Bulls n Bears Daily Market Commentary : 04 September 2024

Thu Sep 5 08:32:11 CAT 2024

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Bulls n Bears Daily Market Commentary : 04 September 2024

ZSE commentary 

Heavies ZSE swings back into the black...

The ZSE closed the midweek session in the black, rebounding from losses
recorded in the past  five consecutive trading sessions. As a result, the
mainstream All-Share Index recovered 0.48% to close at 196.86pts with the
Top Ten Index adding 0.43% and settled at 201.84pts. Contrastingly, the ZSE
Agriculture and Mid Cap ended the session with respective losses of 0.01%
and 0.28% to 180.36pts and 171.35pts. Headlining the gainers of the day was
fintech group Ecocash which surged 13.72% to $0.5900 where supply could be
found. Retailer OKZim rebounded 11.96% to $0.9999 as circa 500,000 shares
exchanged hands. Small cap counters Willdale and Star Africa also featured
on the top five risers' zone after ticking up 4.74% and 2.33% to settle at
$0.0419 and $0.0102. Meikles advanced 1.07% to $5.9800, albeit on paltry 200
shares.

Leading the laggards of the day was Zimpapers which plunged 54.23% to
$0.0460 as 2,700 shares exchanged in the newsgroup.  First  Mutual  Holdings
was  14.98%  down  at $1.4610 while, Zimre Holdings Limited lost 3.39% to
$0.2705 where demand could be found. General Beltings Limited was 1.78% as
it closed at $0.0502 with banking group CBZ following on a 0.43% lift to
$10.0000 as demand continued to wane in the name. Activity aggregates
improved as re!flected in volumes which went up 149.06% to 13.72m shares,
yielding a value outturn of $8.27m which was 21.11% up on yesterday. Econet
was the most sought-after stock of the day, anchoring both the volume and
value of the day after claiming 91.48% and 89.45% apiece. The trio of ETF's
in Datvest Modified consumer Staples, Morgan and Co Multi-Sector and Old
Mutual were the three funds to register trades and settled at $0.0300,
$0.5000 and $0.1495 in that order. Foreign participation remained subdued as
inflows of $124.20 were registered against a nil sales position.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity 

South Africa

South African rand softens ahead of US jobs data

(Reuters) - The South African rand was weaker in early trade on Wednesday,
as markets awaited U.S. jobs data for clues on the interest rate path in the
world's biggest economy.

At 0626 GMT, the rand traded at 18.0025 against the dollar, about 0.17%
weaker than its previous close.

"The USD-ZAR now looks to be targeting the 18.0000 handle once more. Whether
it sustains a break above that level will depend on the market reaction to
the U.S. data scheduled for release in the upcoming session," ETM Analytics
said in a research note.

U.S. job openings data is expected on Wednesday and could hint at the
Federal Reserve's interest rate path for this year.

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

Local investors will look to the S&P Global South Africa Purchasing
Managers' Index for August on Wednesday for hints on the health of Africa's
most industrialised economy.

Data on Tuesday showed South Africa's second-quarter economic growth was
slightly weaker than expected.

South Africa's benchmark 2030 government bond was slightly stronger in early
deals, as the yield slipped 1.5 basis points to 9.2%.

Nigeria

Naira Slumps To N1,625.88/$1 At NAFEM, Worst In Six Months

(THEWILL) - The naira recorded its worst performance in six months at the
Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, September
4, 2024, where it exchanged for N1,625.88 to the dollar.

This marks the lowest exchange rate since March 8, 2024, when NAFEM recorded
a performance of N1,627.4/$1, despite an improved FX turnover of $205.76
million - one of the highest since August 12, 2024, when dollar supply hit
$246.44 million.

Data from the FMDQ website on the NAFEM window showed that naira's
depreciation on August 4 represents a 0.89% decline from the previous day's
rate of N1,611.34/$1.

Glo

Intra-day activity showed that the naira traded at a high of N1,640/$1 and a
low of N1,400/$1, indicating significant volatility in the foreign exchange
market before settling on the equilibrium of N1,625.88.

The $205.76 million FX turnover for the day was a marginal drop of 1.84%
compared to the previous day's $209.61 million - the highest since August
12, 2024.

The drop in exchange rates indicates an uncertain trend as the Nigerian
government announced a 45% increase in the pump price of petrol on September
3, 2024.

This is believed to spark a high inflation rate which would herald a wave of
renewed hardship for the citizens, households and businesses.

Nigeria's headline inflation rate fell in July for the first time in well
over two years - dipping to 33.40% in annual terms from 34.19% recorded in
June.

Food inflation rate in July 2024 was 39.53% points higher compared to the
12.55% rate recorded in July 2023

This crash occurred amid a reported hike in petrol prices across the
country, which may add to the plights of businesses and ordinary Nigerians,
further worsening inflation.

