Bulls n Bears Daily Market Commentary : 25 July 2024

Fri Jul 26 08:33:58 CAT 2024

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Bulls n Bears Daily Market Commentary : 25 July 2024

ZSE commentary

ZSE retreats further ...

The ZSE faltered in Thursday's session as selected heavies weighed on the
market. The Agriculture Index was the worst performer amongst the indices we
review as it declined 2.63% to 185.66pts. The All Share Index trimmed 0.70%
to 202.04pts while, the Top Ten Index let go 0.50% to 211.97pts. On the
contrary, The Mid Cap Index was the sole gainer with a 0.71% lift to end at
172.83pts. Cigarette manufacturer BAT dropped 15.00% to $43.3360, trailed by
tea company Tanganda that succumbed 4.33% to $4.0190. Packaging group Nampak
tumbled 4.13% to $1.1025 while, Zimpapers slipped 3.85% to $0.0500. Spirit
and wines manufacturer AFDIS went down 2.78% to $7.0000. Partially
mitigating today's losses were gains in banking group  NMB that soared
14.99% to end at $2.6335. General Beltings garnered 14.47%to $0.0546 while,
Mashonaland Holdings charged 12.77% to $0.3595. Proplastics advanced 11.17%
to $1.1450 as ART rose 9.45% to $0.1100.-efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity 

South Africa

South African rand weaker, focus on US economic data

(Reuters) – The South African rand was weaker in early trade on Thursday,
ahead of U.S. economic data readings that could give hints on the future
interest rate path of the world’s biggest economy.

At 0631 GMT, the rand traded at 18.42 against the dollar, about 0.2% weaker
than its previous close.

Markets await a U.S. gross domestic product reading on Thursday and personal
consumption expenditure data – the Federal Reserve’s favoured measure of
inflation – on Friday. These readings could give hints on the country’s the
future interest rate path.

“Ahead of this afternoon’s much anticipated U.S. data
 markets have seen
risk off sentiment increase and thus EM (emerging market) currencies remain
on the back foot,” said Andre Cilliers, currency strategist at TreasuryONE.

“The rand
 could possibly test the R18.50 mark in the current market
conditions, with headwinds for commodity currencies also flaring up,”
Cilliers added.

Like other risk-sensitive currencies, the rand often takes cues from global
factors in addition to domestic drivers.

Locally, investors will turn their attention to South Africa’s producer
inflation figures for June, expected around 0930 GMT.

On Wednesday, Statistics South Africa data showed headline consumer
inflation eased to 5.1% year-on-year in June from 5.2% in May.

South Africa’s benchmark 2030 government bond was slightly stronger in early
deals, as the yield slipped 0.2 basis point to 9.5%.

Ghana

Cedi depreciation hikes Ghana’s debt to GH¢742bn in first half of 2024

The Finance Minister, Dr Mohammed Amin Adam, says cedi depreciation hiked
Ghana’s debts from an initial amount of GH¢608 billion in 2023 to GH¢742.0
billion in the first half of 2024. 

He said the development showed an increase of 22 per cent in Ghana’s debt
due to the effect of the Cedi depreciation and disbursements from creditors.

The Minister said the debt stock consisted of external debt of GH¢452
billion and domestic debt of GH¢290 billion, representing 60.9 per cent and
39 per cent of the total debt stock, respectively. 

He stated that external and domestic debt accounted for 43.0 per cent and
27.6 per cent of Gross Domestic Product (GDP), respectively. 

The Finance Minister said this at the mid-year budget review in parliament,
consistent with Section 28 of the Public Financial Management Act, 2016 (Act
921). 

According to the Act, the Minister is required to provide a mid-year fiscal
policy review of the government’s budget statement and economic policy. 

Dr Amin said the domestic financing of the debt would amount to GH¢38.9
billion, representing 3.8 per cent of the revised GDP and 71.9 per cent of
the total financing for 2024. 

The revision, he noted, was largely on the back of interest payments, which
had been revised downward by GHs 7.9 billion to reflect the impact of the
external debt restructuring on external interest payments. 

Dr Amin said the government would continue to build on the 2024 Medium Term
Debt Strategy (MTDS) implemented in the first half of the year. 

 <mailto:info at bulls.co.zw> 

Global Markets

Australian Dollar improves due to commodities prices rebound, US PCE
inflation eyed

The Australian Dollar (AUD) halts its nine-day losing streak against the US
Dollar (USD) on Friday, following unexpected cuts to key lending rates by
the People's Bank of China (PBoC). This move enhances the outlook for the
major metals consumer, leading to higher prices for commodities such as coal
and copper. Given Australia’s role as a net exporter of energy and metals,
its currency is notably responsive to changes in commodity prices.

The Aussie Dollar also receives support from the hawkish sentiment
surrounding the Reserve Bank of Australia’s (RBA) policy stance. The RBA is
anticipated to postpone easing its policy tightening, unlike other major
central banks, due to ongoing inflationary pressures and a tight labor
market.

