Bulls n Bears Daily Market Commentary : 09 April 2024

Tue Apr 9 17:34:07 CAT 2024

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Bulls n Bears Daily Market Commentary : 09 April 2024

 <mailto:sales at dulys.co.zw?subject=Request%20Quote> ZSE commentary

ZiG in marginal appreciation as ZSE registers just two trades

HARARE - Zimbabwe Stock Exchange shares saw cautious trading for the second
consecutive session on Tuesday as the transition to local currency continues
to restrict the flow of funds into the market.

Only two stocks traded.  EcoCash rose 14.87% to 32.65 ZiG cents and Star
Africa was the standout performer after putting on 35.25% to 1.35 ZiG cents.
A total of 21 000 shares worth ZiG 53 441 traded.

The rebased All Share Index was 0.64% higher to 100.87 amid optimistic and
pessimistic readings and expectations of the new currency regime. The ZiG
firmed against the US dollar to 13.53 from 13.56 at the start while
alternative market transfers are on 14.

Meanwhile, the Reserve Bank of Zimbabwe has issued Exchange Control
directive RZ56 of 2024, which operationalises the foreign exchange policies
and facilitates the introduction of the new currency regime.

Of concern to companies on provisioning, would be the conversion of all
outstanding auction allotments into a two-year ZiG denominated investment
instrument at an interest rate of 7.5% per annum.  This expunges the foreign
exchange obligation and liability from the RBZ.

All outstanding payments for foreign exchange purchased by Treasury under
the 25% surrender will be converted using the prevailing exchange rate into
a ZiG denominated investment instrument with a tenor of one year at an
interest rate of 7.5% per annum. 

Purchase of foreign currency by importers under the willing buyer willing
seller market will strictly be to fund external obligations.

The Reserve Bank of Zimbabwe has made special arrangements for those without
bank accounts to swap ZWL notes and coins at POSB and AFC Commercial Bank
within 21 days after April 5.

On the VFEX, the All Share was flat at 97.38 after newly listed Edgars rose
0.68% to 1.48 US cents. Turnover was moderate at US$128 156 after 363 980
shares traded. The biggest turnover contribution was seen in Simbisa at
US$100 595 on volume of 287 158 shares.-finx

Global Currencies & Equity Markets

Kenya

World Bank Report Lists Shilling as Best Performing Currency in Sub-Saharan
Africa

The World Bank has listed the Shilling as the best-performing currency in
Sub-Saharan Africa.

In its Africa Pulse Report released in April 2024, it was noted that the
Kenyan currency registered the highest appreciation rate this year at 16 per
cent.

According to the financial institution, the appreciation of the Shilling
results from the recent monetary policies introduced by the Central Bank of
Kenya  (CBK) which have seen the demand for the local currency rise in
recent months.

On the other hand, Kenya's activity in the Eurobond market in February was
also reported to have helped in making the Shilling gain some ground against
the Dollar.

One currency that is also gaining ground alongside that of Kenya is the
Zambian Kwacha.

"The Kenyan shilling is the best-performing currency in the subcontinent as
it recorded an appreciation of 16 per cent so far this year. After
strengthening by 14 per cent by mid-February, the Zambian kwacha has lost
some ground and recorded a year-to-date appreciation of 2.4 per cent as of
mid-March.

"In both cases, the monetary authority hiked interest rates to defend their
currencies. The Bank of Zambia additionally raised commercial banks' reserve
ratios. In Kenya, securing funds to repay its Eurobond falling due in June
2024 restored confidence and increased the demand for local currency," read
the report in part.

Another currency that has appreciated this year is the Malagasy Ariary
(Madagascar).

Meanwhile, the report also revealed that other currencies were still
depreciating owing to several factors including; deficiencies in the foreign
reserves and the ballooning debt facing most African countries.

Among the countries whose currencies have depreciated significantly include
the Nigerian currency.

"This year, the Nigerian Naira has continued weakening, with a year-to-date
depreciation of about 41 per cent in the official market as of mid-March.

"The weakening of the Naira resulted from a backlog of accumulated foreign
exchange demand on the official market due partly to limited Dollar flows as
foreign investments into the country and its crude oil export receipts have
declined," read the report in part.

Nigerian President Bola Tinubu engages President William Ruto on December 1,
2023 at Dubai, United Arab Emirates. 

South Africa

South African rand little changed ahead of U.S. inflation and Fed minutes

South Africa's rand was little changed in early trade on Tuesday, with
markets awaiting fresh direction from U.S. inflation and Federal Reserve
meeting minutes due on Wednesday.

At 0628 GMT, the rand traded at 18.6150 against the U.S. dollar, about 0.1%
stronger than its previous close. "Currency markets are trading sideways in
tight ranges ahead of tomorrow's US inflation numbers and Fed FOMC minutes,"
Andre Cilliers, Currency Strategist at TreasuryONE, said.

"The rand remains stuck in its recent 18.50/18.80 range," and it could move
back toward the upper end of that range in the short term, he added.

There were no economic data releases due in South Africa on Tuesday. Gold
and mining production and manufacturing figures for February will be
released on Thursday.

South Africa's benchmark 2030 government bond was stronger in early deals,
with the yield down 2 basis points to 10.565%. (

 <mailto:info at bulls.co.zw> 

Global Markets

Pound Sterling advances on cheerful market mood, US Inflation in focus

The Pound Sterling (GBP) moves higher against the US Dollar in Tuesday's
early American session. The GBP/USD pair gains as market mood remains
risk-on despite uncertainty ahead of the United States Consumer Price Index
(CPI) data for March, which will be published on Wednesday. The economic
data will likely provide some clues about when the Federal Reserve (Fed)
could start reducing interest rates.

