Bulls n Bears Daily Market Commentary : 08 July 2024

Tue Jul 9 10:00:16 CAT 2024

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Bulls n Bears Daily Market Commentary : 08 July 2024

ZSE commentary

EcoCash, FBC gains sustain ZSE momentum

HARARE - Zimbabwe Stock Exchange equities opened the week stronger although
lacking perk-up liquidity momentum with investors now focused on the
upcoming mid-term monetary and fiscal reviews, whose dates are yet to be
announced.

Treasury is expected to revise downwards its economic growth forecast for
2024 from the current 3.5% as the full impact of the drought in the past
season and the tight liquidity conditions have curtailed growth further.
The central bank is likely to maintain its current hawkish stance as it
continues to manage the exchange rate while keeping inflation at a minimum.

At close, the All Share Index rose 2.69% to 151.18 in a session which
yielded 14 risers against three fallers. Turnover was at ZWG3.8 million from
the trade of 4.43 million shares. EcoCash contributed the most to turnover
and volume at ZWG1.1 million from 3.02 million shares.  Trades totaled 165
with Delta the most active at 25. Foreigners were net buyers at ZWG342 883
against sales of ZWG153 500.

The Top Ten advanced 2.80% to 160.08. EcoCash, now a speculative stock, was
14.96% stronger to 36.5c and FBC added 12.74% to 293.13c in a low volume
trade of 200 shares. Econet added 2.18% to 320.13c while other small gains
were seen in Delta and CBZ.  

The Medium Cap Index was 1.81% higher to 130.66. Tanganda led the risers
with a 14.98% gain to 271.3c ahead of the release of its delayed results.
Nampak rose 14.81% to 100.23c taking its market cap to US$55.04 million and
Mash Holdings put on 12.96% to 24c.

Star Africa was the day's worst performer with a 2.19% loss to 0.78c while
Willdale shed 0.32% and Ariston pared 0.12%.

On the VFEX, turnover was depressed at US$48 393 after the trade of 763 189
shares. The All Share Index added 0.44% to 104.91. First Capital led the
risers with a 13.75% gain to 4.55 US cents and Simbisa was 0.55% ahead to
34.64 US cents.

Padenga was the weakest link after declining 5.09% to 16.04 US cents and
Axia dropped 1.22% to 8.89 US cents. Other fractional losses were seen in
Innscor, Seed Co International and Padenga.-finx

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity 

South Africa

South African Rand Still Holding That Optimism: Nedbank

The South African Rand has further appreciation potential as the country's
new political settlement is yet to be fully discounted.

This is according to a new analysis from Newbank, the South African lender
and investment bank.

In a new note detailing his expectations for the Rand, analyst Walter De Wet
says, "tactically, we remain buyers of the rand".

The Rand has appreciated in value against the Dollar, Pound and Euro since
early June when it became clear the country was headed for a multi-party
coalition that excluded extreme left-wing parties.

"The local unit still reflects optimism about the local election outcome, in
our view. As a result, it remains the case that the risk of substantial
depreciation in the rand has dissipated despite the post-election reality
settling into the local market," says De Wet.

De Wet's studies find that the Rand has outperformed its Emerging Market
peers, and he finds evidence that domestic factors are providing a tailwind.
He says this is directly related to country-specific factors; specifically,
the election outcome.

"South Africa's election outcome is still seen as positive by market
participants. This is the case even if there are some reality setting into
local markets after the cabinet announcement. As a result, we believe it
remains the case that the risk of substantial deprecation in the rand has
decreased. This would also be consistent with our underlying fundamental
view that favours a stronger rand towards 17,20 over time," says De Wet.

But, the target is not guaranteed, with De Wet saying it now falls to the
new administration to implement the policy measures to catalyse a move.

Nigeria

Naira weakens to 1,523/$ at official market

The naira depreciated at both the official and parallel markets on Monday.

At the official, Nigerian Autonomous Foreign Exchange Market, the naira
dropped to 1,523.85 per dollar, depreciation from the previous close of
1,509.67 to the American greenback.

NAFEM is the market trading segment for Investors, Exporters, and End-users
that allows for forex trades to be made at exchange rates determined by
prevailing market conditions.

The naira traded at an intra-day high of 1,540.75 and a low of 1,474.05 to a
dollar. Turnover stood at $133.46m higher than $116.88m on Friday,
indicating improved liquidity in the market.

THE LOUNGE: Engaged To A Girl I Gang-R?ped In School - Should I Confess My
Involvement0.00 / 0.00

On the parallel market, The PUNCH findings revealed that the naira
depreciated by 0.33 per cent, ending the day at 1,528 per dollar compared to
1,523 per dollar on Friday.

Last week, the foreign exchange market experienced relief for the naira due
to reduced speculative activities, causing the naira to strengthen against
the United States American dollar across market segments.

At the end of the first half of 2024, the naira emerged as the
worst-performing currency in the world.

