Bulls n Bears Daily Market Commentary : 18 December 2023

Tue Dec 19 07:23:01 CAT 2023

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Bulls n Bears Daily Market Commentary : 18 December 2023

ZSE commentary

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

Weakening demand drags down the ZSE.

Waning demand seen across the board continued to drag down the ZSE to see
the primary All Share Index declining a further 2.77% to 187,499.78pts
while, the Blue-Chip Index succumbed 3.65% to 77,127.43pts. The Agriculture
Index lost 1.62% to 593.82pts as the Mid Cap Index fell 1.15% to
879,725.55pts. Milk processor Dairibord led the laggards of the day on a
15.00% drop to $530.40000, followed by banking group FBC that eased 14.89%
to close at $788.0000. Hotelier, Meikles retreated 10.87% to $1,158.7209
while, brick manufacturer Willdale Limited slipped 10.82% to settle at
$41.0227. Beverage giant Delta capped the fallers of the day on a 6.55% slid
to end pegged at $2,968.2723. Partially mitigating today's losses were gains
in Ecocash Holdings that jumped 2.65% to 126.50000 while, retailer OkZim
surged 2.52% to $195.0000. Nampak added 1.72% to settle at $295.0000 while,
FMP inched up 1.45% to settle at $280.0000. Turnall completed the gainers of
the day on a 0.28% uplift to settle at $38.1079. The risers and fallers
spectrum were equally distributed at nine.

Activity aggregates declined in the session as volume traded dropped 19.76%
to 1.40mn shares, yielding a value outturn of $2.14bn which was 7.96% down
from prior session. Delta was the most sought-after stock of the day,
claiming 44.04% of the volumes exchanged and 85.53% of the value totals. NMB
and Proplastics contributed a combined 9.03% of the value outturn. A total
of 171,131 units exchanged hands in the ETF section. OMTT ETF ticked up
2.67% to 39.1979 while, Datvest ETF slipped 0.01% to end pegged at $8.9989.
The Tigere REIT firmed up 1.56% to close at 304.6901 as a total of 2,388
units exchanged hands.-efe

Global Currencies & Equity Markets

South Africa

South African rand weakens as dollar steadies

(Reuters) - South Africa's rand weakened against the U.S. dollar on Monday,
giving back some of last week's gains as the dollar steadied.

At 1434 GMT, the rand traded at 18.5250 against the U.S. dollar , about 1.2%
weaker than its previous close.

The dollar index was last down 0.15% at 102.470 . The greenback had fallen
sharply last week after the Federal Reserve signalled the possibility of
interest rate cuts next year.

Global markets are expected to take direction this week from the Bank of
Japan's monetary policy decision on Tuesday and the U.S. PCE price index
inflation number on Friday.

There are no major upcoming data releases in South Africa.

The rand could strengthen in the coming week as export dollars continue to
flow into the market from the mines, while importer demand dries up due to
seasonal factors, said ETM Analytics in a research note.

Shares on the Johannesburg Stock Exchange fell, with the blue-chip Top-40
index (.JTOPI) last trading about 1.2% lower.

South Africa's benchmark 2030 government bond was stronger, with the yield
down 12 basis points at 9.650%.

Nigeria

Naira records marginal growth on 230.82% rise in dollar liquidity

Naira recorded marginal gains against the US currency following a
significant increase in dollar liquidity at the official foreign exchange
(FX) market on Monday.

After trading on Monday, naira appreciated by 0.17 percent as one dollar was
quoted at N888.35 compared to N889.86 quoted on Friday at the Nigerian
Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ showed.

The FX market recorded increased dollar supply as the daily foreign exchange
market turnover rose by 230.82 percent to $137.82 million on Monday from
$41.66 million recorded on Friday.

Read also Naira falls at official market despite rise in dollar liquidity

The dollar flows came from the willing buyers and willing sellers as they
quoted the greenback as high as N1,249 and lower rate of N720 on the spot
trading.

According to analysts, the increase in dollar supply in Nigeria's forex
market stems from a combination of the CBN interventions, policy
adjustments, market dynamics, and expectations of future inflows. However,
ongoing efforts and sustained improvements in the underlying economic
conditions are crucial for long-term stability and reducing reliance on
temporary measures.

Yemi Cardoso, governor of the CBN, noted in November 2023 that the country
had already witnessed improvements in FX market liquidity in recent weeks,
as the market responded positively to tranche payments which have been made
to 31 banks to clear the backlog of FX forward obligations.

Read alsoNaira scarcity frustrates Nigerians, worsens cost of living

"We have been subjecting these payments to detailed verification to ensure
only valid transactions are honored. In a properly functioning market, it is
reasonable to expect significant FX liquidity, with daily trade potentially
exceeding $1.0 billion.

