Bulls n Bears Daily Market Commentary : 10 April 2024

Thu Apr 11 08:12:54 CAT 2024

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Bulls n Bears Daily Market Commentary : 10 April 2024

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

ZSE activity remains depressed...

Market activity remained depressed for the third time in a row post the
introduction of the ZiG currency. The All-Share Index slipped 0.99% to
100.97pts while, the Blue-Chip Index dropped a negligeable 0.003% to
100.81pts. The Agriculture Index remained stable at 100.63pts while, the Mid
Cap Index fell 2.35% to 101.16pts. Delta lost a negligible 0.007% to settle
at

$6.7995 while, Star Africa surged 0.48% to settle at $0.0200 ART rose up
0.11% to end the day pegged at $0.0900.

Activity aggregates were mixed in the session as volume traded fell by
78.57% to 4,500 shares while, turnover grew 1,585.00% to $9,000.00, Star
Africa led the top volume drivers of the day claiming 50%, followed by Delta
(33.33%) and ART (16.67%). Top value drivers of the day were Delta (98.91%),
ART (0.65%) and Star Africa (0.44%).

Global Currencies & Equity Markets

South South Africa

Rand hits best level in 2024 - then plunges after shock election poll

The rand fell from its best levels this year after a new opinion poll showed
support for the ruling African National Congress is plunging and a party
backed by former President Jacob Zuma may become the country's
third-biggest.

The South African currency depreciated as much as 0.9% to R18.6231 per
dollar after Bloomberg reported the poll by the Social Research Foundation
Wednesday.

Prior to this, the rand had been strengthening for a fourth day, its longest
streak in a month. 

"Uncertainty in South African politics increased markedly after the latest
poll revealed that support for the governing ANC plunged while former
President Zuma's party may become a major political force," said Piotr
Matys, a currency analyst at InTouch Capital Markets. 

The ANC, which has governed South Africa since the end of apartheid, may
garner just 37% support in the May 29 vote, while Zuma's uMkhonto weSizwe
Party, or MKP, may get 13%, the SRF said, citing a poll it carried out this
month.

Such a result would mean the ANC has to form a coalition with a large party
in order to retain control of Africa's most industrialised economy. Zuma's
decision to back the MKP has eaten away at the ANC's support. He ruled the
country from 2009 to 2018, when the ANC forced him from office.

Nigeria

Naira puts strong dollar in check, settles at N1255/$

The naira defied the strong dollar despite positive macros from the world's
largest economy's manufacturing data report that it grew in March for the
first time since September 2022

Goldman Sachs predicts that in the next 12 months, the value of the naira
relative to the dollar will increase to N1,200. On Monday, the naira settled
at N1,255/$, up from its February low of N1,915/$ at the Bureau De Change
segment of the Nigerian FX market.

According to the American Investment Bank, positive real interest rates and
capital inflows will likely address the naira's liquidity crisis.

A series of circulars issued by the Central Bank of Nigeria in recent weeks
and months have assisted in plugging leaks and closing loopholes previously
utilized by currency speculators and racketeers.

After its biggest increase in almost 17 years, the CBN increased its
monetary policy rate by 200 basis points, from 22.75% to 24.75%.

A few weeks ago, the apex bank paid 26.06%  for the one-year Treasury bill
at its previous auction.

However, investors anticipate that at the auction on Wednesday, yields will
rise above secondary market quotes, which currently stand at 22.75%  for the
one-year bill and 20.06% for the benchmark 10-year note.

Nigeria's external reserves growth

The CBN recently declared that it has successfully resolved all valid
foreign exchange backlogs, as promised by Governor Olayemi Cardoso,
addressing inherited claims amounting to $7 billion.

Nigeria's external reserves have grown steadily over the past month, which
has relieved some of the pressure on the naira/dollar exchange rate.

According to the CBN's website, the FX reserves are currently at roughly $34
billion, up from their 2023 peak of $32.9 billion

The Economic and Financial Crimes Commission agents' recent crackdowns on
the operations of illicit BDC operators in Lagos, Abuja, and Kano have also
contributed to a decrease in currency volatility.

According to CBN Governor Olayemi Cardoso, further efforts to improve the
nation's foreign exchange situation will result in more stability in the
naira and foreign reserves.

He claims that working together with the Ministry of Finance and the NNPCL
to guarantee that all foreign exchange inflows are repaid to the CBN will
significantly improve foreign exchange flows and aid in the building of
reserves.

More insights

In addition, the U.S. dollar had maintained its bullish run against other
major currencies with favourable economic data releases.

According to the Institute for Supply Management (ISM), U.S. manufacturing
production climbed and new orders came in despite lower factory employment
and higher input costs.

The manufacturing sector, which makes up 10.4% of the GDP, had been
declining for 16 months in a row until the upturn. That shrinkage lasted the
longest from August 2000 to January 2002.

The dollar index, which compares the value of the US dollar to six
competitors, increased by 0.507% to 105.01 index points.

According to the CME FedWatch tool, markets on Monday reduced their bets on
the Federal Reserve lowering rates in June after increasing the odds on
Friday's news of declining U.S. prices.

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar surges to new 34-year high vs yen after hotter-than-expected
inflation data

(Reuters) - The dollar rose across the board on Wednesday, soaring against
the Japanese yen to its highest since mid-1990, after U.S. inflation rose
more than expected in March, pushing out the expected timing of a first rate
cut to September from June.

