Bulls n Bears Daily Market Commentary : 16 April 2024

Wed Apr 17 07:35:47 CAT 2024

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Bulls n Bears Daily Market Commentary : 16 April 2024

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

ZSE  continue to falter ...

The market continued to falter in Tuesday's session as losing stocks outweighed the gainers to leave the market in the red. The mainstream All Share Index dropped 0.81% to close at 98.43pts while, the Mid Cap Index let go 0.96% to 100.94pts. On the contrary, the ZSE Top Ten Index charged 1.70% to 99.71pts while, ZSE Agriculture Index put on 0.48% to end at 100.93pts. Star Africa headlined the decliners of the day on a 0.85% to $0.0030, followed by Econet that trimmed 0.11% to $1.7299. SeedCo Limited shed 0.10% to close at $1.8000 as Turnall retreated 0.02% to $0.0275. CBZ completed the top five shakers of the day on a 0.004% loss to $3.9500. The tripartite of Willdale, OKZIM and Ariston led the positive movers of the day on a similar 0.12% gain to close at respective prices of $0.0450, $0.5280 and $0.0562. Hippo improved 0.09% to $3.7800 as Zimre holdings added 0.08% to $0.2600.

Activity aggregates were mixed in Tuesday's session as volumes dipped 26.35% to 177,200 shares while, turnover jumped 20.26% to $80,936.84. Ariston and Star Africa contributed a combined 78.95% of the volume outturn. Driving the value aggregate was Delta and Econet claimed 52.60% and 18.60% respectively. The Datvest ETF surged 15.00% to $0.0230 while, the Old Mutual ETF grew 11.19% to $0.1043. The Morgan and Co MCS went up 3.58% to $0.3800 on 640 units. The Tigere REIT climbed up 7.55% to end $0.5527 while, the Revitus property slipped 1.83% to $0.2200.-efsecurities

Global Currencies & Equity Markets

South Africa

South African rand extends losses as risk sentiment sours

South Africa's rand extended its losses early on Tuesday as risk appetite fell amid heightened tensions in the Middle East and dwindling bets that the Federal Reserve would not cut interest rates any time soon.

At 0754 GMT, the rand traded at 19.0975 against the dollar , 0.59% weaker than its previous close.

The dollar index was last trading 0.08% higher against a basket of currencies, after hitting a five-month on Tuesday.

Following a recent raft of U.S. economic data, markets have reduced bets of a Fed interest rate cut in July, with the likelihood of the first cut only coming in September.

"Safe-haven assets like the dollar and gold are in demand as risk sentiment turns negative," said Andre Cilliers, currency strategist at TreasuryONE.

On the South African stock market, the Top-40 index was down 1.73% while the broader all-share index was 1.65% lower in early trade.

South Africa's benchmark 2030 government bond was weaker in early deals, with the yield up 6 basis points to 10.845%.

Nigeria

Naira posts 4th weekly gains but faces high resistance at key support level

The naira gained momentum and hit its highest level against the greenback since it was devalued in January. The Nigerian currency appreciated for the 4th consecutive week to settle at N1,245 per against the dollar amid amplified confidence in the naira.

The Nigerian local currency ended the week at ₦1,251.05/$1, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM), up against the US dollar at the official window for the fourth straight trading day in April 2024.

The CBN, led by Governor Olayemi Cardoso, has implemented several policies to increase local dollar liquidity and free up the naira.

The Economist Intelligence Unit (EIU) had predicted further depreciation of the naira, but so far, the naira has defied it. The EIU predicted the value of the Nigerian Naira would eventually level out at roughly N2,000 per US dollar this year.

However, current fundamentals and price actions indicate that the Nigerian Naira faces significant resistance, especially when the US dollar is strengthening amid strong U.S economic data despite a hawkish CBN as the naira oscillates not too far from a key support level of N1200/$.

Recommended reading: Naira gains N821 against the British pound from its February low

Hawkish CBN

Nigeria’s central bank paid off all its verified foreign exchange backlogs as part of its plan to steady the naira and rein in skyrocketing inflation,

The Nigerian Central Bank raised the benchmark interest rate by 600 basis points to 24.75 percent this year in response to the country’s rapidly rising inflation. However, the CBN’s overall aggressive strategy has brought about some stability. This strategy includes cracking down on the unofficial market and virtual service providers who are allegedly amplifying the naira’s weakness by driving demand for the dollar pegged USDT

Solid U.S Economic data

With the nonfarm payrolls report for March coming in significantly better than anticipated, the dollar index continued to rise modestly in London trade. Markets sharply reduced expectations that the Fed will cut interest rates by as early as June due to the hot labor market. Trader expectations of a 25-basis point cut in June have decreased from last week’s 55 percent to approximately 51 percent.

The CME Fedwatch tool highlighted those expectations for a hold increased to 46.8% from 39.6% last week.

Wednesday’s consumer price index data for March is expected to provide additional inflationary cues. Wednesday is also the deadline for the Fed’s March meeting minutes, which should provide additional hints after several officials cautioned that the bank was not in a rush to lower interest rates.

Naira’s prospect

Nigeria’s 2024 FG budget is largely reliant on oil revenue to cover its obligations. The market will likely gauge OPEC’s next reading for more insights into Nigeria’s oil production.

