Bulls n Bears Daily Market Commentary : 29 August 2024

Fri Aug 30 10:20:46 CAT 2024

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Bulls n Bears Daily Market Commentary : 29 August 2024

ZSE commentary 

ZSE extends losses in penultimate session...

The ZSE registered losses in the penultimate session of the month as the
All-Share Index lost 0.12% to 203.16pts while, the Agriculture Index fell
0.18% to 188.71pts. The Mid Cap Index eased 0.42% to 173.27pts as the
Blue-Chip Index inched up 0.09% to 211.4Spts. Retailer OK Zimbabwe led the
laggards of the day on a 11.49% dip to close at $0.7296, followed by ZB that
dropped 8.01% to $6.8890. Seed producer SeedCo dropped 3.81% to close at
$3.8477 while, Art slipped 1.79% to $0.2200. Star Africa capped the top five
fallers of the day on a 0.79% decline to end the day pegged at $0.0092. In
contrast, Nampak headlined the top performers of the day on a 8.67% jump to
$0.9405 while, fintech group Ecocash Holdings ticked up 3.19% to $0.4205.
Sugar processor Hippo advanced 1.61% to  $7.8239  while,  Mashonaland
Holdings  added  0.08% to $0.6205. Telecoms giant Econet completed the top
performers of the day on a 0.07% rise to end the day pegged at $3 .5025. The
market closed on a negative breadth of one as nine counters recorded losses
against eight that gained.

Activity aggregates enhanced in the session as volumes traded ballooned
53.22% to 3.39m shares while, turnover grew by 69.02% to $7.52m . The top
volume drivers of the day were Star Africa (43.54%), SeedCo (14.82%),
Ecocash (l .19%) and Econet (10.49%). The trio of Delta, SeedCo and Econet
contributed a combined 81.60% of the turnover. A total of 29,737 units
exchanged hands in the ETF category. Revitus REIT firmed up 1.53% to close
at $0.8148 while, Tigere REIT charged 14.99% to end the day pegged at
$1.0146.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity 

South Africa

South African rand firms to 13-mth high ahead of key US inflation reading

(Reuters) - The South African rand firmed on Thursday to its strongest level
in 13 months, buoyed by the return of risk appetite to financial markets
ahead of key U.S. inflation data which could solidify rate cut bets in the
world's biggest economy.

At 1546 GMT the rand traded at 17.7675 against the dollar , about 0.38%
stronger than its previous close. It hit 17.6775 to the greenback earlier in
the day, its best performance since late July 2023.

The dollar index , measuring performance against a basket of currencies, was
last up 0.36%, after data showed the U.S. economy grew a little faster than
expected in the second quarter.

Globally, markets will look to key U.S. Personal Consumption Expenditures
(PCE) price index on Friday, the Federal Reserve's preferred measure of
inflation. If the inflation report is positive, it is another argument in
favour of cutting interest rates in September.

Like other emerging market currencies, the rand often takes cues from global
drivers in addition to local factors.

South Africa's producer inflation (ZAPPIY=ECI), opens new tab fell to 4.2%
year on year in July from 4.6% in June, statistics agency data showed on
Thursday.

Local investors will now shift focus to July money supply, trade and budget
balance data on Friday.

On the Johannesburg Stock Exchange, the blue-chip Top-40 index (.JTOPI),
opens new tab closed about 0.34% up.

South Africa's benchmark 2030 government bond was slightly stronger, as the
yield slipped 0.5 basis point to 9.135%.

Zambia

Zambian Inflation Hits 32-Month High as Food Prices Soar

(Bloomberg) -- Zambia’s annual inflation rate rose to a 32-month high in
August as an El Niño-induced drought continued to wreak havoc on food
prices.

Consumer prices increased 15.5%, compared with 15.4% in July,
Statistician-General Goodson Sinyenga told reporters in Kabwe, about 142
kilometers north of the capital Lusaka, on Thursday. Prices rose 0.9% in the
month from 1% in July.

The extreme drought has constrained the economy, withered crops, curtailed
hydropower-generation and led to a surge in costly imports that have
weakened the kwacha. Prices of food, which make up more than half of the
inflation basket, rose to 17.6% from 17.4% last month and non-food price
growth slowed to 12.5% compared with 12.6% in July.

The dry spell has complicated efforts by the central bank to return
inflation to its 6% to 8% target band by next year and meant that it’s had
to keep its key interest rate higher for longer.

The bank this month held the rate at a seven-year high of 13.5% after six
straight hikes of a combined 450 basis points. It’s also aiming to conclude
consultations over plans to curb the use of foreign currency in domestic
transactions to bolster the kwacha.

