Bulls n Bears Daily Market Commentary : 24 July 2024

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Bulls n Bears Daily Market Commentary : 24 July 2024

 

 	



 

 	


ZSE commentary

 

ZSE takes a breather in mid-week session...

The ZSE market took a breather in mid-week session as the primary All Share
Index slipped 0.22% to 203.47pts while, the Blue-Chip Index lost 0.4i% to
213.03pts. The Agriculture Index went up 0.01% to 190.67pts while, the Mid
Cap Index added 0.46% to 171.62pts. Zimre Holdings led the laggards of the
day on a 12.26% retreat to $0.2720, followed by banking group CBZ holdings
that dropped 2.99% to $15.0358. Telecoms giant Econet slipped 0.14% to
$3.9942 as it closed heavily offered on board while, Meikles capped the
fallers of the day on a 0.04% slide to end the day pegged at $7.4005.
Partially mitigating today's losses was Proplastics that surged 14.44% to
$1.0300, trailed  by  Star  Africa  that  edged  up  10.63%  to  settle  at
$0.0100. Mashonaland Holdings advanced 10.48% to $0.3188 while, RioZim
firmed up 5.53% to $0.9500. Banking group NMB completed the top performers
of the day on a 3.77% uplift to end the day pegged at $2.2902. The market
closed with a positive breadth of nine after fourteen counters recorded
gains against five that faltered.

 

Activity aggregates faltered in the session as volumes traded declined
36.63% to see 3.41m shares exchanged hands while, turnover succumbed 40.95%
to $6.48m. The top volume drivers of the day were Ecocash (28.82%), Econet
{27.02%), OKZim (24.42%) and Star Africa (9.31%). The duo of Econet and
Delta claimed a combined 68.82% of the total value traded. A total of 78,021
units exchanged hands in the ETF section. Datvest ETF dropped 13.01% to
$0.0300 while,  Morgan & Multi Sector ETF ticked up 2.44% to close at
$0.4200. OMIT ETF charged 2.59% to end the day pegged at $0.1800 after 1,000
units exchanged hands in the mid-week session. Tigere REIT traded 25,850
units flat at $1.0000 while, Revitus REIT trimmed 0.13% to close at $0.3446
on 11,170 units.-efesecurities

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Currencies & Equity 

 

South Africa

 

South African rand recoups some losses, inflation slows

(Reuters) - The South African rand recouped some losses against a weaker
dollar on Wednesday even as national inflation slowed, fuelling hopes of an
interest rate cut by the South African Reserve Bank (SARB).

 

At 1402 GMT, the rand traded at 18.3125 against the U.S. dollar , about 0.5%
stronger than its previous close. The rand tumbled against the U.S. currency
on Tuesday after trading weaker for much of last week amid risk-off
sentiment.

 

 

The dollar index was last down 0.31% against a basket of currencies.

Statistics South Africa data showed headline consumer inflation eased to
5.1% year-on-year in June from 5.2% in May (ZACPIY=ECI), opens new tab and
core inflation softened, clearing the path for the central bank to cut rates
at its next meeting in September, economists said.

"We think the SARB will be in position to embark on an easing cycle at its
next meeting in September with a 25 bp cut, to 8.00%," said David Omojomolo,
Africa economist at Capital Economics.

 

 

"The shift down in core inflation to the mid-point of the SARB's 4.5% target
will almost certainly be welcomed by policymakers," Omojomolo said.

Inflation has been above 5% since September 2023, and the central bank
estimates that inflation will only stabilise at its targeted 4.5% over the
next few quarters.

Monetary policy has remained tight as the central bank tries to steer
inflation back towards the midpoint of its 3%-6% target range.

Investor focus will be on June producer inflation figures due on Thursday.

On the stock market, the Top-40 (.JTOPI), opens new tab index was last down
0.2%.

South Africa's benchmark 2030 government bond was weaker, as the yield rose
1 basis point to 9.470%.

 

 

Nigeria

 

Naira pressure traced to banks' borrowing from CBN for FX

Banks have been borrowing from the Central Bank of Nigeria (CBN) to purchase
foreign exchange (FX), a practice that has intensified pressure on the Naira
and inflation, according to Bismarck Rewane, managing director/CEO of
Financial Derivatives Company Limited, in an interview on Channels TV
Tuesday.

 

The naira on Tuesday lost 3.13 percent of its value against the dollar
despite an increase in the greenback at the official foreign exchange (FX)
market.

 

After trading on Tuesday, the dollar was quoted at N1,548.76, lower than
N1,500.32 quoted on Monday at the Nigerian Foreign Exchange Market (NAFEM),
data from the FMDQ Securities Exchange indicated.