According to a report by Bloomberg on Friday, depreciation, insufficient
dollar liquidity, and market volatility have hindered efforts by the Central
Bank of Nigeria to strengthen the currency.

Besides the naira, Egypt's pound and Ghana's cedi were the world's other
worst performers in the first six months of the year.

Meanwhile, International financial analytics corporation, S&P Global, has
described the Dangote Oil Refinery and Petrochemicals company as capable of
resolving Nigeria's forex issue and its pressure on the local currency,
while boosting economic development.

MA

 <mailto:info at bulls.co.zw> 

Global Markets

Rupee flat; state-run banks' dollar sales support as Asian peers slip

(Reuters) - The Indian rupee was largely flat in early trading on Tuesday as
mild dollar sales from state-run banks supported the currency even as most
of its Asian peers slipped.

The rupee was at 83.4775 against the U.S. dollar as of 10:10 a.m. IST,
barely changed from its previous close at 83.4925.

Most Asian currencies edged lower ahead of Federal Reserve Chair Jerome
Powell's closely watched two-day testimony before Congress starting later in
the day. The dollar index was at 105 after rising 0.1% on Monday.

Advertisement . Scroll to continue

Powell's remarks will follow a string of relatively soft U.S. economic data
which has helped push up the odds of a September rate cut by the Fed to
above 75%, according to the CME's FedWatch tool.

"If Powell hints that the Fed is closer to an interest rate cut in
September, it could send the (dollar index) below 104.75, a critical support
level," DBS Bank said in a Tuesday note.

However, traders do not expect Powell's remarks to have a notable impact on
the rupee.

Advertisement . Scroll to continue

It is "tricky to say" which cue may move the currency out of the prevailing
83.40-83.60 band, with the Reserve Bank of India expected to limit
depreciation, while corporate dollar demand caps gains, a foreign exchange
trader at a state-run bank said.

Inflows worth about $2.1 billion into Indian debt and equities over July so
far, according to stock depository data, have also supported the rupee.

Mostly range-bound price action though has squeezed volatility expectations
on the dollar-rupee pair with the 1-month implied volatility dropping to
1.75%, its lowest since March.

Alongside Powell's testimony, remarks from other Fed speakers will also be
in focus heading into the U.S. consumer inflation print on Thursday.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price jumps ahead of Fed Powell's testimony

The Gold price (XAU/USD) gains momentum amid the weaker US Dollar (USD)
during the early European session on Tuesday. The downside for the precious
metal might be limited as traders raise their bets that the US Federal
Reserve (Fed) would cut interest rates in September following soft US
employment data last week. Additionally, the cautious mood amid the
political uncertainties in France and geopolitical tensions in the Middle
East might boost the Gold price, a traditional safe-haven asset.

Nonetheless, Gold prices might be dragged lower by the People Bank of
China's (PBoC) decision not to buy Gold for a second straight month in June.
Gold traders will monitor Fed Chair Jerome Powell's semi-annual
Congressional testimony, along with the speeches from Fed's Michael Barr and
Michelle Bowman. On Thursday, the US Consumer Price Index (CPI) inflation
data will take center stage. 

Daily Digest Market Movers: Gold price remains strong amid rising Fed rate
cut bets

The Chinese central bank kept Gold buying on hold for the second month in
June, according to official data released on Sunday.

China, the world's largest gold consumer, kept its gold holdings unchanged
for the second consecutive month in June, after 18 months of purchases.
These figures indicated that its reserves remained at 72.8 million ounces,
valued at roughly $170 billion.

"This looks like a lot of profit taking, and the equities are strong, and
this morning here, which kind of has a little bit of a competing factor with
precious metals," said Bob Haberkorn, senior market strategist at RJO
Futures.

Financial markets have priced in a nearly 76% chance of a Fed rate cut in
September, up from 71% last Friday, according to the CME FedWatch tool. 

The US CPI inflation is expected to ease to 3.1% YoY in June from 3.3% in
May, while core inflation is estimated to remain steady at 3.4% YoY in the
same reported period.

Technical Analysis: Gold price's bullish bias remains in the longer term

The gold price trades on a positive note on the day. The yellow metal
sustains a breakout above a descending trend channel that formed on May 10.
According to the daily chart, the precious metal maintains the bullish trend
above the key 100-day Exponential Moving Average (EMA), with the 14-day
Relative Strength Index (RSI) holding in the bullish zone above the
50-midline. This indicates that the support level is likely to hold rather
than break. 

The $2,400 psychological level acts as an immediate resistance level for
XAU/USD. The next upside barrier to watch is $2,432 (high of April 12) en
route to $2,450 (the all-time high). 

In the bearish event, the first downside target will emerge at $2,340
(former resistance level). Any follow-through selling below this level will
pave the way to  $2,273 (100-day EMA). 

US Dollar price this week

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

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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