Bulls n Bears Daily Market Commentary : 16 January 2024

Wed Jan 17 09:18:03 CAT 2024

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Bulls n Bears Daily Market Commentary : 16 January 2024

ZSE commentary

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

Heavies lift the market.

The market continued to record gains for the third session in a row as
demand in selected heavies continued to surge. The All-Share Index advanced
5.06% to 287,342.12pts while, the Blue Chip index surged 6.31% to
129,655.62pts mainly anchored by gains in Delta. The Mid Cap Index was up
1.42% to settle at 1,041,825.51pts while, the Agriculture Index added 1.18%
to 690.83pts. Construction group Masimba Holdings headlined the gainers list
of the day as it jumped 15.00% to be restricted at circuit breaker level of
$1,063.7500. Beverages producer Delta buttressed prior session gains as it
inched up 14.62% to close at $5,865.8634 closing heavily bid at 15% while,
Proplastics ticked 13.22% to close trading at a VWAP $739.4674. Dairy
producer Dairibord edged up 11.95% to settle at $655.00000 while, sugar
processor Star Africa fastened the top five gainers list of the day on a
2.03% ascent to $9.5360.  Trading in the negative territory were Zimre
Holdings and Econet that lost 0.42% and 0.29% respectively, to see the
former settle at $173.9839 and the latter at $1,229.8847. Insurer FML
continued to lose ground in the session as it retreated 0.19% to $995.6719
on the back of continuous supply following a cautionary announcement done
last week. Property concern First Mutual shed 0.12% to close at $339.0999
while, roofing and pipe producer Turnall dropped a meagre 0.01% to $36.0500.

Activity aggregates continued to improve in the session as volumes traded
hopped 44.90% to see 5.84m shares worth $6.74bn exchange hands. This
represented a 57.20% increase in turnover. Rarely traded counter Unifreight
drove the volume aggregates of the day as it contributed 66.20% of the
total. In the value category trading was mainly confined in Unifreight and
Delta that claimed a combined 84.13% of the outturn. In the ETF category,
the three funds that registered price movements, closed pointing northwards.
Cass Saddle, Old Mutual Top 10 and Datvest MCS edged up 13.85%, 6.30% and
1.62% respectively. The Tigere REIT was stable at $390.0000 as 12,888 units
traded while, Revitus had no trades-efe

Global Currencies & Equity Markets

South Africa

South African rand weakens as Red Sea tensions push dollar up

(Reuters) - South Africa's rand weakened early on Tuesday as more attacks on
ships in the Red Sea weighed on risk sentiment and hawkish comments from the
World Economic Forum pushed the dollar higher, analysts said.

At 0718 GMT, the rand traded at 18.8350 against the U.S. dollar , about 0.8%
weaker than its previous close.

The dollar was last up about 0.3% against a basket of global currencies.

"News of a missile strike on a US-owned ship in the Gulf and Donald Trump's
overwhelming win in the Iowa caucus has seen risk-off in markets and a
stronger dollar," Andre Cilliers, Currency Strategist at TreasuryONE, said.

Hawkish comments from European Central Bank officials in Davos also spurred
investors to pare back bets on near-term rate-cuts by the U.S. Federal
Reserve, further boosting the dollar.

There were no economic data releases scheduled in South Africa on Tuesday.

Nigeria

The Nigerian naira (NGN) is melting away and it is not alone

The Nigerian naira remained under intense pressure as the US dollar index
(DXY) bounced back and as concerns about the economy remained. According to
TradingView, the USD/NGN pair surged to a record high of 955 on Tuesday. The
situation worsened in the black market, where the currency plunged to 1,305.
This situation has pushed the spread between the official and the street
exchange rate to almost 40%.

The Nigerian naira plunge happened as the government revealed that inflation
continued its uptrend in December. According to the statistics agency, the
headline Consumer Price Index (CPI) in Nigeria surged to a 27-year high of
28.9% in December. This is much higher than the Central Bank of Nigeria's
(CBN) target of between 6% and 8%. 

Therefore, there is a likelihood that the bank will continue hiking interest
rates to stem this inflation. The challenge is that it is unclear when the
Nigerian Central Bank will hold its next meeting since its last one happened
in July last year.

Economists have mixed views on whether interest rate hikes in emerging and
frontier economies work well to stem inflation. In most cases, people in
these countries don't have enough savings in the first place. Also, high
interest rates tend to affect economic growth by limiting lending and
increasing non-performing loans (NPL) in the banking sector

The other challenge hitting the Nigerian naira is the ongoing demand for the
US dollar from both individuals and companies. Most of these individuals are
continually moving to the USD to hedge against naira depreciation. In a
note, Mohammed Abubakar, the head of Forward Marketing Exchange told
Bloomberg:

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the
Invezz newsletter, today.

"Dollar demand has risen steadily since the start of January, from
businesses that want to restock goods or their raw materials as well as
individuals needing dollars for studies abroad."

Dollar scarcity in emerging markets has escalated in the past few years
because of the rising interest rates in the United States. The Fed has hiked
rates to between 5.25% and 5.50%, the highest level in over two decades.
This, in turn, has led to investors pulling money to US assets. 