 

Read also: Banks' borrowing from CBN to buy FX fuelling Naira pressure -
Rewane 

 

The dollar supplied by willing sellers and willing buyers declined by 4.09
percent to $280.92 million on Tuesday from $269.88 million recorded on
Monday.

 

 

At the parallel market, popularly called the black market, the Naira
experienced a sharp decline, falling to 1,687 per dollar on Tuesday as
against N1,570 on Monday.

 

 

Rewane highlighted that the CBN's recent decision to adjust the asymmetric
corridor around the Monetary Policy Rate (MPR) to +500/-100 basis points
after a two-day Monetary Policy Committee (MPC) meeting would significantly
impact borrowing costs.

 

"Before now, banks were borrowing at about 26 percent. As of today, they
will be borrowing at almost 32 percent," Rewane explained.

 

"That difference of almost 5 to 6 percent means that the cost of borrowing
from the CBN to buy FX has gone up astronomically. This increase acts as a
deterrent to borrowing from the central bank to buy FX and should reduce the
pressure on the Naira. It's all meant to make things much easier."

 

 <mailto:info at bulls.co.zw> 

 

Global Markets

 

 

Dollar falls, short yen trades squared ahead of BOJ and Fed meetings

(Reuters) - The dollar fell to its lowest in more than two months against
the yen on Wednesday as short-yen carry trades were unwound ahead of next
week's Bank of Japan meeting, with investors girding for a hawkish monetary
officials to tighten policy.

 

The yen also rose to its highest since mid-May against the euro amid
expectations that yield differentials that have made it costly for foreign
investors to hold yen securities will narrow.

 

 

The dollar index , which measures the greenback against a basket of six
currencies, including the yen and the euro, fell 0.12% to 104.35. It pared
losses a bit after S&P Global said that its flash U.S. Composite PMI Output
Index tracking the manufacturing and services sectors edged up to 55.0 this
month, the highest level since April 2022.

 

"We're just looking at concerns over global growth and we're going to see
through the rest of this week if that's going to continue, if the U.S. is
going to fare differently," said Helen Given, associate director of trading
at Monex USA, in Washington DC, highlighting China's surprise rate cuts this
week as a catalyst for those worries.

 

 

"PMIs for U.S. this morning were fairly positive, but not blowing anything
out of the water," she continued.

The main macro news of the week comes Thursday, with the first estimate of
U.S. second quarter GDP, and Friday, with the Personal Consumption
Expenditures Price Index, which the Federal Reserve relies on to gauge
inflation.

 

Sources told Reuters earlier in the day said the Japanese central bank is
likely to debate at its July 30-31 meeting whether to raise interest rates,
and unveil a plan to roughly halve bond purchases in coming years.

 

The Fed holds its meeting the same days. While few expect it to begin
lowering rates this month, there is a good chance Fed messaging for a pivot
in September will become stronger, given months of declining inflation and
slower growth.

Over three-quarters of economists polled by Reuters expect the BOJ to stand
pat this month and possibly next move in September or October.

 

Recent rounds of suspected currency intervention have speculators rushing to
close what had been profitable carry trades, where they borrowed in
low-yielding yen and invested in assets of currencies with higher rates.

 

The yen is the best performing G-10 currency against the dollar in July so
far.

The dollar weakened 1.07% to 153.92, hitting its lowest since May 6. The
euro marked its lowest price since May 8 and was down 1.16% at 166.915 yen.

 

"Even if the BOJ delivers something that's not quite as hawkish as the
markets are now expecting, there is still the risk that the Ministry of
Finance could step in and prevent weakness in the yen if it should occur,"
said Brian Daingerfield, FX strategist at NatWest Markets in Stamford,
Connecticut.

 

"There is of course the reality that the Fed appears to be closing in on the
potential to start an easing cycle of its own here."

The euro fell 0.11% to $1.0839. Sterling was unchanged in late trade at
$1.2905.

Commodity-linked currencies fell to multi-week lows. Oil prices are at their
lowest in a month and a half and industrial metals like iron ore and copper
hit 3-1/2-month lows on a gloomy outlook for Chinese demand.

 

The Australian dollar fell as much as 0.5% and wrapping up US$0.6584 was
near a low hit in early June.

The Canadian dollar weakened to 1.3808 per US dollar.

 

The New Zealand dollar fell to US$0.5927, trading at levels last seen in
early May.

"We're seeing softer demand in China and Asia in general and the kiwi and
Aussie just being pulled down," said Jason Wong, senior markets strategist
at BNZ in Wellington.

