Bulls n Bears Daily Market Commentary : 23 October 2023

Tue Oct 24 07:36:44 CAT 2023

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Bulls n Bears Daily Market Commentary : 23 October 2023

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

The ZSE All Share Index added 566.97 points to close the session at 145,265.26 points. Trading in the positive: TSL LIMITED added $67.5498 to $517.9000 and FIRST MUTUAL HOLDINGS LIMITED increased by $19.2345 to $519.2345. NMB LIMITED  gained $14.6778 to close at $300.8824, NAMPAK ZIMBABWE LIMITED was $10.9001 up at $346.0000 and MASIMBA HOLDINGS LIMITED added $10.0000 to $800.0000.

Trading in the negative: FIRST MUTUAL PROPERTIES LIMITED lost $0.5500 to close at $132.9500. TANGANDA TEA COMPANY LIMITED shed 0.2890 to close at $923.7980 and ZIMRE HOLDINGS LIMITED eased $0.0500 to $94.9500. ARISTON HOLDINGS LIMITED traded $0.0495 lower at $31.5000 and BRITISH AMERICAN TOBACCO LIMITED decreased by $0.0321 to close at $13999.9250.

EXCHANGE TRADED FUNDS 

MORGAN & CO MADE IN ZIM EXCHANGE TRADED FUND added $0.2461 to $7.0000. DATVEST MODIFIED CONSUMER STAPLES EXCHANGE TRADED FUNDS added $0.0375 to $7.2375 and OLD MUTUAL TOP 10 ETF added $0.6207 to $31.4850. CASS SADDLE AGRICULTURE EXCHANGE TRADED FUND and MORGAN & CO MULTISECTOR EXCHANGE TRADED FUND remained flat at $7.2500 and $250.0000 respectively

REAL ESTATE INVESTMENT TRUST (REIT)

TIGERE REAL ESTATE INVESTMENT TRUST shed $2.9542 to $236.9658.-zse

Global Currencies & Equity Markets

South Africa

South African rand strengthens, global factors in driving seat

(Reuters) - The South African rand strengthened on Monday, with analysts saying global drivers including the Israel-Hamas conflict and U.S. economic data were likely to set the tone for trading this week.

At 1554 GMT, the rand traded at 18.9225 against the dollar , about 0.6% firmer than its previous close.

The dollar index was last trading down about 0.4% against a basket of currencies as U.S. Treasury yields retreated after briefly breaching the 5% level.

Rand Merchant Bank said earlier that the exchange rate had looked comfortable around 19 rand to the dollar but that rising U.S. Treasury yields risked pressuring the rand.

ETM Analytics said in a research note that investor concern that the conflict in the Middle East could spread was boosting demand for safe-haven assets.

"This means that the rand will be a price taker, with none of the domestic data scheduled important enough to override these international developments," ETM Analytics said.

Domestic data releases this week include a leading central bank indicator on Tuesday (ZALEAD=ECI) and producer inflation on Thursday (ZAPPIY=ECI), (ZAPPI=ECI) while global focus will be on the U.S. GDP data and the Federal Reserve's preferred inflation gauge.

Shares on the Johannesburg Stock Exchange fell, with the blue-chip Top-40 index (.JTOPI) closing about 0.4% lower.

South Africa's benchmark 2030 government bond was weaker, the yield up 2.5 basis points to 10.825%.

Nigeria

Naira hits record low against major currencies despite regulatory efforts

The Nigerian Naira continued its downward trend against major currencies, hitting a record low on Monday. Despite the Central Bank of Nigeria's (CBN) efforts to manage the currency value by floating it on June 14 and lifting forex restrictions on commodities, the Naira's depreciation persisted.

According to Aboki FX, the Naira started the day at an exchange rate of N1,200 per dollar in the unofficial market but escalated to N1,205 per dollar by noon due to high dollar demand. This followed a closing rate of N808.27 on Friday at the FMDQ market, as reported by Bureau De Change Operator Dayyabu Mistila.

The Naira also depreciated against the British Pound and Euro. The buying and selling prices for naira to pound began at N1,380/£ and N1,390/£ respectively, escalating to N1,430/£ and N1,450/£ within hours. Similarly, the Euro opened with buying and selling prices at N1,180/€ and N1,190/€ which rose to N1,230/€ and N1,240/€ by noon.

Analysts attribute the continuous fall in the Naira's value to demands from the 43 items restored to access foreign cash and school fees among other factors. The Association of Bureaux De Change Operators of Nigeria (ABCON), under Aminu Gwadabe's leadership, denied involvement in the naira's depreciation, blaming unlicensed forex dealers for speculative activities.

Despite the intense economic situation in Nigeria, startup coverage by Legit.ng has earned them a nomination for the #StartupSouth Awards 2023.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar falls as Treasury yields retreat

(Reuters) - The U.S. dollar fell against a basket of currencies on Monday, tracking a retreat in U.S. Treasury yields from the 5% level hit earlier in the session, and as traders awaited fresh U.S. economic data due later this week.

