Bulls n Bears Daily Market Commentary : 05 June 2024

Thu Jun 6 08:30:28 CAT 2024

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Bulls n Bears Daily Market Commentary : 05 June 2024

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

Heavies     anchor the market in mid-week trades ...                   

The market continued to advance in the week under review as was  1.37%
higher  at  109.37pts  as  counters  in the  Index clinched all the top five
spots in the gainers' category. The ZSE Mid-Cap Index eked out gains of
0.59% to 102.25pts. Sugar processor Hippo led the gainers of the day as it
jumped 10.24% to $4.2000 while, fintech company Ecocash charged 8.84% to
settle at $0.1954. Meikles advanced 7.43% to close at $3.1000 as demand
continued to mount in the counter ahead of its ex- dividend date on the 12th
of June 2024. Retailer OK Zimbabwe surged 2.96% to end at $0.4010 while,,
telecommunications company Econet buttressed prior sessions gains as it
inched up 1.70% to $2.0712. Agriculture concern Ariston led the laggards of
day as it shed 5.10% to $0.0379 post the announcement of its HY24 results in
which they reported a loss after tax of US$2.0lm. Brick manufacturer
Willdale slid 5.00% to settle at $0.0380 while, General Beltings dropped
0.27% to $0.0490 . Packaging  company  Nampak  parred  off  0.25% to  end
at $0.3990 while, property concern First Mutual lost a negligible 0.02% to
close trading at $0.3699.

Activity aggregates faltered in today's session as volumes traded tumbled
60.40% to l.06m shares worth $2.95m, representing a 36.82% drop in turnover.
Econet, Delta, Willdale and Ok Zimbabwe drove the volume aggregates of the
day as they claimed a combined 88.17% of the total. Delta was the most
active stock in the turnover category as it claimed 70.38% of the value
traded while, Econet claimed 25.15% of the total. In the ETF category,
Datvest MCS, Morgan & CO MS ETF and Old Mutual Top 10 lost 1.04%, 0.04% and
0.02% respectively. The Cass Saddle ETF rose by 0.19% to $0.0080 as a circa
of 502,000 units traded in today's session. In the REIT category, the Tigere
REIT was stable at $0.6600 as 11,940 units traded in the name. efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets 

South Africa

South African Rand Falls Due to Coalition Uncertainty

The South African rand fell on Tuesday as uncertainty around possible
coalition partners persisted, a week after an election which saw the African
National Congress lose its parliamentary majority for the first time in 30
years.

At 1414 GMT, the rand traded at 18.6475 against the dollar , about 0.7%
weaker than its closing level on Monday. The dollar last traded around 0.21%
stronger against a basket of global currencies. While we are seeing some
strength returning to the dollar in a risk off start to the day, the rand
has underperformed a broad basket of its currency peers, suggesting
continued angst with regards to coalition uncertainties which persists,"
said Shaun Murison, a senior market analyst at IG. Talks on Tuesday about
which parties it should approach to form South Africa's next government,
with diametrically opposed Marxists and free-marketeers on the menu of
options.

Political parties have two weeks to work out a deal before the new
parliament sits and chooses a president, still likely to be ANC leader Cyril
Ramaphosa since the party remains the biggest force. The rand today is
erring on the side of caution, pricing in some of the economic risks a
business unfriendly coalition may provide," 

Nigeria

Naira records slight appreciation at parallel market, falls in official
window

The naira, on Wednesday, appreciated to N1,500 per dollar at the parallel
section of the foreign exchange (FX) market.

The current FX rate signifies an increase of 0.66 percent from the N1,510
reported on June 3.

Currency traders in Lagos, also known as bureau de change, quoted the buying
rate at N1,460 and the selling price at N1,500.

At the official window, the local currency depreciated by 0.78 percent
against the dollar from N1,476.95 on June 3 to close at N1,488.60 on
Wednesday. 

-

During trading hours, the exchange rate recorded a high of N1,520 and a low
of N1,363.85, according to market data from FMDQ Exchange, a platform that
oversees the official FX trading in Nigeria.

The daily foreign exchange market turnover stood at $205.43 million.

On June 4, Fitch Ratings, a global rating agency, projected the naira would
end the year at N1,450 to a dollar.

-

During a post-sovereign rating webinar on Tuesday focused on Nigeria and
Egypt, Gaimin Nonyane, director of Middle-East and Africa sovereigns at
Fitch Ratings, said the naira is "still finding its feet". 

"We project that naira will average about N1,200/dollar this year and end
the year around N1450/dollar. And in terms of next year, we see a gradual
depreciation but it also depends largely on the foreign exchange reforms
momentum," she said.

In the short term, Fitch Ratings also projected a recovery in the oil sector
to support FX demands.

 <mailto:info at bulls.co.zw> 

Global Markets

China's Yuan Strengthens As US Dollar Eases

What's going on here?

China's yuan firmed, with the People's Bank of China (PBOC) setting the
midpoint at 7.1108 per US dollar. Onshore yuan opened at 7.2441 and reached
7.2447 at midday, 30 pips stronger than the previous session's close.

What does this mean?