A request by state-power utility Zesco Ltd. to increase electricity tariffs
by as much as 156% to cover the cost of emergency supplies could have
further fanned inflation but was rejected by the energy regulator last week.

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar gains for 2nd day after GDP backs smaller Fed cut

(Reuters) - The U.S. dollar rose for a second straight session on Thursday
after data showed the world's largest economy grew a little faster than
expected in the second quarter, modestly reducing expectations for a larger
50 basis-point (bp) rate cut next month by the Federal Reserve.

The report also added to growing expectations that the United States could
avoid recession altogether, or go through just a mild one, analysts said.

Following the U.S. data, the dollar rose to a one-week high against the yen
to 145.55 and was last up 0.1% at 144.77 yen. The dollar/yen pair is the
most sensitive to economic expectations, typically moving in tandem with
U.S. Treasury two-year yields.

Against the euro, the dollar gained, with the single European currency
falling 0.4% to $1.1077 . On the week, the euro has so far fallen 1.04%, the
biggest weekly decline since early April.

Thursday's data showed gross domestic product (GDP) grew at a 3.0%
annualised rate in the second quarter, according to the Bureau of Economic
Analysis' second estimate. That was an upward revision from the 2.8% rate
reported last month, and higher than the 1.4% rise seen in the first
quarter. Economists polled by Reuters had forecast GDP would be unrevised at
2.8%.

In a separate report, jobless claims fell by 2,000 to a seasonally adjusted
231,000 for the week ended Aug. 24. Economists polled by Reuters had
forecast 232,000 claims for the week.

The number of people receiving benefits after an initial week of aid, a
proxy for hiring, increased by 13,000 to a seasonally adjusted 1.868
million, near the levels seen in late 2021, suggesting persistent
unemployment.

"The data so far looks consistent with a 25 basis-point cut, not 50, which
has been our view," said Vassili Serebriakov, FX strategist, at UBS in New
York.

U.S. rate futures priced in on Thursday a 35% chance of a 50 bp easing next
month, slightly down from Wednesday's 37% probability, LSEG calculations
showed. Markets also factored in about 102 bps of cuts by the end of 2024.

The dollar index advanced 0.3% to 101.35 following the GDP data and jobless
claims report. On the week, it has gained 0.6%, on track for its largest
weekly rise since early April.

MONTH-END FLOWS

"The dollar has been better bid...due to month-end flows. We'll likely see a
continuation of that," said Brad Bechtel, global head of FX, at Jefferies in
New York.

"The dollar index has been oversold when it was down below 101. I would
expect we would migrate back to the 103-104 area. But the labor market
report will be critical for that."

As the month-end approaches, investors tend to square up positions, such
that when an asset has been sold off for the month like the dollar, they
would normally buy it back to balance their books or portfolios.

In August, the dollar has lost 2.7% of its value, on pace for its largest
monthly fall since November 2023.

"We've had a sense that the dollar's selloff has been overextended...and the
reasons are understandable given that the Fed is getting close to cuts,"
said UBS' Serebriakov.

Investors now await Friday's release of the U.S. core personal consumption
expenditures (PCE) price index, the Fed's preferred inflation gauge, which
could provide more clues on the size of the rate cut in September, including
the pace of the incoming easing cycle.

In the euro zone, the euro fell to a 10-day low of $1.1059, after hitting a
13-month high on Friday of $1.1201. The euro was undermined overall by
inflation data from Germany and Spain, which raised bets on the European
Central Bank's rate easing outlook.

Data showed, inflation fell in six important German states in August,
suggesting national inflation could decline noticeably this month. It
dropped to the slowest pace in a year in Spain.

Money markets priced in 67 bps of ECB cuts in 2024 , from around 63 bps
before the data.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price dips ahead of key US inflation data release

The gold price (XAU/USD) edged lower on Friday as the US dollar (USD)
strengthened.

A positive US growth report and a decline in Initial Jobless Claims have
reduced the likelihood of a deeper rate cut by the Federal Reserve (Fed) in
September, putting pressure on the non-yielding precious metal, News.Az
reports citing foreign media.

Nonetheless, the escalating geopolitical tensions in the Middle East and the
war between Russia and Ukraine might boost the safe-haven demand, benefiting
the yellow metal.

Investors will closely monitor the US inflation data for further insights on
the potential size of the Fed rate cut.

The core Personal Consumption Expenditures (PCE) Price Index, the Fed's
preferred gauge of inflation, is estimated to show an increase of 2.7% YoY
in July, compared to 2.6% in June.

A softer-than-expected PCE reading could trigger the Fed to start a
rate-cutting cycle, which acts as a tailwind for XAU/USD.

INVESTORS DIARY 2024

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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