The yield on the benchmark 10-year U.S. Treasury note declined on Monday after briefly rising above 5.0%, hitting the July 2007 milestone that it briefly attempted to scale last week and further threatening an economic slowdown on higher borrowing costs.

Traders are on watch for several events this week, including a European Central Bank meeting, and the release of U.S. GDP data and the Federal Reserve's preferred inflation gauge.

"A big week of data with eyes on U.S. GDP on Thursday, plus BoC (Bank of Canada) and ECB (European Central Bank) in the mix, and of course geopolitical risk remaining incredibly elevated is really denting traders' desire to do much as the week gets underway," said Michael Brown, market analyst at Trader X in London.

But the main news on Monday was the yield on 10-year U.S. Treasuries reaching as high as 5.021%, the latest stage of a relentless sell-off in government bond markets, driven by investors accepting central banks will keep rates persistently high, particularly in the United States, an increase in supply of bonds and widening term premia.

The 10-year yield was last at 4.8375%.

Besides that, the risk of Israel's war with the Islamist group Hamas becoming a wider regional conflict is keeping markets on edge, as Israeli air strikes battered Gaza early on Monday, and the United States dispatched more military assets to the region.

The dollar index , which measures the currency's strength against a basket of six rivals, was 0.6% lower at 105.56. The index had risen as high as 106.33 earlier in the session.

The surge in U.S. Treasury yields since mid-July has boosted the U.S. dollar's appeal relative to other currencies and helped lift the U.S. dollar index more than 6%, but the index has made little headway since early October.

"It's definitely interesting and surprising that neither the sell-off in long bonds nor the Middle East situation and subsequent haven demand have managed to spark much demand," Trader X's Brown said.

"I remain bullish, however, with the core U.S. economic outperformance theme continuing to ring true against G10 peers, as this week's GDP figures should prove," he said.

Barclays analysts were less sure the dollar had much further to go, however, pointing to stretched long dollar positioning and a smaller likelihood of further rises in long-dated yields without a reassessment of the Fed's rate outlook.

The Japanese yen last traded at 149.625 per dollar, after slipping as low as 150.14, a level last seen on Oct. 3.

Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo, said it seemed like a set of investors were betting the BOJ would defend the 150 level, even as others saw rising U.S. yields as a reason to keep pushing the dollar up.

The ECB meets on Thursday, and a poll by Reuters shows while it is done raising rates it won't begin easing until at least July 2024. It raised its key interest rates by 25 basis points in September.

The euro was up 0.73% on the day.

The Canadian dollar rose 0.3% against the greenback on Monday, ahead of Wednesday's Bank of Canada interest rate announcement.

The central bank is probably done raising interest rates and will hold them at 5.00% for at least six months, according to a Reuters poll of economists that found a majority expecting a reduction in the second quarter of 2024 as the economy slows.

In cryptocurrencies, bitcoin was up 2.9% on the day at $30,859, a fresh 3-month high, amid investor enthusiasm about the possibility of a spot bitcoin exchange-traded fund.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold rally cools as traders eye MidEast developments, US data

(Reuters) - Safe-haven gold eased on Monday, hitting pause after jumping to within striking distance of the key $2,000 level in the last session, as traders positioned for further developments on the Middle East conflict and U.S. economic data.

Spot gold fell 0.3% to $1,976.19 per ounce by 1:41 p.m. ET (1741 GMT). U.S. gold futures settled 0.3% lower at $1,987.80.

Reuters Graphics

"Safe-haven demand will continue to drive gold higher after a slight period of consolidation. We believe geopolitical tensions and the uncertainty in the Middle East will continue to drive prices higher," said David Meger, director of metals trading at High Ridge Futures.

Bullion has surged about 9% in the past two weeks as investors sought to hedge against risks of a wider escalation in the Israel-Hamas war.

However, "while not a negative signal, it is a red flag and that momentum (in gold) that previously existed has not been restored in early trade this week which could lead to some profit-taking," said Craig Erlam, senior markets analyst at OANDA in a note.

Focus is also on the U.S. PCE price index on Friday— the Federal Reserve's favoured inflation gauge — and U.S. GDP figures for the third quarter on Thursday.

"If inflation data come in higher than expected, it will raise concerns about rising interest rates, to which gold might see a knee-jerk reaction to the downside, but safe-haven demand should begin to kick in post that," Meger added.

Silver slipped 1.3% to $23.05 per ounce, platinum rose 0.3% to $897.58 and palladium gained 3% to $1,131.03.

"Sluggish BEV (battery-powered electric vehicle) sales growth and an increase in palladium-containing light vehicles this year is expected to contribute to a slight improvement in Chinese palladium autocatalyst demand this year," Heraeus analysts wrote in a note.

.

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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