Bulls n Bears Daily Market Commentary : 15 July 2024

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Bulls n Bears Daily Market Commentary : 15 July 2024

 

 	



 

 	


ZSE commentary

 

ZSE resumes new week in the black...

The ZSE market resumed the new week in black as the primary All Share Index
gained 2.46% to close at 180.22pts while, the Blue-Chip Index rose 1.83% to
192.2 pts. The  Agriculture Index went up 4.61% to 152.97pts while, the Mid
Cap Index added 3 .46% to 146.57pts. Proplastics headlined the top
performers of the day on a 15.00% jump to close at $0.8050. The duo of TSL
and milk processor Dairibord surged a similar 15.00% to end at $2.2810 and
$1.5220 respectively. CFI charged 14.99% to $2.1290 while, banking group ZB
Financial Holdings  completed  the  top  five  winners  of  the  day  on  a
side, brick manufacturer Willdale led the laggards of the day on a 5.37%
decline to $0.0374, followed by tea producer Tanganda that fell 3.47% to
$4.0000. Star Africa eased 3.08% to $0.0081 while, ART slipped 0.41% to
settle at $0.1000. Agriculture concern Ariston trimmed 0.07% to end pegged
at $0.0400. Seventeen counters recorded gains against three that faltered to
leave the market w ith a positive breadth of fourteen .

 

Activity aggregates were mixed in the session as volumes traded ballooned
203.00% to 6.61m shares while, value traded succumbed 27.76% to $14.llm.Top
volume drivers of the day were OKZim {54.05%), Star Africa (17.41%} and
Delta (11.02%). Delta, OKZim and AFDIS contributed a combined 95.13% to the
total value traded. A total of 360,165 units exchanged hands in the ETF
section. Cass Saddle ETF shot up 6.09% to $0.0122 while, the Morgan and Co
multi sector ETF tumbled 1.20% to end the day pegged at $0.4100. The Tigere
REIT firmed up 0.99% to $0.7122 on 4,521 units.

 

VFEX records losses in week opening session ...

Padenga led the laggards of the day on a 16.16% drop to settle at $0.0180.
Hotelier African Sun retreated 1.25% to close at $0.0395 as banking group
First Capital completed the fallers of the day on a 0.25% decline to end the
day pegged at $0.0399.

 

Activity aggregates enhanced in the session as volumes traded ballooned
50.71% to 18,484 shares while, value outturn grew 3,844.9% to $129,813.00.
Top volume leaders of the day were Axia, lnnscor and Padenga that accounted
for a shared 85.69% of the total. lnnscor, Axia and Padenga were the top
traded counter by value after claiming a combined 93.62% of the
outturn.-efesecurities

 

 <mailto:info at bulls.co.zw> 

 

 

Global Currencies & Equity 

 

South Africa

 

Rand weakens as markets weigh up a possible Trump victory following shooting

The dollar held steady on Monday and cryptocurrencies jumped as investors
weighed up what the attempted assassination of former US President Donald
Trump might mean for his chances in the 2024 elections and the possible
impact on markets.

 

In the aftermath of the shooting, investors narrowed the odds of a Trump
victory. Such an expectation has in the past strengthened the dollar as
traders have calculated its would lead to looser fiscal policy and extra
trade tariffs.

 

 

The rand took a knock on Monday and was trading at around R18.19/$ in early
afternoon trading, from R17.94 before the shooting. The local currency is
still 1% stronger over the past month.

 

"There's still a lot of ground to be covered between now and November and a
lot of uncertainty about what the Federal Reserve will do in the coming
months," Jane Foley, senior FX strategist at Rabobank, said.

 

Markets are now fully pricing a quarter-point rate cut from the Fed in
September after data last week showed consumer prices fell on a monthly
basis for the first in four years in June.

 

"On one hand you have increased likelihood of the Fed cutting in September
and on the other hand an increased chance of a Trump presidency which
suggests the interest rate cycle could be quite limited," Rabobank's Foley
added.

 

 

"You have these two opposing factors for the dollar in the near term."

