Bulls n Bears Daily Market Commentary : 06 December 2023

Thu Dec 7 06:25:21 CAT 2023

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Bulls n Bears Daily Market Commentary : 06 December 2023

ZSE commentary

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

ZSE eke out gains in midweek session…

The ZSE eked out gains in midweek session as the mainstream All Share Index put on 0.20% to close at 191,561.61pts. The Mid Cap Index rose 0.83% to end at 849,516.12pts. Contrastingly, the ZSE Top Ten Index retreated 0.12% to 81,196.19pts and the ZSE Agriculture Index trimmed 0.13% to 602.72pts. Cable manufacturer Cafca surged 15.00% to $2,530.0000 while, Fidelity Life garnered 13.53% to $235.0000. Zimre holdings charged 12.50% to $180.0000 while, banking group CBZ jumped 5.30% to $2,096.5000 post announcement of executive changes in the group. Zimpapers capped the top five positive movers of the day on a 4.50% rise to $28.0000. On the downside was FBC that dipped 5.28% to $956.7059 while, retailer OKZIM shed 1.17% to $195.0228. Tea company Tanganda slid 0.81% to $950.0000 while, Delta lost 0.54% to $3,508.9445. Telecoms giant Econet tripped 0.49% to close the session at $723.1091.

Volume of shares traded dropped 21.65% to 1.40m while, turnover soared 71.26% to $1.26bn. Volume drivers of the day were OKZIM (30.17%), Delta (19.17%), FBC (17.41%), Star Africa (14.39%) and Ecocash (12.63%). Delta and FBC anchored the value aggregate on respective contributions of 72.03% and 17.84%. The Old Mutual ETF improved 8.64% to $34.4957 while, Morgan and Co MCS fell 1.25% to $483.8795. Morgan & Co MIZ ETF was stable at $9.5000 on 900 units. The Old Mutual ETF claimed 92.63% of the volume aggregate and 73.15% of the value aggregate. The Tigere REIT was 0.20% weaker at $299.4066 as 85,771 units exchanged hands.-efe

Global Currencies & Equity Markets

South Africa

South African rand gains on bets Fed rate cut coming

(Reuters) - The South African rand firmed on Wednesday after subdued U.S. labour data boosted bets that the Federal Reserve was done hiking interest rates and might start easing its monetary policy early next year.

At 1500 GMT, the rand traded at 18.8425 against the dollar , around 0.7% stronger than its previous close.

The dollar was little changed against a basket of global currencies.

Jobs figures out of the U.S. were below market estimates on Tuesday, "raising the prospect of a Fed rate cut in March next year," said Andre Cilliers, currency strategist at TreasuryONE.

Like other risk-sensitive currencies, the rand often takes cues from global drivers like U.S. monetary policy in the absence of local data points.

The rand breached 19.00 on Tuesday after South Africa's third-quarter gross domestic product data showed a slightly bigger than expected contraction.

"The local currency will remain susceptible to any stronger moves in the Dollar and will likely trade on the back foot in the short term," Cilliers added.

Investor focus will turn towards monthly reserves data and third-quarter current account figures due to be published by the South African Reserve Bank on Thursday.

On the Johannesburg Stock Exchange, the blue-chip Top-40 index (.JTOPI) closed over 0.2% higher.

South Africa's benchmark 2030 government bond was stronger, the yield down 3 basis points at 9.980%.

Nigeria

Naira strengthens at official market, stable on parallel window

Nigeria’s Naira strengthened to N806. 73 to the dollar at the official foreign exchange (FX) market on Tuesday, as against N837.77 to the greenback which it closed at, on Monday.

Dealers said the local currency’s appreciation followed a moderation in dollar demand at the official foreign exchange market.

At the close of trading on Monday, the dollar was quoted at N837.77, stronger than N927.19 quoted on Friday at the Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ indicated.

Related Posts2024 budget: Strengthen Naira, fix moribund refineries, block leakages — Reps task TinubuSpeaker Abbas urges more investments in health sector to save Naira Naira stabilizes at N1,030/$ two days after slide at parallel market

Willing buyers and willing sellers quoted dollars at a bid rate of N1,021, stronger than N1,160/$1 offered on Friday as the higher bid rate on the spot trading. The lower bid rate remained steady at N701 per dollar on the spot.

Dollar supply decreased on Monday as the daily foreign exchange market turnover dropped by 32.87 percent to $73.93 million from $110.14 million recorded on Friday.

Similarly, the naira recorded a day stability on Tuesday as it closed at N1, 165 to the US dollar, the same rate exchanged on Monday.

In a note to clients, Afrinvest (West) Africa Limited, and investment banking and research firm, observed that Continued foreign exchange (FX) demand–supply imbalance pressured the CBN foreign reserves to shed 1.1 percent month (m/m) in November to close at US$33.0 billion.

Meanwhile, in the currency market segment, the naira witnessed a divergent outing in the NAFEM and parallel market segments.

At the NAFEM segment, the price currency (Naira) weakened 2.1 percent when compared on month-on-month basis against the base currency (US$) to ₦832.32/$1.00 at the end of November.

In the parallel market, the Naira appreciated against the US$ by 0.9 percent m/m to N1150.00/$1.00.

Looking ahead, the Naira is likely to trade within a similar band across FX segments barring any significant changes in market’s liquidity.

