Bulls n Bears Daily Market Commentary : 12 February 2024

Tue Feb 13 05:23:49 CAT 2024

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Bulls n Bears Daily Market Commentary : 12 February 2024

 <https://www.dulys.co.zw/> 
ZSE commentary

ZSE dips in lacklustre session; Treasury eyes fresh SMP

HARARE - Zimbabwe Stock Exchange shares traded lower on Monday mostly driven
by a slowdown in funds flow in select heavyweight stocks, as investors
appeared cautious ahead of the release of the Monetary Policy Statement,
whose date is still to be announced.

Investors are also on the lookout for a statement, which will announce the
success of negotiations of an IMF-driven staff monitored programme, whose
mission is being done concurrently with the Article IV consultations.

Zimbabwe is hoping for a fresh and wet SMP, which is critical for its debt
and arrears clearance programme. Treasury hopes that the SMP will be signed
off by this April.  If the country is to pursue bridge financing, then it
would have to complete an SMP as a pre-requisite. The last SMP the country
pursued was suspended in 2019 after the re-introduction of the local
currency. It is mostly dependent on the implementation of sound fiscal
discipline and strict exchange rate management.

At close, the All Share Index dropped 1.65% to 555 699.35. Turnover was
subdued at $1.84 million after 1.8 million shares traded. OK Zimbabwe led in
both value and volume after 1.53 million shares worth $1.38 billion traded.
Econet was the most traded at 19 out of the 150 trades. There was no foreign
participation.

The Top Ten Index was the weakest link, with a 2.48% loss to 250 063.47.
Econet was the worst performer, losing 13.54% to 216 152.59c and Delta lost
5.08% to 816 407.95c or 71.30 US cents.

However, FML rose 15% to 322 000c, becoming the standout heavyweight
performer.

The Medium Cap Index rose 3.78% to 2 226 910.54. CAFCA maxed out to 575 000c
after 300 shares traded. The group reported a marginal increase in sales
volumes to 573 tonnes in the quarter to December 2023 from 559 in the
corresponding year-ago period. This was due to improved exports. 

Export volumes increased 32 tonnes with more direct sales being seen in
Malawi due to an improved foreign currency situation. Local volumes were 3%
lower due to a decline in industry sector and factory cash sales. Historical
turnover and profit increased 718% and 503% respectively.

Year-to-date front runner NMB also rose 15% to 299 000c taking its market
cap to $1.2 trillion. Unifreight was 14.99% higher to 38 755c in a low value
trade of $77 510. Edgars, which is set to migrate to the VFEX, put on 14.93%
to 33 100c or 2.89 US cents.  FMP advanced 13.46% to a 52-week high of
59000c.

Masimba lost 11.71% to 300 000c and Tanganda was 11.25% lower to 213 000c.
ZHL fell 9.01% to 17084.76c reducing its year to date gains to 7.37%.

The VFEX All Share was 1.65% higher to 101.10. First Capital Bank led the
risers with a 19.09% gain to 2.62 US cents.  Seed Co International put on
16.15% to 32 US cents, Padenga added 11.38% to 15.66 US cents while marginal
gains were seen in Axia, Innscor and Simbisa.

However, African Sun fell 20% to 3.21 US cents.

Turnover was moderate at US$137 578.81 after 2.04 million shares traded.
First Capital led in both volume and value with 1.7 million shares worth
US$4 644.78.-finx

Global Currencies & Equity Markets

South Africa

South African rand firms in early trade

South Africa's rand was slightly stronger in early trade on Monday but
remained close to the 19.0 mark, with no major market-moving events expected
this week.

At 0840 GMT, the rand traded at 18.9950 against the U.S. dollar, about 0.2%
stronger than its previous close.

The dollar index was last up about 0.1% at 104.080.

South African markets shrugged off President Cyril Ramaphosa's State of the
Nation Address last week, in which he gave little detail about his plans to
address major challenges such as power cuts.

Investors will turn next towards the yearly budget presentation on Feb. 21,
which will lay out the government's spending priorities, revenue collection
measures and updated economic forecasts.

