Bulls n Bears Daily Market Commentary : 05 September 2024

Fri Sep 6 04:42:54 CAT 2024

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Bulls n Bears Daily Market Commentary : 05 September 2024

ZSE commentary 

Heavies ZSE register gains in penultimate session of the week ...

The ZSE registered gains in the penultimate session of the week as the
primary All Share Index added 0.89% to 198.61pts while, the Blue-Chip Index
gained 2.00% to 205 .87pts. The Agriculture Index lost 1.94% to 176.87pts
while, the Mid Cap Index fell 0.80% to 169.99pts. General Beltings headlined
the top performers of the day on a 19.52% jump to $0.0600, followed by life
assurer FML that surged 14.99% to settle at $1.6800 . Fintech group Ecocash
Holdings ticked up 14.33% to $0.6746 while, Zimre Holdings Limited went up
3.37% to $0.2796 . Hotelier RTG completed the top five performers of the day
on a 2.27% uplift to end the day pegged at $0.4500 . In contrast, retailer
Ok Zimbabwe led the laggards of the day on a 54.23% dip to $0.8510, trailed
by milk processor Dairibord that dropped 14.98% to settle at $2.7500. Brick
maker Willdale eased 3.39% to $0.0400 while, cigarette manufacturer BAT
tumbled 1.78% to close at $42.9995. Banking group NMB capped the fallers of
the day on a 0.43% retreat to end the day pegged at $2.7025. Eight counters
recorded gains against seven that faltered to leave the market with a
positive breadth of one.

Activity aggregates declined in the session as volumes traded succumbed
93.08% to 949,400 shares while, value traded plummeted 71.15% to $2.39m. Top
volume drivers of the day were OK Zim (62.26%), Econet (9.88%), Delta
(8.54%) and ZHL (7.75%). The trio of Delta, Ok Zim and Econet contributed a
combined 82.52% of the total value traded. A total of 246,508 units
exchanged hands in the ETF category. Cass Saddle ETF lost 2.31% to $0.0225
while, Datvest ETF slipped 3.15% to $0.0291. Tigere REIT dipped 1.40% to end
the day pegged at $1.0000 after a total of 683,834 units exchanged hands in
the session.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity 

South Africa

South African rand gains on improved risk sentiment, Q2 current account data
ahead

(Reuters) - The South Africa rand extended gains in early trade on Thursday,
as risk sentiment improved on bets of a deeper rate cut this month in the
United States, analysts said.

At 0632 GMT, the rand traded at 17.82 against the dollar, about 0.3% firmer
than its Wednesday closing level.

The local unit strengthened against a weaker dollar on Wednesday, after U.S.
job openings dropped to a 3-1/2-year low in July.

Andre Cilliers, currency strategist at TreasuryONE, said bets of a deeper 50
basis rate cut by the Federal Reserve increased after the data.

"Hopes of a larger Fed rate cut have seen risk sentiment improve and the
dollar retreat. We expect the local currency to consolidate further within
the recent R17.70/R18.00 range ahead of tomorrow's payroll numbers,"
Cilliers said.

Markets will look to a slew of U.S. jobs data set for Thursday and Friday
for further hints on the Fed's interest rate path.

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

Domestic investors will focus on South Africa's second quarter current
account data, set for 0900 GMT on Thursday.

South Africa's benchmark 2030 government bond  was stronger in early deals,
as the yield slipped 3.5 basis points to 9%.

Kenyan And Ugandan Shillings Look Steady While Ghana And Zambia Feel
Pressure

What's going on here?

Kenya and Uganda's currencies remain firm, while Ghana's cedi and Zambia's
kwacha struggle due to rising dollar demand.

What does this mean?

The Kenyan shilling is likely to stay stable, supported by dollar supply
from remittances and tea exports. Commercial banks quoted it at
128.50/129.50 per dollar, compared with 128.25/129.25 last Thursday. A local
trader suggested trading would remain within this range. Meanwhile, Ghana's
cedi might edge lower as dollar demand outpaces supply, even with central
bank support. London Stock Exchange Group data showed the cedi trading at
15.62 per dollar, marginally up from 15.60 a week ago. Uganda's shilling is
also expected to hold steady, bolstered by reduced demand for hard currency.
It was quoted at 3,715/3,725 to the dollar, slightly up from 3,710/3,720
last Thursday. On the other hand, Zambia's kwacha faces a rough patch due to
increasing foreign-currency demand from importers while supply dwindles. It
was quoted at 26.30 per dollar, up from 25.96 the previous week.

Why should I care?

For markets: Navigating currency currents.

Currency stability in Kenya and Uganda spells good news for businesses
relying on predictable exchange rates for imports and exports. However, in
Ghana and Zambia, the rising dollar demand can lead to higher costs for
importing goods, thus squeezing profit margins. Investors should keep a
close watch on how these currency shifts might impact local economies and
their respective markets.

The bigger picture: Regional economic ripples.

The strength or weakness of African currencies can have broader economic
implications. Steady shillings in Kenya and Uganda indicate healthier
foreign exchange reserves and consistent supply from remittances and
exports. Conversely, the pressure on the cedi and kwacha highlights
potential vulnerabilities in foreign currency inflows, which may point to
deeper economic issues such as reliance on imports, lower export
performance, or unbalanced trade dynamics. These shifts will inform the
monetary policies and economic strategies in the region.

 <mailto:info at bulls.co.zw> 

Global Markets

Investor bets shift as dollar weakens with looming Fed rate cuts

(Reuters) - The U.S. dollar's decline is gaining speed as anticipated
interest rate cuts by the Federal Reserve threaten to end the greenback's
years-long period of strength.