Market participants were also on the alert for any signs of intervention
from Japanese authorities to boost the yen.

The big move in the yen came after data showed the U.S. consumer price index
(CPI) rose 0.4% on a monthly basis in March, compared with the 0.3% increase
expected by economists polled by Reuters. On a year-on-year basis, the CPI
increased 3.5% versus forecasts of a 3.4% growth.

Excluding the volatile food and energy components, core inflation grew 0.4%
month-on-month in March, compared with expectations of a 0.3% advance.
Annually, it gained 3.8%, versus the estimated 3.7% increase.

Following the CPI data, traders slashed bets that the Federal Reserve would
cut interest rates in June to 17%, from 57% late on Tuesday, according to
the CME's FedWatch tool. They now see the likelihood of an interest rate cut
at the September meeting, with a 66% probability, based on prices of rate
futures.

Fed fund futures have also reduced the number of rate cuts of 25 basis
points (bps) this year to under two, or roughly 44 bps, from about three or
four a few weeks ago.

"The core rate of inflation has accelerated four months in a row. ... Maybe
you get some moderation later in the year but given the fact you're starting
from a higher rate, you're going to need real weak numbers and more time to
be convinced that inflation is trending back down after what appeared to be
the case last fall," said Joseph Lavorgna, chief U.S. economist, at SMBC
Nikko Securities in New York.

"What that means is the timing of Fed easing is going to get pushed out,"
Lavorgna added.

In afternoon trading, the dollar index, which measures the greenback's value
against six major currencies, was up 1.07% at 105.20 , on track for its
largest daily gain since March 2023. Earlier, it climbed to its highest
since November.

Minutes of the last Fed meeting released on Wednesday suggested that central
bank officials were worried that the progress on inflation slowed and they
may have to keep interest rates higher for longer.

"The Fed has no reason to cut rates when we are still battling inflation -
that's the realization," said Kenneth Mahoney, president at Mahoney Asset
Management in Greenwich, Connecticut.

The euro, meanwhile, fell 1.06% to $1.0741 , on pace for its biggest one-day
fall in about a year.

Against the yen, the dollar was last up 0.93% from late Tuesday at 153.15
yen , having touched 153.24, the highest since June 1990.

Traders have been on alert for weeks for possible intervention by Tokyo
authorities, as even a historic exit from negative rates in Japan has failed
to lift the currency.

Japan intervened in the currency market three times in 2022, selling the
dollar to buy yen, first in September and again in October as the yen slid
toward what was then a 32-year low of 152 to the dollar.

The yen has been under pressure for years as U.S. interest rates have
climbed and Japan's have stayed near zero, driving cash out of yen and into
dollars to earn so-called "carry."

Yen futures data from CFTC showed non-commercial short positions had climbed
to 143,230 contracts in the week ended April 2, the largest since December
2013.

"I would say there is a 30% chance of Japanese intervention this month. That
move today, that quick move down, it just seems a bad time to fight it,"
said Adam Button, chief currency analyst at FOREXLIVE.

"Japan doesn't want the yen to weaken further, but this is fundamental move
of broad U.S. dollar strength. I don't see the argument for fighting this
move from Japan right now, it's not a yen move, it's a broad U.S. dollar
move," Button added.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold slips from record levels after hot US inflation data

(Reuters) - Gold prices slipped from record-high levels on Wednesday as the
U.S. dollar and Treasury yields firmed after a stronger-than-expected
inflation print softened expectations of an early U.S. rate cut.

Spot gold fell 0.7% to $2,335.99 per ounce, as of 2:25 p.m. ET (1825 GMT).

U.S. gold futures settled 0.6% lower at $2,348.4.

The U.S. dollar index (.DXY), opens new tab rose 1% and U.S. Treasury yields
spiked after the data, making non-yielding bullion less attractive.

A Labor Department report showed the Consumer Price Index(CPI) rose 0.4% on
a monthly basis in March, compared with the 0.3% increase expected by
economists polled by Reuters.

"Strong employment and elevated CPI are interfering with the Fed's rate-cut
plans but gold, like inflation, remains cheeky," said Tai Wong, a New
York-based independent metals trader.

Federal Reserve officials worried that progress on inflation might have
stalled, making a longer period of tight monetary policy necessary,
according to the minutes of the U.S. central bank's March 19-20 meeting.

"The minutes seem to suggest that the entire committee would be ready to
reduce rates if the economy evolved as expected. Except inflation is moving
as expected," Wong added.

Despite being known as an inflation hedge, bullion's appeal tends to fade in
an elevated interest rate environment.

Bullion prices hit a record high of $2,365.09 on Tuesday.

"Escalating geopolitical risks significantly bolster gold as hot and cold
conflicts, and a record number of elections this year, keep the risk
thermometer high," HSBC said in a note, adding that it expects to see a wide
trading range of $1,975-$2,500 for gold prices in 2024.

"Gold demand has been very strong this year buoyed by central bank buying,
particularly non-western banks have been buying gold to diversify their
foreign exchange reserves away from the U.S. dollar and a volatile Chinese
currency," said Will Rhind, CEO of GraniteShares.

Spot silver fell 0.4% to $28.04 per ounce, after hitting a near three-year
high on Tuesday.

Platinum edged 1.5% lower to $964.35 and palladium fell 4.1% to $1,047.92.

INVESTORS DIARY 2024

Company

Event

Venue

Date & Time

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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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
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for guideline purposes only and sourced from third parties.

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