Statistics South Africa will release gold and mining production and retail
sales figures later this week, which could give clues about the state of the
economy.

On the stock market, the Top-40 index was up 0.02% while the broader
all-share was down 0.05% in early trade.

South Africa's benchmark 2030 government bond was weaker in early deals,
with the yield up 4.5 basis points to 10.000%. 

Nigeria

Naira crashes to N1,534 against US dollar at foreign market

The Naira depreciated to a record low of N1,534.39 against the US dollar at
the foreign exchange market on Monday.

Data from FMDQ showed that the Naira dropped to N1,534.39 per US dollar on
Monday from N1,469.97 on Friday.

This represents a 4.2 per cent or N64.42 depreciation compared to N1,469.97
recorded at the close of trading on Tuesday.

With the development, the Naira is back to the exchange rate it traded on
Monday, January 29, when the Central Bank of Nigeria introduced 'Financial
Markets Price Transparency and Market Notice of a Revision to the FMDQ FX
Market Rate Pricing Methodology' and other reforms.

Similarly, at the Parallel Market, Naira increased to N1,495 per Dollar on
Monday from N1,490 on Friday.

Meanwhile, the Central of Nigeria governor, Olayemi Cardoso, assured
exchange rate stability when he spoke at an interface with the Senate Joint
Committee on Banking, Insurance and Financial Institutions in Abuja on
Friday.

 <mailto:info at bulls.co.zw> 

Global Markets

Australian Dollar depreciates despite improved Consumer Confidence, US
Dollar remains calm

The Australian Dollar (AUD) retreats after posting gains in the previous two
sessions, despite the release of improved Australia Consumer Confidence data
on Tuesday. The Westpac-Melbourne Institute Consumer Sentiment index surged
6.2% to 86 in February from 81 in January, marking its highest reading in 20
months. However, the index remained below the neutral 100 mark since
February 2022.

Australian Dollar faces downward pressure as Australian inflation moderates,
leading to the market sentiment that the Reserve Bank of Australia (RBA) has
completed its monetary tightening cycle. This downward trend in the Aussie
Dollar weighs on the AUD/USD pair. Additionally, the Australian money
market's decline may further constrain the AUD's performance.

The US Dollar Index (DXY) holds steady after recent gains, with the decline
in US Treasury yields capping the strength of the US Dollar (USD). Market
sentiment is mixed, as traders exercise caution ahead of the release of
important US inflation data scheduled for Tuesday, which could influence
expectations regarding interest rates.

Daily Digest Market Movers: Australian Dollar declines amid a stable US
Dollar

National Australia Bank's Business Confidence improved to the reading of 1
in January from the previous flat 0.

National Australia Bank's Business Conditions decreased to 6 in January from
8 prior.

RBA's Head of Economic Analysis, Marion Kohler, emphasized uncertainty
regarding current inflation projections for the Australian economy. However,
she anticipates that price growth will eventually return to a more moderate
level by 2025.

The Commonwealth Bank of Australia (CBA) forecasted a reduction of 75 basis
points in the benchmark interest rate for 2024, with the initial cut
anticipated in September.

China's headline CPI declined by 0.8%, exceeding the anticipated decline of
0.5% and the previous decline of 0.3%.

Dallas Federal Reserve (Fed) Bank President Lorie Logan remarked on Friday
that there is currently no pressing need to lower interest rates. She
acknowledged "tremendous progress" in curbing inflation but emphasized the
necessity for additional evidence to ensure the sustainability of this
progress.

US Monthly Budget Statement came in with the reading of $-22B in January,
against the expected reading of $-21B and $-129B prior.

3-Month and 6-Month US Bill was auctioned at the rate of 5.23% and 5.065%,
respectively.

Technical Analysis: Australian Dollar trades near 0.6530 before the 14-day
EMA

The Australian Dollar hovers near 0.6530 on Tuesday, situated below the
immediate resistance of the 14-day Exponential Moving Average (EMA) at
0.6544 aligned with the major barrier at 0.6550 level. A breakthrough above
this major level could potentially prompt the AUD/USD pair to target key
levels such as the 23.6% Fibonacci retracement level at 0.6563 and the
psychological resistance at 0.6600. On the downside, the psychological level
of 0.6500 could act as the immediate support. A break below the latter could
push the AUD/USD pair to revisit the previous week's low at 0.6468 followed
by the major support level of 0.6450.