The dollar has fallen 5% from its 2024 highs, close to its lowest level in
about a year against a basket of its peers following a sharp drop last
month.

The reason is an imminent drop in U.S. interest rates. For years, a robust
U.S. economy and persistent inflation kept rates far above those of other
developed countries, making dollar-based assets more attractive and keeping
it elevated even after the currency hit a two-decade high in 2022.

That yield advantage is set to diminish now that inflation has cooled and
Fed Chairman Jerome Powell said last month the "time has come" to start
cutting rates, a process expected to kick off at the central bank's Sept.
17-18 monetary policy meeting.

"We've always had the view that almost regardless of other circumstances,
once the Fed starts cutting rates, that the dollar would lose ground," said
Brian Rose, senior U.S. economist at UBS Global Wealth Management. "We still
have that view."

Getting the dollar's trajectory right is important for investors due to the
currency's central role in global finance. A weaker dollar could make U.S.
exporters' products more competitive abroad and lower costs for
multinational companies converting foreign profits into greenbacks.

How much further the dollar falls over the long term could depend on how
deeply the Fed cuts rates in the months ahead, and how quickly other global
banks follow suit.

For now, the U.S. economy appears stronger than many of its peers. The yield
gap between 10-year Treasuries and equivalent German bunds - recently around
160 basis points - has shrunk in recent months but remains around its
five-year average of 167 basis points.

Investors, however, are betting on big rate cuts ahead. Futures tied to the
Fed's key policy rate show traders pricing in around 100 basis points of
cuts this year, compared to about 60 basis points for the European Central
Bank.

Commodity Futures Trading Commission data tracking positioning by hedge fund
and other speculative investors showed bets on the dollar swung net short to
the tune of $8.83 billion for the week ended Aug. 27, the first bearish
position in about six months. That compares to a net long of $32.6 billion
in May.

"The recent dovish tone from Powell suggests more cuts than initially
expected," said Aaron Hurd, senior portfolio manager, currency, at State
Street Global Advisors, who has recently reduced tactical bullish positions
on the dollar.

The U.S. government's August jobs report, due on Sept. 6, may offer clues on
any further deterioration in what many policymakers have called a
still-healthy job market.

SLOW DECLINE?

Several factors could prevent a deeper dollar decline, at least in the
shorter term. August's sell-off, during which the dollar index lost 2.2%,
has led some strategists to conclude the U.S. currency may have fallen too
quickly.

"While the Fed's long-telegraphed move in September does spell some dollar
weakness in the fourth quarter, this recent move we've seen is a bit of an
overreaction," said Helen Given, associate director of trading at Monex USA.

Monex USA nevertheless sees the euro at $1.13 by June 2025, implying a drop
of about 2% against the dollar. Rose, of UBS, has a similar target for the
currency pair.

Many are awaiting more evidence of a U.S. economic slowdown before turning
more negative on the dollar.

"The economy is slowing but it's still in a very healthy place," said Thanos
Bardas, co-head of global investment-grade fixed income at Neuberger Berman.

Investors also believe the winner of the U.S. presidential election in
November could influence the currency's fortunes. The latest polls show the
leading candidates, Republican Donald Trump and Vice President Kamala
Harris, a Democrat, in a tight race.

Trump has railed against the currency's strength, saying it hurts U.S.
competitiveness. Yet many of his policies, such as tariffs and tax cuts,
could strengthen the dollar, said Bardas.

On Thursday, Trump told the Economic Club of New York that "we have to
continue to have (the dollar) be the world currency," in response to a
question about his use of economic sanctions.

"We cannot lose our dollar standard, very important," he said.

Steven Englander, head of global G10 FX research at Standard Chartered,
wrote late last month that a Harris win could bring higher taxes and more
pressure on the Fed to ease if economic activity slows.

In the end, the market's reaction to lower U.S. rates is the likely factor
that determines the dollar's course, said Kit Juckes, FX strategist at
Societe Generale.

Strong growth has provided the U.S. with an "insatiable appetite for foreign
investment, matched with enthusiastic yield-hunting foreign investors," he
wrote. "Now that growth is slowing and rates are coming down, we'll see how
it plays out."

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold holds gain as rate-cut hopes rise before US payrolls data

Gold held an advance above $2,500 an ounce, bolstered by the latest US jobs
reading ahead of more data due later Friday, which could prove key in
determining the size of the Federal Reserve's rate cut this month.

Bullion rose 0.8% on Thursday following a report that showed US companies
added the fewest jobs last month since the start of 2021. The figures added
to evidence that the labor market is shifting into a lower gear, boosting
chances the central bank's expected pivot to monetary easing in September
will be the first of a series of rate cuts.

A weak US payrolls report on Friday could help determine whether the Fed
cuts by 25 or 50 basis points at its next meeting. Lower rates are typically
positive for non-interest bearing gold, which has also been supported this
week by a weaker dollar as the precious metal is priced in the US currency.

Bullion is up by more than 20% this year and peaked at a record $2,531.75 an
ounce in August. Along with Fed rate-cut optimism, it's been supported by
strong over-the-counter purchases and haven demand due to conflicts in the
Middle East and Ukraine. 

Spot gold was little changed at $2,517.44 at 7:28 a.m. in Singapore, and up
0.6% for the week. The Bloomberg Dollar Spot Index slipped 0.1%, after
falling 0.5% over the previous two sessions. Silver and palladium were
little changed, while platinum edged up.

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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opinions expressed and recommendations made are subject to change without
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