The yuan gained strength as the US dollar eased amid renewed bets on a US
Federal Reserve (Fed) easing cycle, with expectations for a 50 basis point
cut this year. These expectations were driven by investor focus on the US
nonfarm payroll report for May, predicting an addition of 185,000 jobs. The
European Central Bank's (ECB) 

interest

rate outlook also added anticipation to the markets. The global dollar index
fell to 104.102 from 104.268, reflecting these shifting dynamics.
Additionally, China's services sector saw rapid growth, signaling robust
recovery.

Why should I care?

For markets: Glimmers of resilience in global currencies.

The softening US dollar, fueled by anticipated Fed rate cuts, is boosting
other currencies like China's yuan. Market participants should closely watch
the Fed's policies as they significantly impact forex trading and global
economic stability. The ECB's upcoming policy decision could further stir
currency markets. Meanwhile, a favorable NFP reading may push the dollar
index lower, making diversified currency investments more appealing.

The bigger picture: Economic shifts amid geopolitical tensions.

China's economic resilience, highlighted by its accelerating services
sector, is a beacon of recovery amid global geopolitical tensions.
Geopolitical friction, especially between China and western economies like
the US and the EU, will likely impact currency rates and necessitate
strategic adjustments for investors. A balanced approach that considers
these geopolitical nuances and economic data can offer insights into future
market movements.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price attracts some buyers to two-week high amid Fed rate cut bets

Gold price (XAU/USD) attracts some follow-through buying for the second
straight day and climbs to a two-week top, around the $2,373 area during the
early European session on Thursday. Moreover, the near-term bias remains
tilted in favor of bulls in the wake of bets that major central banks will
lower borrowing costs to bolster economic activity. In fact, the Bank of
Canada (BoC) on Wednesday lowered its benchmark rate for the first time in
four years, from a more than two-decade high and signaled concern about
slowing economic growth. Furthermore, the European Central Bank (ECB) is
also expected to cut interest rates for the first time since March 2016 at
the end of its June policy meeting later today.

Meanwhile, the markets are now pricing in a greater chance for an imminent
rate cut by the Federal Reserve (Fed) amid signs of a slowdown in the US
economy. The expectations keep the US Treasury bond yields depressed near
the lowest level in over two months and fail to assist the US Dollar (USD)
to build on its modest recovery gains registered over the past two days.
This, along with persistent geopolitical tensions stemming from ongoing
conflicts in the Middle East, continues to act as a tailwind for the
safe-haven Gold price. Despite a combination of supporting factors, the
upside for the XAU/USD seems limited as traders keenly await the release of
the US Nonfarm Payrolls (NFP) report on Friday. 

Daily Digest Market Movers: Gold price draws support from firming Fed rate
cut bets, softer USD

.         Mixed US macro data released on Wednesday reaffirmed expectations
that the Federal Reserve will start cutting interest rates later this year,
dragging the US Treasury bond yields lower and benefiting the non-yielding
Gold price. 

.         The Automatic Data Processing (ADP) reported that private sector
employment in the US rose by 152K in May as compared to 173K anticipated and
the previous month's downwardly revised reading of 188K (192K reported
originally).

.         The Institute for Supply Management's (ISM) Services PMI rose to
53.8 in May, registering its highest level since August and surpassing
consensus estimates of 50.8, while the Prices Paid sub-component edged lower
to 58.1 from 59.2.

.         This, along with the softer US Personal Consumption Expenditures
(PCE) Price Index on Friday, pointed to easing inflationary pressures and
dragged the US Treasury bond yields lower, offering some support to the
yellow metal. 

.         The benchmark 10-year US Treasury yield fell to a two-month low,
at 4.28%, and the yield on the rate-sensitive 2-year US government bond
slipped to 4.731% amid speculations that the official job data will fall
short of expectations. 

.         The US Dollar did react positively to the data, though a further
decline in the US Treasury bond yields offered support to the yellow metal
and lifted it to a fresh weekly peak during the Asian session on Thursday.

.         Traders now look forward to the release of the Weekly Initial
Jobless Claims data from the US for some impetus, though the focus will
remain glued to the US monthly employment details, or the Nonfarm Payrolls
(NFP) on Friday.

.         Technical Analysis: Gold price might confront stiff hurdle and
remain capped near the $2,400 mark

.         From a technical perspective, momentum beyond the $2,364 area, or
last week's swing high, could be seen as a fresh trigger for bullish
traders. That said, mixed oscillators on the daily chart warrant some
caution before positioning for any further gains. Hence, any subsequent move
up is more likely to confront stiff resistance and remain capped near the
$2,400 mark. Some follow-through buying, however, has the potential to lift
the Gold price to the next relevant hurdle near the $2,425 zone en route to
the $2,450 region, or the all-time peak touched in May.

On the flip side, any meaningful slide back below the $2,360 level might
attract fresh buyers around the $2,340 horizontal zone. This should help
limit the downside for the Gold price near the $2,315-2,314 area or the
multi-week low touched on Tuesday. A convincing break below, however, will
confirm a breakdown through the 50-day Simple Moving Average (SMA) and pave
the way for deeper losses. the XAU/USD might then weaken further below the
$2,300 round-figure mark and test the $2,280 support zone.

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
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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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
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
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for guideline purposes only and sourced from third parties.

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