Bulls n Bears Daily Market Commentary : 05 June 2023

Tue Jun 6 03:36:57 CAT 2023

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Bulls n Bears Daily Market Commentary : 05 June 2023

ZSE commentary

ZSE in gains in week-ending session.

The ZSE continued in gains in Friday's session as mid cap counters lifted
the market. The ZSE All-Share Index put on 1.03% to 112,615.44pts while, the
Blue-Chip Index added 0.02% to close at 67,504.61pts. The ZSE Agriculture
Index advanced 4.65% to 438.95pts while, the Mid Cap Index rose 4.385% to
220,449.67pts. CBZ and CFI topped the winners of the day for the second
consecutive session with an identical gain of 15.00%. Financial services
group ZB surged 14.99% to $367.0000 as SeedCo Limited garnered 14.96% to
settle at $1,282.2856. Conglomerate Meikles extended 14.91% to $1,348.0000.
Leading the losers of the day was telecoms giant Econet which dipped 14.89%
to $763.9387 while, Zimplow parred 9.88% to $75.0133. Agriculture concern
Ariston shed 9.17% to $16.0835 as Getbucks retreated 0.69% to end pegged at
$32.5000. 

RioZim capped the group on a 0.57% decline to $280.0000. Volume of shares
traded ballooned 371.60% to 14.72m while, turnover leapt 250.37% to $6.75bn.
Volume leaders of the day were Zimplow and Econet that claimed 47.80% and
38.41% respectively. Value leaders were Econet, Delta and SeedCo Limited
that accounted for a combined 89.31%. Morgan and Co MCS was the top gainer
amongst the ETFs with a 14.97% surge to $89.1000, trailed by Datvest MCS
which grew 14.96% to $6.6300. Cass Saddle went up 1.22% to $3.4486. The Old
Mutual ETF let go 1.39% to $24.5280. Cumulatively, 704,743 units worth
$10.95m traded in the four ETFs. The Tigere REITmimproved 1.95% to $129.2268
on 501,788 units. efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand strengthens despite lacklustre PMI

(Reuters) - The South African rand gained more than 1% against the dollar on
Monday, despite an economic survey that showed business activity was at an
almost two-year low.

At 1600 GMT, the rand traded at 19.2900 against the dollar , up about 1.15%
from its closing level on Friday.

The dollar was last trading around 0.19% weaker - at 103.950 - against a
basket of global currencies.

The rand was boosted by Chinese PMI data that showed manufacturing and
services activity picking up, said DailyFX analyst Warren Venketas.

China is South Africa's largest trading partner, so positive news about the
health of its economy tends to lift South African asset prices.

"In addition, part of the rand strength is likely due to some profit taking
as the pair has been in overbought territory for some time at extreme
levels." said Venketas in a note.

The rand fell sharply last month as investor sentiment soured on the back of
the worst rolling blackouts on record and U.S. allegations that South Africa
had supplied arms to Russia late last year.

It hit an all-time low last week at 19.9075 to the greenback.

"(South Africa's) geo-diplomatic risk has peaked, and foreign investors are
starting to dip their toes back into (South Africa), but a strong dollar
reduces scope for rand gains," said Rand Merchant Bank analysts in a
research note.

The S&P Global South Africa Purchasing Managers Index (PMI) (ZAPMIM=ECI)
released on Monday showed that private sector activity had contracted for a
third consecutive month in May as rolling power cuts and inflationary
pressures continued to weigh on businesses.

Investors will turn their attention on Tuesday to Statistics South Africa
for the country's first quarter gross domestic product (GDP) figures. A
negative figure would put South Africa in a technical recession - defined as
two consecutive quarters of falling GDP.

Shares on the Johannesburg Stock Exchange closed lower, with the blue-chip
Top-40 index (.JTOPI) down 0.8% and the broader all-share index (.JALSH)
down 0.7%.

South Africa's benchmark 2030 government bond was flat.

-The Thomson Reuters Trust Principles.

Nigeria

Naira strengthens to N750 per dollar

Naira on Monday strengthened by 0.26 percent (N2) against the dollar as
demand slows at the parallel market, also known as black market.

Traders said on Monday that there was enough dollars but not much demand for
the greenback in the market.

The Central Bank of Nigeria (CBN) sold at the rate of N462.05 per dollar as
of June 2, 2023, the data on its website showed.

The naira/dollar exchange rate closed flat at N464.67/$1 at the Investors
and Exporters (I&E) forex window on Friday as the CBN sold the dollar at
N645 at its latest auction.

The FX auction results on Friday showed this was 27.90 percent (N180) lower
than N465 where the currency is trading on the official secondary market,
according to Reuters.

Nigeria operates multiple exchange rates, which the central bank has used to
manage demand, mask pressure on the naira and conserve its dwindling
reserves. The system has fuelled a black market, trading sharply lower than
the spot rate, Reuter's reports.

Read also: Collapse the different CBN windows to achieve a unified exchange
rate - Yemi Kale

The demand level for dollars eased marginally at the various FX segments,
following the policy statement by the new administration on plans to unify
the exchange rate and also bring about a moderation in the interest rates as
part of efforts geared towards increasing investment and consumer purchasing
power in ways to sustain the economy at higher level, according to a report
by Cowry Asset Management Limited.

Consequently, the naira traded in a bullish sentiment as it appreciated by
N15 or 1.96 percent week-on-week (w/w) to N752/$1 from N767/$1 at the
parallel market.

At the investors' and exporters' FX window, the naira depreciated marginally
against the United States' dollar by N0.16 or 0.03 percent w/w to close at
N464.67/$1 from N464.51/$1 in the previous week as the hegemony of the
dollar continues while players in the market kept bids between N463 and
N470.

