Bulls n Bears Daily Market Commentary : 11 April 2024

Fri Apr 12 08:03:45 CAT 2024

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Bulls n Bears Daily Market Commentary : 11 April 2024

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

ZSE falters in the penultimate session ...

The ZSE faltered in the penultimate session of the week as investors
continued on a wait and see approach while, the currency situation continued
to ravel. The All-Share Index dropped 2.27% to close at 98.68pts while, the
Blue-Chip Index faltered 3.56% to end at 97.22pts. On the contrary, the Mid-
cap Index was 0.57% firmer at 101.74pts while, the Agriculture Index added
0.30% to close at 100.93pts. Delta was the only loser in today's session as
it lost 8.48% to trade at $6.2230. Partially offsetting today's losses were
Ariston and  Zimre Holdings  Limited that  added  0.18% and 0.12% to  close
at $0.0500 and $0.2400 respectively.

Activity aggregates enhanced in the session as volumes traded increased by
181.44% to 12,665 shares while, turnover ballooned by 265.95% to $32,935.75.
In the volume category Star Africa and Delta were the top traded stock as
they claimed 86.78% of the totals. In the turnover category, trading was
confined in Delta that claimed 99.08% of the value traded

Global Currencies & Equity Markets

South Africa

South African rand broadly steady after positive local data

(Reuters) - South Africa's rand reversed earlier losses to hold broadly
steady on Thursday after supportive local mining and manufacturing data.

At 1606 GMT, the rand traded at 18.7650 against the U.S. dollar , near its
previous close of 18.7700.

The rand had fallen on Wednesday as the dollar soared after data showed U.S.
inflation rose in March, dampening hopes of an interest rate cut by the
Federal Reserve in June.

Statistics South Africa said the country's total mining output rose 9.9%
year on year in February compared with a revised fall of 2.8% in January,
while manufacturing output rose 4.1% year-on-year in February.

South African business confidence also held steady in March, stabilising at
an improved level despite local economic challenges, said the South African
Chamber of Commerce and Industry.

On the stock market, the Top-40 (.JTOPI), opens new tab index closed down
about 0.3%.

South Africa's benchmark 2030 government bond was weaker, with the yield up
13 basis points to 10.690%.

Nigeria

Naira reclaiming value amidst growing foreign currency debts

The Nigerian naira was last exchanged at N1230.61 per US dollar at the
official window, according to information from the FMDQ Securities Exchange.
In a report, Goldman Sachs forecast that exchange rate will settle around
N1200 over 12 months.

In the parallel market, exchange rate settled at N1230 as the authority
continues to cap returns on FX spot to invisible users in the dark economy.

The fast, furious albeit easy exchange rate strengthening has been driven by
FX flood in the currency markets. The Central Bank of Nigeria (CBN) has
risen up to the occasion managing exchange rates fluctuations across the
markets.

"The Central Bank has raised regulatory bar to reduce spurious demand on
Bureau De Change (BDCs) operators. This was made possible selling USD 10,000
to eligible operators at below market rate.

"The last FX auction detailed showed that the apex bank sold US$10000 at
N1101 to 1508 operators as part of efforts to stabilize the naira", analysts
said in a note shared with MarketForces Africa..

FX inflows in the market has increased significantly since the apex bank
began to pay higher interest rates on government borrowing instruments. This
has attracted hot money into the economy and government has released plan to
issue foreign currency bonds in the second quarter.

"There will be a time -maybe one year - where foreign investors would
liquidate their investment without rolling over. This suggests that
continuous sales of OMO bills is short term approach which could result in
bloated balance sheet funding costs for the CBN", analysts said.

Despite rally in the commodity market, the Nigeria's foreign reserves
continued to track lower. FX accretion experienced in the first quarter of
2024 has slowed down as the monetary authority began to reduce interest
rates on OMO and Treasury bills.

According to information from the central bank, gross external reserves
declined to $33.361 billion, covering about 7 months of import bills based
on Q3 trade data. Banks Face Risks over 24hrs FX Positions Sell Down

Nigeria's state-oil company NNPC owes around $3 billion to fuel traders for
imported petrol, three sources told Reuters, as the tumbling naira currency
and rising global fuel prices have increased the effective subsidy it is
paying.

The payment backlog is a blow to the government's efforts in Africa's
largest economy to shore up its strained finances by curbing costly energy
subsidies.

