Bulls n Bears Daily Market Commentary : 16 May 2024

Fri May 17 08:44:37 CAT 2024

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Bulls n Bears Daily Market Commentary : 16 May 2024

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

ZSE slips into the red in penultimate session

The ZSE market recorded losses in the penultimate session of the week as the
All-Share Index lost 0.93% to 93.98pts while, the Blue-Chip Index fell 1.10%
to 92.lOpts. The Agriculture Index remained unchanged at 90.21pts as the Mid
Cap Index eased 0.49% to 96.67pts. Brick manufacturer Willdale Limited
headlined the  shakers  of the  day  on a  25.10%  retreat to $0.0264,
followed  by  Proplastics  that  dropped  9.57%  to $0.4065. Retailer Ok Zim
dipped 5.57% to close at $0.5000 while, Star Africa trimmed 3.52% to
$0.0083. Beverage giant Delta capped the top five laggards of the day on a
2.17% slide to end the day pegged at $6.9463. Partially mitigating today's
losses was Ecocash Holdings that put on 0.36% to settle at $0.2350 .
Hotelier RTG advanced 0.02% to end the day pegged at $0.2125 . The market
closed with a negative breadth of seven as eleven counters recorded losses
against four that gained.

Activ ity aggregates enhanced in the session as volume traded ballooned
3,049.32% to 12.75m shares while, value traded grew 50,047.14% to $794.48m .
The top volume drivers of the day were ART (54.90%} and Econet (39.86%). The
threesome of Econet, ART and Delta dominated the total value traded after
contributing a combined 94.66% of the outturn. A total of 30,028 unis
exchanged hands in the ETF sect ion in Datvest MCS and Old Mutual ETF as
they claimed 92.34% and 7.66% of the volumes traded apiece. No price changes
were recorded in the ETF section. Tigere REIT ticked up 6.65% to $0.6346
while, the Revitus Property Opportunities shored up 2.29% to end at $0.2148
.-efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand firms to five-month high on Fed rate cut bets

(Reuters) - The South African rand strengthened to a five-month high on
Thursday, as risk sentiment improved on growing bets the Federal Reserve may
cut interest rates in September.

At 1518 GMT, the rand traded at 18.2250 against the dollar , 0.25% stronger
than its previous close. It briefly hit 18.1775 earlier in the day, a level
not seen since mid-December.

The dollar index was up 0.27% against a basket of currencies.

Data released on Wednesday showed April U.S. core inflation eased to its
slowest pace in three years, pulling forward expectations for rate cuts in
the world's biggest economy.

"Risk sentiment has improved on the back of the rate cut optimism, and we
have the rand trading below the 18.30 mark ... which is in line with
stronger EM markets," said Andre Cilliers, currency strategist at
TreasuryONE.

No major economic data releases are scheduled in South Africa until
Wednesday, when local inflation figures are due.

However, economists warned that despite the rand's recent gains, markets
remain cautious ahead of a national election on May 29.

"We think risks around the upcoming election in South Africa, among other
factors, will cause renewed weakness in the currency before long," said
Jonathan Petersen, senior markets economist at Capital Economics.

In the stock market, the Top-40 (.JTOPI), opens new tab index closed 0.10%
higher and the broader all-share (.JALSH), opens new tab index rose 0.19%.

South Africa's benchmark 2030 government bond was stronger, with the yield
down 2.5 basis points at 10.365%.

Nigeria

Naira loses grip in black market as U.S dollar takes front foot

The U.S dollar index was back on the front foot on Wednesday, making modest
gains after earlier losses from renewed bets on Federal Reserve rate cuts
this year, while the naira traded near its low amid high demand for the
haven currency in Africa's largest economy

At the NAFEM spectrum, the naira dropped to N1,416.57 per dollar from
N1,354.21 per dollar on Monday, according to data from FMDQ

On the black market, the value of the Naira dropped from N1,410 per dollar
on Monday to N1,415 per dollar on Tuesday.