The US Dollar drops ahead of the inflation data. The US Dollar Index (DXY),
which tracks the Greenback's value against six major currencies, falls
slightly to the crucial support of 104.00.

Meanwhile, the appeal for the Pound Sterling slightly improves as surveys
show that the United Kingdom economy will deliver modest growth this year
after falling into a technical recession in the second half of 2023. The
latest projections from the UK Office for Budget Responsibility (OBR) showed
that the economy is forecast to grow by 0.8% this year. Domestic demand has
rebounded while geopolitical tensions remain a major concern, resulting in
supply chain disruptions, the OBR report said.

This week, investors will focus on the UK monthly Gross Domestic Product
(GDP) and the factory data for February, which will be published on Friday.
The data will give a snapshot of the state of the economy after the 0.2% GDP
expansion registered in January. The breakdown among sectors will also
provide data from the country's manufacturing sector, which is considered a
leading indicator for overall demand. 

Daily digest market movers: Pound Sterling moves higher on risk-on mood

The Pound Sterling rises to 1.2700 against the US Dollar, with eyes on the
United States Consumer Price Index (CPI) data for March, which will be
published on Wednesday. 

US Monthly headline and core inflation, which strips off volatile food and
energy prices, are both forecasted to have risen at a slower pace of 0.3%
from 0.4% in February. In the same period, economists expect the annual
headline CPI to accelerate to 3.4% from 3.2%, while the core inflation is
anticipated to decelerate to 3.7% from 3.8%. 

The inflation data will provide cues about when the Federal Reserve will
start reducing interest rates. Currently, market expectations lean towards
the June policy meeting for the Fed pivoting to rate cuts. However, upbeat
US Nonfarm Payrolls (NFP) data for March has shaken investors' confidence.
Strong labor market data has strengthened the inflation outlook, allowing
Fed policymakers to avoid consideration for rate cuts for now.

On the United Kingdom front, speculation about the Bank of England lowering
interest rates from the June meeting has escalated. The UK's inflation came
in below expectations in the first two months of this year. Also, BoE
Governor Andrew Bailey said two or three rate cut expectations this year are
"reasonable."

A significant fall in UK inflation is mainly driven by weak consumer
spending. The British Retail Consortium (BRC) reported on Tuesday that
robust spending on food items boosted Retail sales in March. Demand for food
items rose due to early Easter, but the broader picture remains subdued as
wet weather dented sales of other goods.

Meanwhile, the UK economic outlook improves as large businesses see economic
uncertainty easing ahead. A survey by audit and consultancy firm Deloitte
said that uncertainties driven by Brexit, the pandemic, and inflation that
have clouded the business scene for much of the last eight years "seem to be
clearing." 

The Pound Sterling advances to 1.2680 as an appeal for risk-sensitive assets
improve. The GBP/USD trades back and forth around 1.2660, and remains inside
Monday's trading range. The 200-day Exponential Moving Average (EMA) near
1.2570 supports the Pound Sterling bulls.

On the downside, the psychological level of 1.2500 plotted from December 8
low will be a major support for the Cable.

The 14-period Relative Strength Index (RSI) oscillates inside the
40.00-60.00 range, suggesting indecisiveness among market participants.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price sets record for eighth session in a row

Gold extended its hot streak on Tuesday by setting yet another all-time
high, fueled by strong buying momentum and widespread geopolitical risks.

Spot gold rose a further 0.7% to $2,354.88 per ounce by 10:25 a.m. EDT,
after closing 0.4% higher on Monday. Earlier, it had reached $2,364.96 per
ounce for an eighth straight session of record highs.

US gold futures saw a larger gain of 1.2%, trading at $2,379.70 per ounce in
New York.

"The fundamentals underpinning the current rally include growing
geopolitical risk, steady central bank buying and resilient demand for
jewelry and bars and coins," the World Gold Council said in a recent note.

"With the prospect of lower interest rates ahead, the suggestion is that
(gold exchange-traded-funds) ETFs have missed the rally and are now
under-allocated," the Council added.

Bullion has gone up by more than 18% since mid-February, a move that has
left some onlookers puzzled because of the lack of any obvious trigger,
especially with the market now undecided on the Federal Reserve's next move.

CME Group data showed that the market is pricing in a 53% chance of a rate
cut in June, a Reuters poll showed.

The US central bank's policy meeting minutes and Consumer Price Index (CPI)
data are both due on Wednesday, which would shed more light on the exact
timing of the Fed's rate cuts.

"Technical buying momentum will continue in the gold market unless the CPI
data comes out much hotter-than-expected. A cooler inflation report could
take prices to $2,400," said Phillip Streible, chief market strategist at
Blue Line Futures in Chicago.

The metal is enjoying "strong underlying momentum with the buy-on-dip still
the prevailing strategy among traders," said Ole Hansen, commodity
strategist at Saxo Bank A/S. With so many bullish tailwinds, gold "is in
desperate need for consolidation, but FOMO is on clear display currently" he
added.

This week, UBS Group said it sees gold rising to $2,500 an ounce by
year-end, with a revival in exchange traded funds set to support another
rally when the Fed eventually cuts rates.

INVESTORS DIARY 2024

Company

Event

Venue

Date & Time

Independence Day

April 18

Workers day

1 May

Counters trading under cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

ZBFH

Invest Wisely!

Bulls n Bears 

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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
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