Bulls n Bears Daily Market Commentary : 03 June 2024

Tue Jun 4 07:56:44 CAT 2024

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Bulls n Bears Daily Market Commentary : 03 June 2024

 <mailto:sales at dulys.co.zw?subject=Request%20Quote> ZSE commentary

ZSE adds 2.02% in the month opening session ...

The ZSE continued to advance in Monday's trades as it added 2.02% to close
at 103.lOpts while, the Blue-Chip Index was 2.94% higher at 105.40pts. The
Agriculture Index was 2.32% firmer at 87.98pts while, the Mid-Cap Index was
0.27% up at 100.46pts. Heavy cap counter Hippo led the gainers of the day as
it charged 14.86% to settle at $3.3200 while, telecommunications  company
Econet notched up 14.08% to $1.9000. Banking group NMBZ advanced 6.78% to
end pegged at $1.8500 while,  sugar  refiner Star Africa  was  6.09%  up at
$0.0069. Beverages giant Delta capped the top five gainers of the day as it
eked out gains of 0.40% to $8.1200. Bankers ZB led the laggards of the day
as it plunged 5.00% to $1.9000 while,  agricl)lture   concern  Ariston   was
2.50%  lower  at $0.0389. Zimre Holdings Limited eased 0.15% to $0.3395
while,  digital media group Zimpapers  lost 0.14% to end at $0.0466 .

Activity aggregates faltered in today's session as volumes of shares traded
fell by 13.67% to close at 969,800 shares while, turnover dropped 78.25% to
$586,870.79. In the volume category, activity was mainly confined in Star
Africa that contributed 75.89% of the total. The other notable volume driver
was Econet that contributed 10.62% of the total. The duo in Delta and Econet
drove the turnover as they claimed a combined 80.33% of the Clggregate. In
the ETF section, Old Mutual Top 10 was the only active fund in today's
session as it dropped 0.25% to settle at $0.1098 as 101,228 units exchanged
hands.-efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

Rand jumps thanks to weaker dollar, DA-ANC deal hopes

The dollar fell to a three-week low on Monday after data showed the US
economy is slowing down with weaker-than-expected readings on manufacturing
and construction spending, suggesting that the Federal Reserve is on track
to start cutting interest rates this year.

The rand gained 1.4%, benefitting from the dollar weakness, while it also
managed to claw back some of its recent losses as the dust starts to settle
on local elections, said Shaun Murison, senior market analyst at IG Markets.

"The rand's rebound from oversold conditions comes in the wake of coalition
talks and perhaps shows some optimism that more conservative business
friendly alliances are likely to be formed rather than those leaning towards
leftist policy."

This weekend, News24 reported of informal discussions between the DA and
those close to president Cyril Ramaphosa's camp in the ANC.

The rand spiked from R18.24/$ to almost R18.90 last week as the ANC's dismal
election results raise fears that it would form a coalition with the
market-unfriendly EFF or MK Party.

On Monday evening, the rand was trading at R18.51.

"While volatility in the domestic currency is likely to continue, a move
below the R18.60/$ level could signify on a technical basis that R18.30/$
becomes a feasible short term target for the currency pair," said Murison.

The US dollar fell to a two-week low against the yen following the data and
was last down 0.6% at 156.245. The euro gained 0.3% to $1.0879, pushing the
dollar index, a measure of the U.S. currency's value versus six major
currencies, down 0.3% as well to 104.24.

The index earlier dropped to a three-week low of 104.22. The US Institute
for Supply Management (ISM) said its purchasing managers index (PMI) for
manufacturing fell to 48.7 in May , from 49.2 in April, sliding as well from
an 18-month high of 50.3 seen in March. In a research note, BMO pointed out
that the U.S. manufacturing sector in May shrank for the eighteenth time in
the past nineteen months. Monday's ISM decline followed weakness in the
Chicago PMI, Dallas Fed, Philadelphia Fed indexes, and the Empire State
manufacturing indexes.

US construction spending also slid unexpectedly for a second consecutive
month in April, decreasing by 0.1% after a 0.2% decline in March, amid falls
in non-residential activity.