Consequently, the rate differential between NAFEM and the parallel market
dropped from N55.79 per dollar on Monday to N1.57.

Price action highlights naira short sellers have taken control in May, amid
dwindling FX liquidity, as the bears station on the N1400 price support. The
other reason is profit-taking among Nigerian naira holders who have started
to move back to the greenback despite Economic and Financial Crimes
Commission (EFCC) clampdown on currency traders in Abuja and Lagos.

The Securities and Exchange Commission (SEC), acting on behalf of the
Federal Government, plans to delist the naira from all peer-to-peer
cryptocurrency platforms to stabilize the country's foreign exchange market
amid the crackdown on digital assets traded through unofficial channels.

This move coincides with the FG's increased efforts to combat dollar
racketeering and exchange rate manipulation.

The nation's financial watchdog stated certain entities manipulated the
value of the naira and the exchange rate through the usage of P2P networks.

Emomotimi Agama, the recently appointed SEC DG, verified that the government
was working on a new set of regulations to control the cryptocurrency
industry.

U.S dollar index resumes bullish trend

The U.S. dollar index, which measures the greenback's strength against the
Japanese yen, Euro, British pound sterling, and three other major peers,
rose by 0.14% to 105.5 index points, adding to Tuesday's 0.3% advance.

Despite last week's Non-Farm Payroll (NFP) data falling short of
expectations, the price action indicates that the US dollar is likely to
find support this week.

The dollar has continued its upward trend despite a weaker-than-expected
jobs report and Federal Reserve officials' attempts to allay talks of a rate
hike.

Although the U.S. central bank has reinforced expectations that rates would
likely drop by year's end, investors are still closely monitoring it and the
timing of Fed rate cuts, which will likely impact currency movements and
further strengthen the greenback against most currencies, including the
naira.

The amount of rate cuts priced into the market has not changed, despite
Minneapolis Fed President, Neel Kashkari's comments on Tuesday that it is
premature to declare that inflation has stopped.

On Monday, additional Federal Reserve members reiterated statements made by
Federal Reserve Chair Jerome Powell on Wednesday about the ongoing
improbability of rate increases.

Interest rates will be lowered "eventually" by the central bank, according
to New York Fed President John Williams, but he did not specify when.

Thomas Barkin, a top Fed official, also stated that the current interest
rate environment is sufficiently restrained to cool the U.S. economy and
return inflation to the central bank's target of 2%. This week's economic
schedule is light, with the University of Michigan's consumer sentiment
index on Friday serving as the focal point.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar rebounds on high US import prices

(Reuters) - The dollar rose on Thursday after data showed U.S. import prices
increased 0.9% last month, a jump that raised concerns the Federal Reserve's
fight to tame inflation is not yet done and could delay plans for
policymakers to cut interest rates.

Economic data this week offered the U.S. central bank good news, but
policymakers haven't openly shifted their views on the timing of rate cuts
many investors believe will start this year.

-

The jump in the price index for U.S. imports in April was the largest
one-month increase since it rose 2.9% in March 2022, the Bureau of Labor
Statistics said. Prices for U.S. imports last declined on a monthly basis in
December, the BLS said.

The market also was grappling with a drop in the number of Americans filing
new claims for unemployment benefits last week that pointed to underlying
strength in the U.S. labor market. A strong economy could keep rates higher
for longer.

-

"The market is, of course, very sensitive to signs of inflation from
wherever it may come, and the import price series that we got today was
meaningfully stronger than expected," said Brain Daingerfield, head of G10
FX strategy at NatWest Markets in Stamford, Connecticut.

"The Fed wants to see consistent progress in more than just one point. The
number we got yesterday - the CPI - was not as bad as feared," he said. "But
I don't think it was enough to materially change the market's outlook for
the Fed and that's reflected in the way that the dollar has bounced back
today."