The report noted that at the Interbank foreign exchange forward contracts
market, the spot exchange rate remained unchanged, closing at N462/$1, the
report stated.

"Also, in our analysis of the Naira/USD exchange rate at the weekly Naira FX
forward contracts markets, the dollar reigned with positive appreciations
across all forward contracts against the Naira," analysts at Cowry Asset
Management said.

Last week, the Brent Crude traded at $76.81 per barrel on the back of
positive US debt ceiling talks. However, on the home front, the Bonny Light
crude price lost its gains of last week by 7.61 percent or ($6.15) w/w, to
close at $74.65 per barrel from $80.80 per barrel in the previous week.

"We expect the naira to trade in a relatively calm band across various
market segments barring any market distortion and as the apex bank continues
its weekly FX market intervention to defend the value of the naira," the
analysts said.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar falls after weak services data

The dollar fell on Monday on news that the U.S. services sector barely grew
in May as new orders slowed, ending an initial rally sparked by strong jobs
growth.

The Institute for Supply Management (ISM) said its non-manufacturing PMI
fell to 50.3 last month from 51.9 in April. A reading above 50 indicates
growth in the services industry, which accounts for more than two-thirds of
the economy.

Economists polled by Reuters had forecast the non-manufacturing PMI edging
up to 52.2.

The data indicates that the more accurate signal from the jobs report "might
have been from the uptick in the unemployment rate rather than the solid
increase in payroll employment," Bill Adams, chief economist for Comerica
Bank said in a note.

Data on Friday showed U.S. job growth accelerated by 339,000 jobs in May,
but a surge in the unemployment to a seven-month high of 3.7% suggested an
easing labor market.

The dollar had risen after the better-than-expected jobs gains boosted
expectations the Federal Reserve may continue hiking rates as inflation
remains elevated.

"Job gains continue to surprise meaningfully to the top side, the labor
market continues to be very strong," said Brian Daingerfield, head of G10 FX
strategy at NatWest Markets in Stamford, Connecticut.

The dollar index fell to 104.00, down 0.13% on the day, after climbing as
high as 104.40. It is holding just below a 11-week high of 104.70 reached on
May 31.

The euro was last up 0.07% at $1.0712, just above $1.0635 on May 31, which
was the lowest since March 20.

The greenback fell 0.27% to 139.60 yen . It reached 140.93 on May 30, the
highest since Nov. 23.

The U.S. central bank is viewed as most likely to leave rates unchanged in
June, but fed funds futures traders are pricing in a 65% likelihood of at
least an additional 25 basis points rate hike by July, according to the CME
Group's FedWatch tool.

Fed officials including vice chair nominee Philip Jefferson have stressed
that any Fed decision to hold its benchmark overnight interest rate steady
at an upcoming meeting should not be taken to mean the U.S. central bank is
done tightening monetary policy.

"You could think of a skip as maybe part of the slowing of the tightening
cycle rather than a pause in the tightening cycle," said Daingerfield.

Fed officials are now in a blackout period before the June 13-14 meeting.
Consumer price inflation data for May due on June 13 is the next major U.S.
economic release.

The Aussie dollar edged higher before the Reserve Bank of Australia (RBA) is
due to announce its interest rate decision on Tuesday.

Wells Fargo analysts Erik Nelson and Jack Boswell on Monday recommended
buying the Australian currency against the U.S. dollar and British pound on
the view that markets are underestimating the likelihood of a rate hike.

"Market pricing for the RBA looks far too low in our view, both outright and
relative to peers," they said. "We expect the RBA to hike tomorrow and guide
for more, leading to a ~25-bp upgrade to terminal rate pricing and a sharp
AUD rally."

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold rebounds after U.S. services slowdown boosts Fed pause bets

Gold rebounded on Monday after weaker U.S. services sector growth reinforced
bets for the Federal Reserve to stand pat on interest rates next week.

Spot gold gained 0.6% to $1,958.89 per ounce, erasing losses from earlier in
the session, when it touched its lowest since May 30.

U.S. gold futures settled up 0.2% at $1,974.30.

The U.S. services sector barely grew in May as new orders slowed, with the
Institute for Supply Management's non-manufacturing index falling to 50.3
last month from 51.9 in April and missing expectations for an uptick to
52.2.

"The market is really taking it in as a reason to pencil out some rate hikes
here ... It's certainly something that the Fed is pleased to see with
respect to its fight against inflation," said Daniel Ghali, commodity
strategist at TD Securities.

The index is seen by some economists as an indicator of the Fed's favored
inflation gauge, as services prices tend to be stickier and less responsive
to rate hikes.

The dollar index slipped after the data, making greenback-priced bullion
more affordable for overseas buyers, while 10-year Treasury yields
retreated.

Traders pegged the chances of the Fed pausing its interest rate hikes at its
June 13-14 meeting at 78%, according to the CME FedWatch Tool.

Non-interest-bearing bullion becomes less attractive for investors in a
high-interest rate environment.

However, "gold may be looking overpriced despite a recent decline owing to
sticky inflation and the likelihood that the Fed will not meaningfully cut
interest rates in 2023," Heraeus Precious Metals said in a note.

Gold dropped over 1% on Friday after data showed the U.S. economy added
339,000 jobs last month, above estimates of 190,000.

Silver dipped 0.2% to $23.54, platinum rose 2.6% to $1,029.92, while
palladium fell 0.4% to $1,414.21.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Heroes' Day

Aug 14

Defence Forces Day

Aug 15

Counters trading under cautionary

CBZH

GetBucks

EcoCash

TSL

Econet

Turnall

First Capital Bank

ZBFH

Fidelity

Zimplow

FMHL

Invest Wisely!

Bulls n Bears 

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DISCLAIMER: This report has been prepared by Bulls 'n Bears, a division of
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