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 weakest
against the Japanese Yen.

        USD   EUR   GBP   CAD   AUD   JPY     NZD   CHF

USD           0.04%         0.03%         -0.01%        0.04%         -0.02%
0.02%         0.03%

EUR  -0.04%                 -0.01%        -0.05%        -0.01%        -0.06%
-0.03%        -0.01%

GBP  -0.03%        0.01%                  -0.04%        0.00%         -0.05%
-0.01%        -0.01%

CAD  0.01%         0.05%         0.04%                  0.02%         -0.01%
0.02%         0.05%

AUD  -0.04%        0.01%         0.00%         -0.04%                 -0.05%
-0.02%        0.01%

JPY    0.02%         0.07%         0.05%         0.01%         0.05%
0.03%         0.05%

NZD  -0.02%        0.02%         0.01%         -0.03%        0.01%
-0.03%                 0.01%

CHF  -0.03%        0.00%         0.00%         -0.04%        -0.03%
-0.05%        -0.01%        

The heat map shows percentage changes of major currencies against each
other. The base currency is picked from the left column, while the quote
currency is picked from the top row. For example, if you pick the Euro from
the left column and move along the horizontal line to the Japanese Yen, the
percentage change displayed in the box will represent EUR (base)/JPY
(quote).

AUSTRALIAN DOLLAR FAQS

What key factors drive the Australian Dollar?

One of the most significant factors for the Australian Dollar (AUD) is the
level of interest rates set by the Reserve Bank of Australia (RBA). Because
Australia is a resource-rich country another key driver is the price of its
biggest export, Iron Ore. The health of the Chinese economy, its largest
trading partner, is a factor, as well as inflation in Australia, its growth
rate and Trade Balance. Market sentiment - whether investors are taking on
more risky assets (risk-on) or seeking safe-havens (risk-off) - is also a
factor, with risk-on positive for AUD.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices subdued

Gold prices were subdued on Friday, hurt by a stronger dollar and higher
Treasury yields, while investors looked ahead to next week's US inflation
reading for clues on when the Federal Reserve could begin cutting interest
rates.

Spot gold XAU= was down 0,2 percent to US$2,029.80 per ounce at 1236 GMT,
with prices down 0,5 percent over the week. US gold futures also lost 0,2
percent to US$2,044.50 per ounce.

The dollar index DXY remained on track for a weekly rise, making gold more
expensive for holders of other currencies, while the US 10-year Treasury
yield also edged higher. 

Jigar Trivedi, a senior analyst at Reliance Securities, said that Fed Chair
Jerome Powell's recent comments had reduced the probability of an interest
rate cut in March, putting a cap on gold prices.

After several Fed policymakers this week said they would wait to cut rates
until they were more confident that inflation would fall to 2 percent, all
eyes will be on Tuesday's U.S. consumer price index report.

Traders now see about a 61 percent chance of an interest rate cut in May,
according to the CME Fedwatch tool. Lower interest rates decrease the
opportunity cost of holding non-yielding bullion.

On the physical front, physical gold dealers in India charged premiums this
week for the first time in four months, encouraged by a pick-up in purchases
as local prices eased, while the approaching Lunar New Year festival boosted
activity in China and elsewhere.

Elsewhere, palladium XPD= rose 0,3 percent to US$889,62 per ounce and
platinum was down 0,5 percent to US$880,56. Prices of both metals were
heading for a second weekly dip.

Prices of auto-catalyst metal palladium fell below those of platinum for the
first time since April 2018 on Thursday.

"Challenging supply backdrop, heavy platinum loadings and substitution away
from palladium are boding well for platinum," analysts at ANZ Research wrote
in a note. -Reuters.

INVESTORS DIARY 2024

Company

Event

Venue

Date & Time

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
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opinions expressed and recommendations made are subject to change without
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for guideline purposes only and sourced from third parties.

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