The Nigerian naira is not the only EM currency that has plunged to a record
low against the US dollar. In Kenya, the shilling plunged to 160 against the
dollar, meaning that it has lost over 60% of value in the past three years.

Similarly, in Tanzania, the shilling (TZS) has dropped to 2,520, a few
points below its all-time low of 2,540. In Turkey, the lira has slipped to
30, continuing a trend that has happened in the past few decades. Other top
underperforming currencies are the Ethiopian birr, Zambian kwacha, and the
Angolan kwanza.

The Nigerian naira and these other currencies will likely remain on edge as
the crisis in the Middle East escalates. The impact of this crisis is that
it has pushed inflation higher, putting the Fed in a bind when it comes to
interest rate cuts. As such, hopes of a rate cut in March have now
disappeared as Christopher Waller warned on Tuesday.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar at one-month high as rate cut expectations ease on Fedspeak

The dollar index hovered at a one-month high against a basket of currencies
on Wednesday as remarks by Federal Reserve Governor Christopher Waller
dampened expectations for a March rate cut.

Waller said that while the U.S. is "within striking distance" of the Fed's
2% inflation goal, the central bank should not rush towards cuts in its
benchmark interest rate until it is clear lower inflation will be sustained.

"I will need more information in the coming months confirming or
(conceivably) challenging the notion that inflation is moving down
sustainably toward our inflation goal," before backing rate cuts, he said on
Tuesday.

Market expectations of a rate cut in March have eased to a 62.2% chance
versus an 76.9% view in the prior session, according to CME's FedWatch Tool.

While the market's latest pricing brings the Fed rate curve into more
sensible territory, "with 157 basis points of rate cuts still priced in for
2024, there is room for this to ease back," said Tony Sycamore, market
analyst at IG.

Remarks by European Central Bank, or ECB, President Christine Lagarde later
on Wednesday could bring further repricing, he added.

"Rate cuts are coming but not as soon as some might be hoping for," Sycamore
said.

The dollar index

, a measure of the greenback against a basket of major currencies, last
stood at 103.35 after climbing as high as 103.42 during the previous
session, its highest level since Dec. 13. Tuesday also saw the dollar's
biggest one-day percentage gain since Jan. 2.

Meanwhile, the euro

was hanging near a one-month low at $1.0875 after its steepest one-day
percentage drop in two weeks, following comments from several ECB
policymakers this week that maintained uncertainty over the timing of rate
cuts.

Sterling

was last trading largely unchanged at $1.2636, after a sharp fall on Tuesday
in the wake of data that showed British wage growth slowed in the three
months through November.

The yen

was under some pressure again. The Japanese currency stood at its lowest
since early December at 147.45 per dollar, as U.S. bond yields ticked up to
support the greenback.

The move in dollar/yen overnight was a "reminder that US Treasury yields
remain a big influence on JPY with the (Bank of Japan) likely on the
sidelines until at least March (and in our view more likely until mid
year)," Rodrigo Catril, senior currency strategist at the National Australia
Bank, wrote in a note.

Elsewhere in Asia, eyes are on top-tier Chinese economic indicators for
December out later on Wednesday, including fourth-quarter growth which is
expected to have slowed to 1% in the October-December period from 1.3%.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold dips over 1% as dollar, yields rise on hawkish remarks by Fed's Waller

(Reuters) - Gold prices fell over 1% on Tuesday, pressured by a firmer
dollar and higher U.S. Treasury yields after Federal Reserve Governor
Christopher Waller's hawkish remarks on interest rate cuts this year, but
safe-haven buying limited bullion's downside.

Spot gold was down 1.3% at $2,027.26 per ounce as of 2:36 p.m. ET (1936
GMT), after gaining in the previous three sessions.

U.S. gold futures GCcv1 settled more than 1% lower at $2030.2.

"Strong gains in the U.S. dollar index are pressuring the gold market as
well as a rise in U.S. Treasury yields today on this first day back from the
three-day holiday weekend," said Jim Wyckoff, senior analyst at Kitco
Metals.

"However, one could argue that losses in gold are not bad compared to how
strong the dollar is as tensions in the Middle East are keeping a floor
under the prices."

The dollar index rose nearly 1% to a more than one-month high, making
bullion less attractive for other currency holders, while yields on the
benchmark U.S. 10-year Treasury notes also gained.

Waller said the United States was "within striking distance" of the Fed's 2%
inflation goal, but the central bank should not rush towards cuts in its
benchmark interest rate until it is clear lower inflation will be sustained.

The Fed bank is widely expected to hold its policy rate steady at the end of
its Jan. 30-31 meeting. Traders see a 67% probability of an interest rate
cut in March, according to the CME Fedwatch tool.

Elsewhere, European Central Bank officials also pushed back against market
expectations for rapid rate cuts this year.

Spot silver fell 1.2% to $22.93 per ounce.

Platinum declined 2.1% to $895.56 and palladium slipped 3.8% to $934.32,
marking its lowest level in over one month.

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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