The dollar rebounded from a sharp decline against all major currencies on
Wednesday when data showed U.S. inflation slowing to 0.3% in April from a
month earlier.

The dollar index , which tracks the U.S. currency against six peers, rose
0.27% to 104.47 after a 0.75% slide on Wednesday.

The slowing of consumer prices, after a stall in the first three months of
the year, prompted markets to price in the likelihood that the Fed would cut
rates twice this year, with the first coming as early as September.

-

But Fed officials sounded a note of caution on Thursday, with Richmond Fed
President Thomas Barkin saying inflation is still not where it needs to be.
Holding U.S. central bank policy at current levels will help get still-high
inflation back to the 2% target, said Cleveland Fed President Loretta
Mester, adding that reaching that goal will take longer than she previously
thought.

"The goods price deflation is no longer dominating and then you have the
import price number, which went up even though the non-petroleum price
didn't go up a lot," said Steven Ricchiuto, U.S. chief economist at Mizuho
Securities USA in New York.

"The reality is inflation is moderating to 3%. That's still above target.
Maybe you're jumping the gun on the inflation story," he said.

Reuters Graphics

Initial claims for state unemployment benefits dropped 10,000 to a
seasonally adjusted 222,000 for the week ended May 11, the Labor Department
said. Economists polled by Reuters had forecast 220,000 claims in the latest
week.

The dollar dropped 1% against the yen on Wednesday but was up 0.28% on
Thursday at 155.30, having fallen as low as 153.6 before weak Japanese
growth figures dented the yen.

The Japanese currency has fallen around 9.5% this year as the Bank of Japan
has kept monetary policy loose while higher Fed interest rates have drawn
money towards U.S. bonds and the dollar. The yen has been particularly
sensitive to any widening or closing of the interest rate differential.

The euro hit a two-month high at $1.0895 on Thursday before dipping to trade
0.14% lower at $1.0867. Britain's pound reached a one-month top of $1.2675
before falling back 0.13% to $1.1268.

Bitcoin fell 1.35% to $65,088.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold eases as dollar gains, Fed rate cut bets lend support

(Reuters) - Gold prices edged lower on Thursday as the dollar rebounded,
although signs of cooling U.S. inflation cemented hopes for interest rate
cuts from the Federal Reserve this year and kept bullion near the one-month
peak.

Spot gold fell 0.3% to $2,379.60 per ounce as of 1817 GMT, after hitting its
highest since April 19 earlier in the session. Bullion rose more than 1% on
Wednesday.

Meanwhile, U.S. gold futures for June delivery settled 0.4% lower at 2385.50
per ounce.

"Gold market is seeing some routine profit taking pressure by the short term
futures traders after the recent gains, while the firmer U.S. dollar Index
today is also adding to that pressure," said Jim Wyckoff, senior analyst at
Kitco Metals.

The dollar (.DXY), opens new tab rose 0.2% against its rivals after hitting
a multi-month low in the previous session after data showed U.S. consumer
prices rose less than expected in April.

A stronger dollar makes gold more expensive for other currency holders.

Meanwhile, Fed Bank of New York President John Williams said that positive
news around cooling inflation is not enough to call for the U.S. central
bank to cut interest rates sometime soon. Lower interest rates reduce the
opportunity cost of holding non-yielding gold.

Market participants are pricing in a roughly 68% chance that the Fed will
cut rates in September, according to CME's FedWatch tool, opens new tab.

"Weaker US dollar, declining US Treasury yields as well as elevated
geopolitical tensions offered support to gold over the past week and we
expect gold prices to stay above $2,250/oz in the coming months," Fitch
Solutions analysis unit BMI said in a note.

Spot silver fell 0.2% to $29.63 per ounce after hitting its highest since
February 2021 earlier in the session.

Palladium lost about 2% to $989.62, while platinum fell 0.3% to $1,060.90
after hitting a one-year high earlier in the session.

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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