The Nigerian official foreign exchange (FX) market experienced a marked
decline in turnover in August, despite the initial Retail Dutch Auction
conducted by the Central Bank of Nigeria (CBN).

The troubled naira is a reflection of the drop in the nation's foreign
exchange reserves, which fell to $36.32 billion as of August 29, 2024,
marking a decline from the year's peak of $36.70 billion recorded on July
29, 2024.

The CBN has intensified efforts towards achieving a stable rate of the
domestic currency which industry experts believe is not sustainable given
the import-dependent nature and the poor productive base of the economy.

 <mailto:info at bulls.co.zw> 

Global Markets

Canadian dollar defies odds with strong rally amid economic concerns

The Bank of Canada is poised to cut interest rates for the third time this
year, as the economy slows, and unemployment rises to its highest level in
two years.  

Despite these conditions, the Canadian dollar has experienced its best
monthly gain so far in 2024. According to BNN Bloomberg, options traders
expect the loonie to continue rallying, even in the face of a gloomy
economic outlook. 

Consumer strain is evident, with rising credit card balances, yet traders
remain bullish on the loonie. Last week, options traders were the most
optimistic on the Canadian dollar in 15 years, betting that it will
outperform the US dollar in the coming month.  

The US dollar's broad-based weakness has played a significant role in
supporting the loonie's rise, along with other unique factors, according to
Karl Schamotta, chief market strategist at Corpay in Toronto. 

Short positions on the loonie have been declining, with hedge funds and
asset managers reducing their bets from a peak of US$14bn earlier in August
to US$8bn by the end of the month.  

Schamotta suggested that bearish speculators are pulling back, indicating
that the extreme short positions seen in early August may be unwinding. 

The Canadian dollar climbed 2.3 percent last month against the US dollar, in
contrast to its average August return of negative 0.2 percent over the past
25 years.  

Since hitting its lowest point in 2024 on Aug. 5, the loonie has surpassed
key technical levels, including its 50-, 100-, and 200-day moving averages
in less than three weeks. 

However, despite its strong performance last month, the loonie began
September with a slight decline of 0.4 percent and is still down 2.3 percent
year-to-date.  

Among developed-nation currencies tracked by Bloomberg, it remains one of
the weakest performers, leading options traders to anticipate further gains.

Traders last week were paying more for put options betting on a weaker US
dollar against the Canadian dollar than for call options, an anomaly not
seen since the 2008 financial crisis.  

One-month risk reversals, measuring the difference between call and put
options, briefly dipped below zero to levels not seen since October 2009,
though they have since recovered. 

Despite the optimism, Charu Chanana, head of FX strategy at Saxo Markets in
Singapore, warned that the loonie could be vulnerable to a rebound in the US
dollar, as yield differentials do not favour the Canadian currency.  

For now, the loonie is trading in a range of 1.31 to 1.32, where it has
struggled to reach over the past two years. With no immediate headwinds, it
could build on recent momentum, potentially rising another 2 to 3 percent,
according to Bloomberg data. 

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold rebounds from lows after weak US jobs openings data

(Reuters) - Gold prices reversed course to gain on Wednesday, helped by a
softer dollar and lower yields after falling U.S. job openings signalled a
possibility of an over-sized rate cut from the U.S. Federal Reserve at its
policy meeting this month.

Spot gold gained 0.1% to $2,494.24 per ounce as of 1:41 p.m. ET (1741 GMT),
bouncing back from a two-week low of $2,471.80 hit earlier in the session.
U.S. gold futures settled 0.1% higher to $2,526.00.

Data showed U.S. job openings in July fell to the lowest level in three and
a half years.

Traders added to bets that the Fed will deliver a 50-basis-point reduction
at its Sept 17-18 meeting, raising them to about 49% from 41% immediately
before the data, rate futures contracts show.

"The data has shifted expectations for a little bit of a higher percentage
chance of more than a 25-basis-point cut at the Fed meeting," said David
Meger, director of metals trading at High Ridge Futures.

JOLTS data indicates that there is an expectation that we are beginning to
see a bit of a slowdown in the economy, leading to a pullback in the dollar,
and interest rates continuing to creep lower, which is supportive to the
gold market, Meger added.

ADP employment and jobless claims reports on Thursday and the non-farm
payrolls report on Friday will also be closely scanned for cues on the Fed's
rate-cut path.

Markets expect 100 basis points of cuts by year-end, implying a
50-basis-point cut in one of the next three FOMC meetings, although it's
unlikely to be the first one, said Peter A. Grant, vice president and senior
metals strategist at Zaner Metals.

Bullion, which offers no interest of its own, tends to thrive in a
low-interest-rate environment.

Elsewhere, spot silver rose 0.5% to $28.18 per ounce, platinum gained 0.5%
to $907.68 and palladium dipped nearly 1% to $929.25.

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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