"They are paying, but it's slow," one of the sources with knowledge of the
matter said. Five sources said that NNPC - the country's main importer of
petrol - was taking more than 130 days to make the payments instead of
within 90 days.

For most analysts, lasting solutions to naira strengthening is to exports
more than the nation's imports record. "There is no other way out of FX
palaver that has persisted for years. It looks like the naira is gaining now
but how long would the forex buffer the apex bank is using would be
available?".

 <mailto:info at bulls.co.zw> 

Global Markets

Canadian Dollar struggles for direction following earlier YTD lows

The Canadian Dollar (CAD) is practically flat Thursday after having retraced
previous losses as softer US data and comments from Fed policymakers have
kept hopes of Fed easing alive. The Loonie, however, remains bearish after
having depreciated more than 1%  in the last two weeks. 

The US Producer Prices Index (PPI) has shown mixed data, with the headline
figures accelerating below expectations but still offering
hotter-than-expected core inflation. These figures together with some dovish
remarks by Fed policymakers have kept hopes of Fed cuts alive, easing the
risk-averse sentiment after Wednesday's Consumer Prices Index (CPI) data.

NY Fed CEO John Williams has shown a dovish profile, stating that there will
be a need to cut rates. Somewhat later, Boston Fed President, Susan Collins
has shown confidence that the inflation will continue to moderate.

Daily digest market movers: USD/CAD keeps marching higher as Fed cut hopes
wane

Canadian Dollar bounces up from to fresh five-month lows on Thursday as soft
US data and dovish Fed rhetoric trigger some profit-taking on the US Dollar

US PPI slowed down to 0.2% in March, from 0.6% in February, although the
yearly rate bounced up to 2.1% from 1.6% in the previous month. Core PPI
accelerated to a 2.4% yearly rate from 2.1% in February, above expectations
of a 2.3% reading.

Fed's Williams and Collins have shown confidence that inflation will hit the
2% target leaving options of rate cuts in 2024 alive and easing bullish
pressure on the US Dollar.

On Wednesday, US CPI inflation accelerated at 0.4% pace in March and 3.5%
YoY, beating expectations of 0.3% and 3.2%, respectively. Risk aversion sent
US yields and the US Dollar surging.

Treasury yields for the US 10-year remain ready above the key 4.5% level.
The 2-year yield is near 5% after having rallied about 40 basis points in
three days. This will keep US Dollar's downside attempts limited.

On Wednesday, BoC left interest rates unchanged at 5%, but Governor Macklem
revealed that committee discussed possibility of cutting rates, adding
negative pressure to CAD.

Futures market bets for Fed rate cuts in June have dropped to 20% from
levels above 50% before US CPI report, according to CME Group's FedWatch
Tool

Canadian Dollar price this week

The table below shows the percentage change of Canadian Dollar (CAD) against
listed major currencies this week. Canadian Dollar was the weakest against
the US Dollar.

Technical analysis: USD/CAD breaks above channel top, next resistance at
1.3740 

The US Dollar has broken above the last two months' channel top as the
strong US inflation data dampened hopes of a rate cut in June. Bulls have
taken control, extending their rally to levels near 1.3700 with no sign of a
bearish reversal in sight.

The reverse trendline is acting as support, confirming the bullish trend.
The next upside targets are 1.3740 and 1.3770. The measured target of the
broken channel is the mid-November high at 1.3845. Supports are the
mentioned channel top, 1.3660 and 1.3545.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Gold price hits an all-time high to near $2,390

Gold prices (XAU/USD) climbs to a record high near $2,390 during the early
Asian session on Friday. 

The market expectation that the US Federal Reserve (Fed) will cut its
benchmark interest rate this year is the main driver for the yellow metal.
Additionally, the gold purchase by the Chinese central bank and the ongoing
geopolitical tensions in the Middle East boost safe-haven flows, benefiting
the gold price. 

Analysts believe the US Fed to maintain its projection of three 25-basis
points (bps) rate cuts this year despite concerns over recent
higher-than-expected inflation reports.

The People's Bank of China (PBoC) purchased gold for the 17th consecutive
month in March, adding 160,000 ounces to its reserves of 72.74 million troy
ounces, per Reuters. Chinese investors have shifted to gold as an
alternative asset despite deteriorates in the property sector and equities
prices in recent years.

Furthermore, the rising geopolitical risks also boost safe-haven assets like
gold price. According to the US and its allies, there is a higher
possibility of drone or missile strikes by Iran or any of its proxy groups
on government and military infrastructure targets in Israel.

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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