 

The dollar index, which measure the currency against six major peers, was
last up less than 0.1% on the day at 104.10.

 

The euro was little changed at $1.0910 after earlier hitting its highest
level since March at $1.0921, while sterling dipped 0.1% to $1.2979.

 

Long-dated US bond yields ticked higher on expectations that a Trump win
would see policies that would drive up government debt and stoke inflation.

 

The benchmark 10-year Treasury yield was last up roughly 3.5 basis points at
4.2197%.

 

Elsewhere, crypto prices surged, with bitcoin last up roughly 4% at $62,601.
Ether jumped nearly 5% to $3 338.

 

Trump has presented himself as a champion for cryptocurrency, although he
has not offered specifics on his proposed crypto policy.

 

Yen watch

 

Elsewhere, the yen reversed some of its gains from late last week and last
stood at 157.96 per dollar, though remained not too far from a roughly
one-month high of 157.30 hit on Friday.

 

Tokyo was thought to have intervened in the market to prop up the battered
Japanese currency last week in the wake of the cooler-than-expected U.S.
inflation report, with Bank of Japan data suggesting that authorities may
have spent up to 3.57 trillion yen (R408 billion) to do so on Thursday.

 

"We continue to think that a more substantial Yen appreciation will require
a more significant negative US growth shock or a significantly more hawkish
BoJ (Bank of Japan)," Goldman Sachs analysts said in a note.

 

China also grabbed investors' attention on Monday, as data showed the
world's second-largest economy grew much slower than expected in the second
quarter, weighed down by a protracted property downturn and as job
insecurity squeezed domestic demand.

 

Separate figures released earlier in the day showed China's new home prices
fell at the fastest pace in nine years in June, with the battered sector
struggling to find a bottom despite government support measures to control
oversupply and bolster confidence.

 

 

The Chinese yuan last inched 0.2% lower to 7.2616 per dollar in the onshore
market.

 

"The second-quarter momentum weakening kind of implies that we'll need more
support to get the economy to the 5% target for the whole year," Alvin Tan,
head of Asia FX strategy at RBC Capital Markets, said.

 

China's once-in-five-year gathering of top officials, which usually ushers
in policy changes, kicked off on Monday. The four-day plenum will be watched
for measures to support the patchy recovery in the world's second-largest
economy.

 

Additional reporting on the rand by News24.

 

 

 

Nigeria

 

Naira depreciates against dollar at official market

The Naira on Monday depreciated at the official market, trading at N1,577.29
to the dollar.

 

Data from the official trading platform of the FMDQ Exchange, a platform
that oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM),
showed that the Naira lost N13.49.

 

This represents 0.86 per cent loss when compared to the previous trading
date on Friday, July 12 when it exchanged at N1,563.80 to a dollar.

 

However, the total daily turnover increased to 153.53 million dollars on
Monday, up from 126.50 million dollars recorded on Friday.

 

Meanwhile, at the Investor's and Exporter's (I&;E) window, the Naira traded
between N1,590 and N1,470 against the dollar.

 

(NAN)MA

 

 

 <mailto:info at bulls.co.zw> 

 

Global Markerts

 

 

Dollar Consolidates to Start the New Week

Overview: The assassination attempt on former President Trump has injected a
new dynamic as his chances of being re-elected appear to have risen. There
are a few trades that seem to benefit from a second term:  steepening yield
curve, weaker Mexican peso, and stronger crypto. The dollar initially
strengthened as the market's initially responded, while Tokyo markets were
closed for Marine Day. As North American activity is about to begin, the
dollar is mostly little changed. The Scandis and the New Zealand dollar are
exceptions, and off around 0.4%. Among emerging market currencies, central
European currencies are slightly firmer, while the Mexican peso, which had
enjoyed its best week of the year last week is off more than 1.1% to be the
worst performer today, though the South African rand is giving it a run for
its money. 