We envision that, with discipline and focused commitment, foreign exchange
reserves can be rebuilt to comparable levels with similar economies," he
said.

He said new foreign exchange guidelines and legislation will be developed,
and extensive consultations will be conducted with banks and FX market
operators before implementing any new

requirements.

 <mailto:info at bulls.co.zw> 

Global Markets

US Dollar slightly declined on a quiet Monday, Fed speakers

The US Dollar (USD) took a slight downturn in the early part of the week,
bracing itself before the release of the Personal Consumption Expenditures
(PCE) Price Index data on Friday, which is the Federal Reserve (Fed)
preferred gauge of inflation. Inflation figures will give additional
insights to investors to continue placing their bets on the next Fed
decisions. The US Dollar Index is trading at the 102.50 area, 0.1% down on
the day.

In the last 2023 meeting, the Fed's dovish stance emerged, with officials
forecasting 75 bps of rate cuts for 2024, recognizing that inflation is
softening, which fueled risk on flows that significantly pushed the DXY
downwards. However, markets may be overhyped with the dovish surprise, as
the bank may consider delaying cuts if inflation remains sticky, so Friday's
figures will be important.

Daily Market Movers: US Dollar remains weak on the back of the Fed's dovish
surprise

The US Dollar experienced mild losses as the week kicked off, with traders
awaiting the release of the PCE Price Index data.

The US will report mid-tier housing figures on Tuesday and Wednesday that
may impact Greenback's price dynamics.

The Q3 Gross Domestic Product final revision is due on Thursday.

In the meantime, US bond yields are trending upwards, with the 2-year yield
at 4.44%, the 5-year yield at 3.95%, and the 10-year yield at 3.95%, which
may limit the downside of the US Dollar.

The CME FedWatch Tool insights indicate that markets are considering
possible rate cuts by March 2024.

Mary Daly from San Francisco's Fed argued on Monday that fewer cuts would be
warranted if inflation progress stalls but that three rate cuts could be
needed in 2024 to avoid over-tightening.

Chicago's Fed Goolsbee commented that the US made significant progress on
inflation adhering to the signalled rate cuts but that he was "confused"
with the market reaction.

Technical Analysis: DXY index shows a bearish short-term outlook, sellers
maintain control

The indicators on the daily chart reflect a stronger selling momentum on the
DXY. The Relative Strength Index (RSI) is in negative territory with a
downward slope, indicating an inherent bearishness in the index. The red
bars of the Moving Average Convergence Divergence (MACD) further confirm
this bearish momentum.

The position of the index with respect to its 20, 100, and 200-day Simple
Moving Averages (SMAs) also highlights the continuing dominance of the
bears. The DXY trading beneath all these SMAs implies a strong downward
bias, affirming the bearish undertone.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold gains as traders buy on dips, await US inflation data

Gold gained on Monday as traders purchased bullion on price dips, while
their focus shifted to key U.S. inflation data for signals on the Federal
Reserve's interest rate direction post its recent dovish tilt.

Spot gold was up 0.4% at $2,026.5374 per ounce. U.S. gold futures settled
0.2% higher at $2040.8.

"The market is in a pause mode waiting for the next major fundamental
economic data point or news, but it's a buy-the-dip mentality among gold
traders with the bullish technical posture," said Jim Wyckoff, senior
analyst at Kitco Metals.

The underlying factors keeping a floor under the gold market are the weaker
U.S. dollar, easier monetary policy and some safe-haven demand from
heightened tensions in the Middle East, Wyckoff added.

Last week, the Federal Reserve kept interest rates unchanged and indicated
the historic tightening of monetary policy was likely over as inflation fell
faster than expected.

But Chicago Fed President Austan Goolsbee said the U.S. central bank is not
pre-commiting to cutting interest rates soon and swiftly.

Traders are pricing in a 69% chance of a Fed rate cut in March, according to
the CME FedWatch tool.

Lower bond yields and interest rates reduce the opportunity cost of holding
non-interest-bearing.

Benchmark U.S. 10-year Treasury yields were hovering near their lowest level
since July.

Traders now await a slew of U.S. economic data, including the November core
personal consumption expenditure (PCE) index report on Friday.

Downward trends in U.S. rates are often accompanied by a stronger bullish
move of gold and this asymmetric trend might continue and favor gold,
especially in the first half of next year and prices could average $2,050 an
ounce in 2024, Intesa Sanpaolo said in a note.

Spot silver fell 0.3% to $23.7645 per ounce, while platinum rose 0.4% to
$943.75. Palladium was up 0.8% to $1,182.36, hitting a two-and-a-half-month
high.

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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