"The US manufacturing sector is expected to remain under pressure until the
Fed starts to loosen monetary policy in the fall," wrote Jay Hawkins, senior
economist at BMO Capital Markets in a research note. After the ISM and
construction spending data, fed funds futures increased the chances of a
rate cut in September to around 59.1%, according to LSEG's rate probability
app, compared with around 55% late Friday. It was slightly below 50% earlier
last week.

The US dollar posted its first monthly decline of the year in May, weighed
down by shifting expectations on when the US central bank will cut rates and
by how much. The futures market is fully pricing in one rate cut of 25 bps
this year. "It's pretty clear that the Fed is going to be on hold for a
while," said Brad Bechtel, global head of FX, at Jefferies in New York.

"The US data matters but they're probably not going to move the needle."

"The dollar (index) is going to be trading in a range, at least for the
remainder of the year, which is going to be in the 103-107 area. For the
next couple of weeks, we might just hold in the 104-105 range."

In other currencies, the Mexican peso weakened on Monday after the ruling
party declared Claudia Sheinbaum the winner of the presidential election by
a "large margin" after polls closed on Sunday. "The peso is underperforming
amid seemingly growing concerns amongst investors that by securing
supermajority in the lower house the governing coalition could be tempted to
implement non-market-friendly policies," said Piotr Matys, senior FX
analyst, at In Touch Capital Markets. 

Nigeria

Naira drops at parallel market, appreciates at official window

The naira depreciated to N1,510 per dollar at the parallel section of the
foreign exchange (FX) market on Monday.

The current rate represents a drop of 1.34 percent from the N1,490/$ traded
on May 31.

Speaking to TheCable in Lagos, currency traders, also known as bureau de
change (BDC) operators, quoted the buying rate of the greenback at N1,490
and the selling price at N1,510 - leaving a profit margin of N20.

At the official window, the local currency appreciated by 0.66 percent to
N1,476.12/$ on Monday - from N1,485.99 on May 31.

According to FMDQ Exchange, a platform that oversees the official FX trading
in Nigeria, the dollar exchanged for as high as N1,500 and as low as N1,250,
during trading hours. 

The daily FX market turnover stood at $121.87 million.

Meanwhile, on June 2, the International Air Transport Association (IATA)
said 98 percent of trapped airlines' funds in Nigeria has been cleared.

Willie Walsh, IATA's director-general, said a balance of $19 million is
remaining to be cleared by the Central Bank of Nigeria (CBN).

"We are on the right path and urge the government to clear the residual $19
million and continue prioritizing aviation," he said.

Walsh lauded the current Nigerian government and the CBN for their efforts
to resolve the issue.

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar sinks to three-week low on signs of slowing economy

(Reuters) - The dollar fell to a three-week low on Monday after data showed
the U.S. economy is gradually slowing down with weaker-than-expected
readings on manufacturing and construction spending, suggesting that the
Federal Reserve is on track to start cutting interest rates later this year.

The dollar index, a measure of the U.S. currency's value against six major
currencies, fell 0.4% to 104.14 . The index earlier dropped to 104.13, the
lowest since mid-May.

The greenback also slid a two-week trough against the yen following the data
and was last down 0.7% at 156.22 .

The euro gained 0.5% versus the dollar to $1.0897 , after earlier rising to
a three-week high of $1.0898.

Monday's data showed the U.S. Institute for Supply Management's (ISM)
purchasing managers index (PMI) for manufacturing fell to 48.7 in May, from
49.2 in April, sliding as well from an 18-month high of 50.3 seen in March.

In a research note, BMO pointed out that the U.S. manufacturing sector
shrank in 18 of the last 19 months.

Monday's ISM decline followed weakness in the Chicago PMI, Dallas Fed,
Philadelphia Fed, and the Empire State manufacturing indexes.

U.S. construction spending also slid unexpectedly for a second consecutive
month in April, decreasing by 0.1% after a 0.2% decline in March, amid falls
in non-residential activity.

"Investors and markets are starting to believe that the U.S. exceptionalism
theme is starting to wane," said Boris Kovacevic, global macro strategist at
global payments company Convera in Vienna, Austria, referring to the world's
largest economy's outperformance versus the rest of the world.