 

Disappointing Chinese data sent the shares that trade in Hong Kong lower
(-1.7%) while the mainland equities were little changed. Outside of Hong
Kong and Taiwan, most Asia Pacific equities advanced. Europe's Stoxx 600 is
trading a little heavier after a three-day rally to finish last week. US
index futures are firm. The S&P 500 and NASDAQ have fallen only once so far
this month. European benchmark 10-year yields are most 1-3 bp softer, while
the 10-year Treasury yield is up nearly three basis points to 4.21%. The US
two-year yield is almost a basis point softer at 4.44%. Fed Chair Powell
will be interviewed at the Economic Club in Washington a little after
midday. Gold is consolidating inside the pre-weekend range. It is holding
above $2400 and below $2414. September WTI extended last Friday's pullback
to almost $80.50 before catching a bit to resurface above $81. 

 

Asia Pacific

 

China's economic data disappointed. At 0.7%, the pace of growth more than
halved from Q1 1.6% quarterly pace. Economic output in H1 24 was 5.0%
greater than in H1 23. Details for June warn of weak momentum. Industrial
production and retail sales slowed sequentially a year-to-date,
year-over-year basis (6.0% vs 6.2%, and 3.7% vs. 4.1%, respectively). The
slowing of auto sales accelerated to a 6.2% contraction from 4.4% in May.
Auto production decelerated to 6.8% from 7.6%, even as EV output increased
(37% from 34%). New and used home prices softened further. The contraction
in property investment was steady at a 10.1% year-to-date, year-over-year
pace. The PBOC kept its one-year Medium-Term Lending Facility rate at 2.50%
while reducing the volume to CNY100 bln from last month's CNY182 bln, which
implies a drain of CNY3 bln. The data reinforces the sense of the importance
of the Third Plenum session that began today. 

 

The 10-year US yield reached its lowest level in four months after the US
CPI was reported July 11. It is little wonder that the dollar fell against
the yen. The speculative market was caught the wrong way. Non-commercials in
the CME futures market have shaved their largest net short yen position
since 2007 by a couple thousand contracts in week through July 9 but at 182k
contracts (notional value ~$14.2 bln), it was still extreme. Japanese
officials may have intervened to ensure the lesson was painful and bolster
the chances that it might not have to repeat the exercise again. With Tokyo
on holiday today the dollar has been confined to a narrow range
(~JPY157.75-JPY158.40), the lower half of the pre-weekend range. After the
BOJ, the Reserve Bank of Australia seems to be the most hawkish of the G10
central banks. Still, the futures market has downgraded the chances of a
hike to less than 20% from slightly more than 40% a week ago. The Australian
dollar closed at its best level since January 1 before the weekend
(~$0.6785). Still, that leaves it nearly a cent below the high at the end of
last year. It is trading firmly today (~$0.6760-$0.6790) within the
pre-weened range. Yet, with momentum indicators stretched and the proximity
of the upper Bollinger Band, ($0.6795), and Thursday's employment report,
some near-term consolidation looks likely. The yuan finished last week at
its best level in a month, aided by the same forces that weighed on the US
dollar more broadly. The five-day moving average is slipping below the
20-day moving average today for the first time in two months. The moving
averages against the offshore yuan crossed last Thursday. Yet, ahead of the
weekend, the dollar held above Thursday's low (~CNH7.2580) in the offshore
market and today, it held mostly above CNY7.26. The PBOC set the dollar's
reference rate at CNY7.1313 (CNY7.1315 before the weekend), the third
consecutive decline, albeit minor. The highest fixing last week was at
CNY7.1342.

 

Europe

 

Eurozone industrial production fell for the second consecutive month in May.
It fell by 0.6% and April's 0.1% decline was revised away. Recall the 2.5%
and 2.1% collapse month-over-month in Germany and France, respectively. On a
workday adjusted basis, industrial production in the eurozone is off 2.9%
year-over-year after falling 2.1% year-over-year in May 2023. Nevertheless,
it is unlikely to persuade the ECB to cut rates again when it meets later
this week after last month's move. Still, there is little doubt that the ECB
will cuts rates further this year, and if anything, the recovery of the euro
may make it more likely. It is a big week for the UK data, and it will
impact expectations for the Bank of England meeting on August 1. However,
the data are concentrated in the second half of the week, with the June CPI
on Wednesday, employment and wage data on Thursday, and retail sales on
Friday. 

