? Risk aversion may continue brewing during Wednesday’s Asia-Pacific trading session. That may pressure regional indices, such as the Nikkei 225 and ASX 200. Such an outcome might continue supporting the US Dollar and to a certain extent, the Japanese Yen in the near term. AUD/USD will be awaiting an Australian CPI report.

US Dollar Technical Analysis

The DXY Dollar Index left behind another Bullish Engulfing candlestick pattern just above the critical 100.82 – 101.29 support zone. Once again, this continues to reinforce the February low, making this range a pivotal point for the US Dollar. Breaking higher could open the door to a bullish reversal. If not, turning lower opens the door to extending losses since late last year.-dailyfx

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold rises as traders hunker down for economic cues

Gold prices rose on Tuesday as steeply lower Treasury yields countered pressure from a stronger dollar, while investors awaited a slew of U.S. economic data due later this week that could sway the Federal Reserve's interest rate-hike stance.

Spot gold was up 0.35% to $1,996.12 per ounce, while U.S. gold futures settled 0.34% higher at $2,006.60.

The rival safe-haven dollar rose 0.5%, making bullion more expensive for buyers holding other currencies, while benchmark 10-year Treasury yields fell by their largest amount since March.

A weak U.S. consumer confidence report and lackluster manufacturing data fanned fears of economic slowdown, lowering the bets for a rate hike next week.

Markets now see a 73% chance of a 25-basis-point rate hike at the Fed's May 2-3 meeting.

Next on the radar is the quarterly gross domestic product data scheduled for Thursday followed by the reading on the core personal consumption expenditures (PCE) index, the Fed's favoured inflation gauge, on Friday.

"The Fed would do its best to try and hold rates higher in order to quell inflation but that likely means that it might be a constraint on the economy growing as quickly," said Everett Millman, chief market analyst at Gainesville Coins.

"No matter what decision they have to make, it's probably going to result in some type of stress, and that looming uncertainty is certainly what gold is going to be sensitive to."

While gold is considered a safe haven during economic uncertainties, higher interest rates dull appeal for zero-yield bullion.

Traders also took stock of U.S. Treasury Secretary Janet Yellen's warning that failure by Congress to raise the government's debt ceiling would trigger an "economic catastrophe" that would send interest rates higher for years to come.

Silver shed 0.8% to $24.9689 per ounce, platinum rose 0.54% to $1,087.8647 and palladium lost 2.93% to $1,490.3632.-CNBC

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Workers’ Day

May 1

Africa Day

May 25

Counters trading under cautionary

CBZH

TSL

Fidelity

Willdale

FMHL

ZBFH

GetBucks

Zimre

Seed Co

Invest Wisely!

Bulls n Bears 

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

(c) 2023 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:  <mailto:info at bulls.co.zw> bulls at bullszimbabwe.com Tel: +263 4 2927658 Cell: +263 77 344 1674

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