"It's not completely over but...but markets are now questioning how long the
U.S. exceptionalism theme has to go," he added.

ISM manufacturing PMI

After the ISM and construction spending data, fed funds futures increased
the chances of a rate cut in September to around 59.1%, according to LSEG's
rate probability app, compared with around 55% late Friday. It was slightly
below 50% earlier last week.

The U.S. dollar posted its first monthly decline of the year in May, weighed
down by shifting expectations on when the U.S. central bank will cut rates
and by how much. The futures market is fully pricing in one rate cut of 25
basis points (bps) this year.

In the euro zone, however, the European Central Bank is holding a meeting on
Thursday and is seen as almost certain to cut rates.

The comments from ECB officials will be in focus for traders along with
economic projections as they assess whether the central bank will provide
further cuts after Thursday in the wake of data showing a rise in euro zone
inflation in May.

Markets are pricing in 57 bps of ECB cuts this year.

In other currencies, sterling rose 0.4% against the dollar to $1.2799,
boosted by the dollar's fall following the U.S. manufacturing data.

The pound pared gains a little after Nigel Farage, who helped lead Britain's
departure from the European Union, said he would stand as a candidate in
next month's election and will lead the right-wing Reform Party. This is
widely seen as a major blow to Prime Minister Rishi Sunak.

In Mexico, the peso weakened on Monday after the ruling party declared
Claudia Sheinbaum the winner of the presidential election by a "large
margin" after polls closed on Sunday.

"The peso is underperforming amid seemingly growing concerns amongst
investors that by securing supermajority in the lower house the governing
coalition could be tempted to implement non-market-friendly policies," said
Piotr Matys, senior FX analyst, at In Touch Capital Markets.

The U.S. dollar was last up 4.1% against the Mexican unit at 17.704 pesos ,
after earlier hitting its highest since around mid-April.

The Indian rupee, meanwhile, rose to a 2-1/2-month high versus the greenback
and was last up 0.4% at 83.08 per dollar as exit polls pointed to a sizable
mandate and rare third term for Prime Minister Narendra Modi.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold rises as soft US economic data spurs Fed rate cut bets

(Reuters) - Gold prices rose on Monday as weaker-than-expected U.S. economic
data cemented expectations that the Federal Reserve would cut interest rates
later this year, sending the dollar and bond yields lower.

Spot gold was up 0.9% at $2,347.12 per ounce as of 2:38 p.m. ET (1838 GMT),
after posting a 2% gain last month. Prices hit an all-time high of $2,449.89
on May 20.

U.S. gold futures settled 1% higher at $2,369.3 per ounce.

"We've had a bit of a pullback, we'd prefer to call it a consolidation. But
again, the underpinning positive bias really comes from strong expectation
that we are moving towards a interest rate cuts at some point later this
year," said David Meger, director of alternative investments and trading at
High Ridge Futures.

Data showed U.S. manufacturing activity slowed for a second straight month
in May, and U.S. construction spending fell unexpectedly for a second
consecutive month in April on declines in non-residential activity.

The dollar fell to a three-week low against its rivals, making gold more
attractive for other currency holders, while Benchmark U.S. Treasury yields
fell to a two-week low after soft manufacturing data.

Data on Friday showed that the U.S. inflation had stabilised in April,
suggesting the U.S. central bank's interest rate cut plans later this year
remained intact.

Traders are currently pricing in about a 59% chance of a Fed rate cut in
September, according to CME FedWatch tool, opens new tab. Lower interest
rates cut the opportunity cost of holding non-yielding bullion.

Meanwhile, The European Central Bank is seen almost certain to trim rates by
a quarter point to 3.75% on Thursday, which could make it the first major
central bank to cut rates this cycle.

Investors now look forward to Wednesday's ADP employment report, and U.S.
non-farm payrolls data due on Friday.

Elsewhere, spot silver gained 0.7% to $30.57 per ounce, platinum slipped
1.9% to $1,017.55 and palladium gained 1.6% to $918.62.

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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DISCLAIMER: This report has been prepared by Bulls 'n Bears, a division of
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opinions expressed and recommendations made are subject to change without
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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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