 

The euro settled last week at its best level since March 20 and above its
upper Bollinger Band (~$1.0890) for the first time in a couple of months. It
initially slipped to almost $1.0880 in Asia Pacific turnover as the market
reacted to the assassination attempt on Trump. It recovered and has made a
marginal new high in the European morning. French politics will return to
fore, ahead of the ECB meeting on Thursday. This may encourage some
consolidation the single currency's three-week 2% run. Looking at the
positioning in the futures market, short covering may have been the main
driver of the euro's gains. In the two weeks through July 9, the gross short
non-commercial euro position was trimmed by 14k contracts, while the gross
long position fell by about 1.5k contracts. Sterling has surged almost 3%
over the past two weeks and settled before the weekend at its highest level
since July 18, 2023. It stalled slightly in front of $1.30 but closed above
its upper Bollinger Band (~$1.2930) for the second consecutive session. The
upper Bollinger Band is near $1.2970 today. It found support today, slightly
below $1.2960 before recovering to the pre-weekend high. Sterling has not
traded much below $1.29 since the US CPI. The net long non-commercial
position in sterling futures nearly doubled in the two weeks through last
Tuesday to about 84.7k contracts, which is the largest net long position
since 2007. The gross long position rose about 32k contracts over the two
weeks to edge above last July's multi-year high of 135.2k contracts. The
gross short position has fallen by 7.8k contracts, and that includes an
increase of almost 6k contracts in the CFTC reporting week than ended July
9. 

 

America

 

The market took a big bite from the apple last week. It moved to discount
almost a 50% chance of three cuts this year, which the Federal Reserve had
backed away at the June 11-12 FOMC meeting. The median projection saw room
for one cut this year. Of course, it is simply a snapshot based on the data
at the time. It is reasonable that the pendulum of sentiment at the Fed
shifts based on the recent data, which will likely boost its confidence that
inflation is resuming its glide path toward the target. Fed Chair Powell
spoke to Congress about the risks being more in balance on its full
employment and stable price mandates. The focus this week shifts to back
from prices to the real economy, though import/export price figures will be
reported tomorrow and import prices are expected to have fallen for the
second consecutive month. However, due to the base effect, the
year-over-year rate may have risen for the sixth consecutive month and
around 1.4%, it would be the highest since the end of 2022. Today's Empire
State manufacturing survey is of little consequence. It is too early in the
month to be indicative. Tomorrow's June retail sales report is likely to be
held back by weaker auto sales, but signal of slower US consumption is real.
In the first five months of the year, retail sales have risen by an average
of 0.1%. In the Jan-May 2023 period, retail sales averaged a monthly
increase of 0.5%. Canada reports June CPI tomorrow, and after an outsized
jump of 0.6% in May, a 0.1% gain is the median projection in Bloomberg's
survey. With a little more than a 72% chance of a cut at the July 24 central
bank meeting discounted in the swaps market, the market seems more
vulnerable to a upside surprise, especially in the underlying core rates,
than a softer print. The swaps market is pricing in an aggressive course for
the remainder of the year with two cuts fully discounted and around a 57%
chance of a third cut, with four meetings to left.

 