OPEC’s oil production was down in March, due to a combination of lower oil exports from both Nigeria and Iraq and ongoing voluntary supply restrictions. OPEC produced 26.42 million barrels per day on average in March, up from 50,000 barrels per day in February

 <mailto:info at bulls.co.zw> 

Global Markets

Australian Dollar advances on improved sentiment amid corrected US Dollar

The Australian Dollar (AUD) ends its three-day decline on Wednesday, bouncing back from levels not seen since mid-November. Nevertheless, hawkish remarks from Federal Reserve (Fed) officials and the influx of safe-haven flows could bolster the US Dollar (USD) and potentially limit the upside of AUD/USD in the short term.

The Australian Dollar gains upward momentum as the ASX 200 Index rebounds after three consecutive days of losses. However, AUD encountered obstacles, possibly due to risk aversion, as investors awaited Israel's response to Iran's air strike on Saturday with caution. A Reuters report indicated that a third meeting of Israel's war cabinet, scheduled for Tuesday to determine a reaction to Iran's unprecedented direct attack, was postponed until Wednesday. Meanwhile, Western allies are considering swift imposition of new sanctions against Tehran to dissuade Israel from escalating the situation further.

The US Dollar Index (DXY) pulls back from a five-month high of 106.51 reached on Tuesday. This decline could be attributed to a slight decline in US Treasury yields. Fed Chairman Jerome Powell's remarks on Tuesday, stating that recent data suggests little progress on inflation this year and that it will take longer than anticipated to reach the 2% target, may have contributed to a hawkish stance and provided some backing to the US Dollar.

Daily Digest Market Movers: Australian Dollar recovers losses on improved sentiment

Westpac Leading Index declined by 0.1% month-over-month in March, compared to February’s increase of 0.8%.

Australian Employment Change and Unemployment Rate for March are scheduled to be released on Thursday.

China’s Gross Domestic Product (GDP) rose by 1.6% QoQ in the first quarter of 2024, against the previous quarter’s increase of 1.0%. GDP year-over-year rose by 5.3%, exceeding the expected 5.0% and 5.2% prior.

China’s Industrial Production (YoY) increased by 4.5% in March, against the market expectations of 5.4% and 7.0% prior.

Late on Tuesday, US National Security Advisor Jake Sullivan announced that new sanctions targeting Iran, along with sanctions against entities supporting the Islamic Revolutionary Guard Corps and Iran's Defense Ministry, will be implemented in the coming days.

Federal Reserve Bank of San Francisco President Mary Daly has emphasized that although there has been significant progress regarding inflation, there is still more to be done. She stressed the necessity of being assured that inflation is heading towards the target before making any decisions.

According to the CME FedWatch Tool, the likelihood of interest rates remaining unchanged in the June meeting has been increased to 84.8% from Monday’s 78.7%.

US Building Permits (MoM) fell to 1.458 million in March, compared to the expected 1.514 million and 1.523 million prior. Housing Starts declined to 1.321 million MoM from 1.549 million, falling short of the expected 1.480 million.

US Retail Sales (MoM) increased by 0.7% in March, exceeding the market expectations of 0.3%. The previous reading was revised to 0.9% from 0.6% in February.

Technical Analysis: Australian Dollar holds ground above the support level of 0.6400

The Australian Dollar trades around 0.6420 on Wednesday. The 14-day Relative Strength Index (RSI) indicates a bearish sentiment for the AUD/USD pair as it sits below the 50 level. Key resistance for the pair could be encountered at the 23.6% Fibonacci retracement level of 0.6449, coinciding with the significant level of 0.6450. A breach above the latter could bolster the pair's momentum toward testing the nine-day Exponential Moving Average (EMA) at 0.6480 and, subsequently, the psychological barrier of 0.6500. On the downside, notable support is observed at the psychological level of 0.6400. A breach below this level may intensify downward pressure on the AUD/USD pair, potentially leading it toward the major support level at 0.6350, followed by November's low at 0.6318.

AUD/USD: Daily Chart

Australian Dollar price today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Pound Sterling.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold is Gold holds steady as geopolitical risks counter rate cut concerns

(Reuters) - Gold prices held steady on Tuesday, as safe-haven demand amid ongoing tensions in the Middle East offset rising expectations of fewer U.S. rate cuts this year.

Spot gold was little changed at $2,382.72 per ounce by 13:56 ET (1756 GMT).

U.S. gold futures settled 1% higher at $2,407.8.

The yellow metal touched an all-time high of $2,431.29 on Friday in anticipation of Iran's retaliatory attack against Israel.

Data showed on Monday U.S. retail sales increased more than expected in March. The 10-year Treasury yields were up for the second consecutive day, making non-yielding bullion less attractive.

"The market is in pause mode and waiting for the other shoe to drop on this Israeli-Iran confrontation. You will see another rally in gold if the situation escalates," said Jim Wyckoff, senior analyst at Kitco Metals.

"If the Middle East conflict de-escalates, market focus will turn to the Fed. It has become apparent that Fed is not going to be able to cut rates soon, which is a bearish element for gold and silver markets."

Federal Reserve Chair Jerome Powell told a U.S. Senate panel just over five weeks ago the Fed was "not far" from gaining confidence in inflation falling to the level needed to cut interest rates but policymakers, investors and outside analysts have lost a bit of faith in that outlook in light of a series of strong economic data.

Deutsche Bank forecasts gold prices at $2,400 per ounce by year-end and at $2,600 in December 2025.

"We think gold is likely to remain on a strong footing as any profit-taking by early investors would be replaced by investment from those who have so far not participated in the move, but agree philosophically with its direction," the bank added in a note.

Spot silver fell 2.4% to $28.17 per ounce, platinum eased 1.2% to $958.03 and palladium was down 2.3% to $1,012.00.

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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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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