In cryptocurrencies, bitcoin gained 0.69% to $66,290.00. Ethereum declined
2.38% to $3,399.80.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Gold 

 

Gold price attracts some sellers near two-week low, eyes on US Q2 GDP data

 

Gold price continues losing ground for the second straight day and drops to
a two-week low.

The downfall could be attributed to some technical selling, though it is
likely to remain limited.

September Fed rate cut bets and the risk-off mood could lend support to Gold
ahead of the US data.

 

Gold price (XAU/USD) remains under heavy selling pressure for the second
straight day and drops to a two-week low during the early European session
on Thursday. That said, a combination of supporting factors assists the
commodity in attracting some buyers near the $2,365 area and trimming a part
of intraday losses. Growing acceptance that the Federal Reserve (Fed) will
begin its rate-cutting cycle in September keeps the US Dollar (USD)
depressed below a two-week high touched on Wednesday and acts as a tailwind
for the non-yielding yellow metal.

 

Apart from this, the risk-off impulse - as depicted by a weaker tone across
the global equity markets, which tends to benefit traditional safe-haven
assets, further lends some support to the Gold price. Traders, meanwhile,
might refrain from placing aggressive directional bets and prefer to wait
for more cues about the Fed's policy path. Hence, the focus will remain
glued to important US macro data - the Advance Q2 GDP print due for release
later this Thursday and the crucial Personal Consumption Expenditures (PCE)
Price Index on Friday.

 

 

Daily Digest Market Movers: Gold price finds some support amid risk-off
mood, softer USD

Gold price attracts some follow-through sellers on Thursday and dives to a
two-week low, though any further depreciating move seems elusive in the wake
of the risk-off impulse and dovish Federal Reserve expectations.

 

The global risk sentiment took a hit following the release of mostly
disappointing global flash PMIs on Wednesday, which added to worries about
an economic slowdown and should offer some support to the safe-haven metal

The HCOB's preliminary survey indicated a broad-based weakening of economic
conditions in the Eurozone amid a deepening manufacturing downturn, which
was accompanied by a slowdown in the service sector.

 

The S&P Global reported that the business activity in the US private sector
continued to expand at a healthy pace in July amid a pick-up in the services
sector, though it was offset by an easing in the manufacturing industry.

Former New York Federal Reserve President William Dudley on Wednesday called
for a rate cut as soon as next week in the wake of recession concerns,
reaffirming bets for an imminent start of the policy-easing cycle.

 

Market participants have fully priced in a 25 basis points (bps) interest
rate cut in September and expect the US central bank to lower borrowing
costs again during the November and December monetary policy meetings.

Apart from this, the US political uncertainty should act as a tailwind for
the XAU/USD ahead of the key US macro data - the Advance Q2 GDP print on
Thursday and the Personal Consumption Expenditures (PCE) Price Index.

 

Technical Analysis: Gold price might struggle to move back above the $2,400
round-figure mark

>From a technical perspective, the intraday breakdown below the 100-period
Simple Moving Average (SMA) on the 4-hour chart, the 50% retracement level
of the June-July rally and the $2,385 support could be seen as a fresh
trigger for bearish traders. Moreover, oscillators on the daily chart have
just started gaining negative traction and suggest that the path of least
resistance for the Gold price is to the downside. That said, it will still
be prudent to wait for some follow-through selling below the 61.8% Fibo.
level, around the $2,370 area, before positioning for deeper losses. The
XAU/USD might then weaken further below the 50-day SMA, around the $2,361
region, and test the next relevant support near the $2,35-$2,350 region.

 

On the flip side, any attempted recovery might now confront some resistance
ahead of the $2,400 round-figure mark. A sustained strength beyond the said
handle has the potential to lift the Gold price back towards the $2,412
horizontal resistance en route to the $2,423-2,425 region. This is followed
by the weekly top, around the $2,432 area touched on Wednesday, above which
a fresh bout of a short-covering should pave the way for a move towards the
$2,469-2,470 intermediate resistance. The momentum could extend further
towards the all-time peak, around the $2,484 area touched last week.

 

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 strongest against the
Australian 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 

 

 

 Invest Cellphone:            +263 71 944 1674 | +27 79 993 5557 

Email:               bulls at bullszimbabwe.com

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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
notice. Securities or financial instruments mentioned herein may not be
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any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 

 	

 

 

 	


 (c) 2024 Web: www.bullszimbabwe.com Email: bulls at bullszimbabwe.com Tel: +27
79 993 5557 | +263 71 944 1674

 

 	

 

 

 	
							

 

 

 

 

 

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