Given the aggressiveness of the swaps market, it is a wonder that the
Canadian dollar is holding in as well as it has. The attempt to break
CAD1.3600 support was rejected after intraday violation at the US CPI.
Initially today, the greenback pushed to an eight-day high near CAD1.3665,
the 20-day moving average before returning to CAD1.3630 in early European
turnover. The speculative positioning in the future market suggests short
covering rather than establishing new longs may be an important part of the
explanation of the Canadian dollar's resilience. About a quarter of the
gross short position has been covered in the past three weeks, after
reaching a record of 170.7k contracts. The gross longs have been cut by
about 5.5k contracts over the last three weekly reporting periods, and at
about 20.2k contracts, it is the smallest position this year. Last week's
nearly 2.8% rise of the Mexican peso was its best weekly performance of the
year. Higher than expected headline inflation, the fall in US rates, and
risk-on mood helped fuel the gains, while Mexican political developments
were sparse. Last week, Latam currencies accounted for five of the top six
emerging market currency performers (joined by the Polish zloty). The dollar
approached MXN17.6050 before the weekend. It the fifth consecutive session
that the dollar fell. Today, the peso is the weakest of the emerging market
currencies, off more tha1%. As the market games out the implications of a
second turn for Trump, many see Mexico as vulnerable. A move above MXN17.84
may spur a greenback recovery toward MN18.00-MXN18.10. 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Gold price sticks to intraday gains, bulls seem non-committed amid
risk-on/USD uptick

Gold price (XAU/USD) attracts some buyers for the second successive day on
Tuesday - also marking the fifth day of a positive move in the previous six
- and climbs above the $2,430 level during the Asian session. The precious
metal, however, remains below its highest level since May 20 touched on
Monday amid the emergence of some US Dollar (USD) buying. Apart from this,
the prevalent risk-on environment contributes to capping the upside for the
safe-haven commodity.

 

The near-term bias, meanwhile, seems tilted firmly in favor of bullish
traders amid growing acceptance that the Federal Reserve (Fed) will start
cutting interest rates in September. The bets were reaffirmed by the
overnight comments from Fed Chair Jerome Powell, which keeps the US Treasury
bond yields depressed and validates the positive outlook for the
non-yielding yellow metal. Traders now look to the release of the US monthly
Retail Sales data for a fresh impetus. 

 

 

Daily Digest Market Movers: Gold price struggles to capitalize on intraday
gains amid risk-on and modest USD strength

Federal Reserve Chair Jerome Powell said on Monday that the recent inflation
data had added to confidence that price increases are returning to the
target in a sustainable fashion. 

The US Labor Department reported last week that the headline CPI dipped in
June for the first time in more than four years, and the yearly rate
decelerated to 3% from 3.3% in May. 

Powell added that the Fed doesn't expect to wait until inflation reaches 2%
before acting, suggesting that rate cuts may not be far off and lending some
support to the Gold price. 

The current market pricing indicates a greater chance that the Fed will
lower borrowing costs in September and the possibility of another interest
rate cut by the end of this year. 

The US Dollar, meanwhile, gains some positive traction and moves away from
over a three-month low touched on Monday, which might cap any further gains
for the commodity.

Apart from this, an extension of the risk-on rally across the global equity
markets should contribute to keeping a lid on the safe-haven XAU/USD ahead
of the US Retail Sales.

According to the consensus estimates, the headline sales are expected to
remain flat in May, while sales excluding automobiles are forecasted to rise
by 0.1% during the reported month.

Technical Analysis: Gold price bulls not ready to give up yet, might still
aim to retest all-time peak near $2,450 area

>From a technical perspective, last week's breakout through the $2,390-2,388
supply zone and sustained strength above the $2,400 mark favors bullish
traders. Furthermore, oscillators on the daily chart hold in positive
territory and are still away from being in the overbought zone, suggesting
that the path of least resistance for the Gold price is to the upside.
Hence, a subsequent strength towards challenging the all-time peak, around
the $2,450 area touched in May, looks like a distinct possibility. Some
follow-through buying will be seen as a fresh trigger for bullish traders
and pave the way for an extension of the recent uptrend witnessed over the
past three weeks or so. 

 

On the flip side, dips below the $2,400 round figure could now be seen as a
buying opportunity and remain limited near the $2,390-2,388 resistance
breakpoint. Some follow-through selling, however, could drag the Gold price
to the $2,358 region with some intermediate support near the $2,372-2,371
area. The subsequent fall might expose the 50-day Simple Moving Average
(SMA) support, currently pegged near the $2,350 region.

 

 


 

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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 (c) 2024 Web: www.bullszimbabwe.com Email: bulls at bullszimbabwe.com Tel: +27
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