The AUD/USD pair gains ground on the weaker US Dollar. However, the
Greenback may limit its downside as stronger US economic data have reduced
some rate cut expectations for September. On Friday, attention will be on
the release of the Personal Consumption Expenditures (PCE) Price Index for
June.

According to CME Group’s FedWatch Tool, markets now indicate an 88.6%
probability of a 25-basis point rate cut at the September Fed meeting, down
from 94.0% a week earlier.

Daily Digest Market Movers: Australian Dollar improves due to improved
commodities prices

Bank of America suggests that robust economic growth in the United States
enables the Federal Open Market Committee (FOMC) to "afford to wait" before
implementing any adjustments. The BofA notes that the economy "remains
strong" and maintains its expectation for the Fed to begin rate cuts in
December.

On Thursday, the US GDP grew at an annualized rate of 2.8%, adjusted for
seasonality and inflation, up from the previous reading of 1.4% and
surpassing forecasts of 2%. Additionally, Initial Jobless Claims fell to
235K in the week ending July 19, compared to the previous reading of 243K
and the expected 238K.

The S&P Global US Services PMI increased to a reading of 56.0 in July, the
highest in 28 months, up from a 55.3 reading in June and exceeding market
expectations of 55.3. Meanwhile, the Composite PMI rose to 55.0 from the
previous 54.8 reading, marking the highest reading since April 2022 and
indicating sustained growth over the past 18 months.

Concerns about the weak Chinese economy were heightened by an unexpected
rate cut from the People's Bank of China (PBoC) on Monday. The People’s Bank
of China (PBOC), cut the one-year Medium-term Lending Facility (MLF) rate
from 2.50% to 2.30% on Thursday. Additionally, the Bank of China, one of the
world's largest banks, announced a 10-20 basis points cut in time deposit
rates. Any change in the Chinese economy could impact the Australian markets
as both countries are close trade partners.

Australia's Judo Bank Manufacturing PMI improved to 47.4 in July from 47.2
in June. Meanwhile, the Services PMI dropped to 50.8 in July from 51.2 in
June. The Composite PMI also declined, falling to 50.2 in July from 50.7 in
June.

Last week, Reuters cited Sean Langcake, head of macroeconomic forecasting
for Oxford Economics Australia, saying, "The current pace of employment
growth suggests demand is resilient and cost pressures will remain. We think
the RBA will stay the course and keep rates on hold, but August is certainly
a live meeting."

Technical Analysis: Australian Dollar edges higher to near 0.6550

The Australian Dollar trades around 0.6550 on Friday. The daily chart
analysis shows that the AUD/USD pair has fallen below the descending
channel, indicating a strengthening bearish bias. The 14-day Relative
Strength Index (RSI) is slightly above the 30 level, suggesting the currency
pair is oversold and may be due for a potential correction soon.

Support for the AUD/USD pair could be found around the psychological level
of 0.6500, with further support at 0.6470.

On the upside, key resistance lies at the lower boundary of the descending
channel at 0.6570, followed by the psychological level of 0.6600. If the
AUD/USD pair returns to the descending channel, it may weaken the bearish
bias and support testing the nine-day Exponential Moving Average (EMA) at
0.6623. A break above this level could lead the pair to test the upper
boundary of the descending channel around 0.6715, with a potential aim for a
six-month high of 0.6798.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold firms ahead of US inflation data, but set for weekly loss

(Reuters) - Gold was on track for a weekly loss, even as prices firmed on
Friday ahead of a key U.S. inflation reading that could offer more cues on
when the Federal Reserve will cut interest rates.

Spot gold was up 0.3% at $2,370.62 per ounce, as of 0416 GMT, but has lost
more than 1% for the week. U.S. gold futures climbed 0.8% to $2,371.30.

"Last week, prices scaled record highs on bets of a September U.S. rate cut.
When prices rally in a short span, you see a correction, but we remain
bullish on gold," said ANZ commodity strategist Soni Kumari.

Reuters Graphics

The U.S. personal consumption expenditure data for June - the Federal
Reserve's favoured measure of inflation - is due at 1230 GMT.

Data on Thursday showed that the U.S. economy grew faster than expected in
the second quarter, but inflation pressures subsided, leaving intact
expectations of a September rate cut.

Non-yielding bullion's appeal tends to shine in a low-interest-rate
environment.

"With near-term support in sight at the $2,280 mark, we still believe gold
can hit $2,680 by end of this year," said Sugandha Sachdeva, founder of SS
WealthStreet, a New Delhi-based research firm.

"The U.S. elections and the political uncertainty surrounding it along with
the U.S.-China trade tensions are other key triggers that could lead to a
significant rebound in prices."

Top consumer China's net gold imports via Hong Kong slumped 18% in June from
the previous month, data showed.

"Chinese physical demand for gold should pick up, especially given the
challenges in their property and equity markets. Meanwhile, India's demand
for gold is likely to rise while moving into fourth quarter, which is
traditionally a robust seasonal period for gold demand," ANZ's Kumari said.

Spot silver fell 0.7% to $27.77 per ounce and platinum gained 0.5% to
$937.80. Both metals were on track for a third straight weekly fall.

Palladium rose 0.9% to $914.90.

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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