Also, in its equity research note, FSDH research acknowledged the recent pickup in activities at the NAFEM following increasingly attractive interest rates in the money market, which could entice trade investors to bring investments into Nigeria.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar at 2-week high, euro softer as market bets on rate cuts

(Reuters) - The U.S. dollar was at a two-week high on Wednesday, while the euro was weak across the board as markets ramped up bets that the European Central Bank (ECB) will cut interest rates as early as March.

Although markets are still pricing at least 125 basis points of interest rate cuts from the U.S. Federal Reserve next year, the dollar was able to hold steady as rate cut bets for other central banks intensified.

The dollar index , which measures the currency against six other majors, was last up 0.19% at 104.16. The euro was down 0.29% to $1.0764.

Traders are betting that there is around an 85% chance that the ECB cuts interest rates at the March meeting, with almost 150 basis points worth of cuts priced by the end of next year. Influential ECB policymaker Isabel Schnabel on Tuesday told Reuters that further interest rate hikes could be taken off the table given a "remarkable" fall in inflation.

The euro also touched a three-month low against the pound , a five-week low versus the yen and a 6-1/2 week low against the Swiss franc .

"It's a reasonably sized sell-off and the market is trying to digest, is it just a correction? Did the market get over-exuberant in the previous weeks? I think there is definitely an element of that," said Amo Sahota, director at FX consulting firm Klarity FX in San Francisco.

'A BIT OVERBOARD'

The ECB will set interest rates on Thursday next week and is all but certain to leave them at the current record high of 4%. The Fed and Bank of England are also likely to hold rates steady next Wednesday and Thursday respectively.

The Bank of Canada on Wednesday held its key overnight rate at 5% and, in contrast to its peers, left the door open to another hike, saying it was still concerned about inflation.

Traders have priced around a 60% chance of the U.S. central bank cutting rates in March, according to CME's FedWatch tool.

"Markets have aggressively priced in rate cuts, without any kind of confirmation from central banks," said Adam Button, chief currency analyst at ForexLive in Toronto. "As December continues, we need either a change in tune from central bankers or a repricing in markets."

If the Fed were to cut rates as markets expect, it could result in the dollar loosening its grip on other G10 currencies next year, dimming the outlook for the greenback, according to a Reuters poll of foreign exchange strategists.

The spotlight in Asia was on China, as markets grappled with rating agency Moody's cut to the Asian giant's credit outlook.

The offshore Chinese yuan was flat at $7.1728 per dollar, a day after Moody's cut China's credit outlook to "negative".

China's major state-owned banks stepped up U.S. dollar selling forcefully after the Moody's statement on Tuesday, and they continued to sell the greenback on Wednesday morning, Reuters reported.

Elsewhere in Asia, the Japanese yen weakened 0.15% versus the greenback at 147.38 per dollar. The Australian dollar fell 0.02% to $0.65495.

In cryptocurrencies, bitcoin eased 0.06% to $44,049, still near its highest since April 2022.

The world's largest cryptocurrency has gained 150% this year, fueled in part by optimism that a U.S. regulator will soon approve exchange-traded spot bitcoin funds (ETFs).

Reporting by Hannah Lang in Washington; additional reporting by Samuel Indyk in London and Ankur Banerjee in Singapore; Editing by Christina Fincher, Mark Potter and Diane Craft.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold firms as spotlight shifts to US jobs print

(Reuters) - Gold firmed on Wednesday as Treasury yields eased, stabilizing after a rapid retreat from a record high hit earlier this week, while investors braced for the U.S. jobs report for further clues on how soon interest rate cuts may materialize.

Spot gold rose 0.4% to $2,027.48 per ounce by 3:10 p.m. ET (2010 GMT). U.S. gold futures settled 0.6% higher at $2,047.90.

Benchmark 10-year Treasury yields hit a more than three-month low.

Gold scaled an all-time peak of $2,135.40 on Monday on elevated bets for a Fed cut, before dropping more than $100 on uncertainty over the timing of the reductions.

Reuters Graphics

Further direction could come from the U.S. non-farm payrolls data due on Friday, coming ahead of the U.S. central bank's policy meeting next week.

"Gold and silver traders are sitting on a tinderbox, and this payroll Friday could spark the flames ... While we expect macro headwinds to weigh on precious metals short positions in the medium term, the current set-up is ripe for a squeeze," analysts at TD Securities said in a note.

Traders are pricing in about a 60% chance of a rate cut by March next year, CME's FedWatch Tool showed.

Safe-haven inflows driven by wars in Ukraine and the Middle East, coupled with the rate cut bets, have driven a more than 10% rise in bullion prices. Lower interest rates make zero-yield gold more attractive than competing assets such as bonds and the dollar.

Anticipation of monetary easing is the biggest driver of gold now and prices should move higher into next year, said Daniel Pavilonis, senior market strategist at RJO Futures.

"Geopolitics can play an important role in moving gold up, for the remainder of this year and next year."

Silver fell 0.9% to $23.92 per ounce, while platinum dropped 1% to $890.35, both down for a third straight session.

Palladium climbed 1.3% to $946.31, snapping a six-session losing streak from last session's five-year low.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Counters trading under cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

ZBFH

Invest Wisely!

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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.

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