Bulls n Bears Daily Market Commentary : 17 September 2024

Wed Sep 18 09:50:38 CAT 2024

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Bulls n Bears Daily Market Commentary : 17 September 2024

ZSE commentary 

Mid cap counters anchor the market in Tuesday's trades...

The ZSE market buttressed prior sessions gains mainly anchored by Mid Cap
counters that clinched the top five spots of the risers' list. The All Share
Index was 0.59% up at 263.58pts while, the Mid Cap Index advanced 3.71% to
188.60pts. The Agriculture Index was 3.75%  higher at 213.48pts while, on
the contrary, the Blue Chip Index was 0.34% lower at 289 .17pts. Banking
group ZB led the gainers of the day as it charged 15.00% to close at circuit
breaker limit of

$8.2685 . Proplastics was 14.55% higher at $2.2910 despite having recorded a
loss of US$71,875 for the half year ended 30 June 2024. Property concern
First Mutual Properties surged 14.01% to $0.5250 while, in the same vein
First Mutual Holdings Limited ticked up 12.50% to $3.6000. Seed technology
group SeedCo Limited soared 9.13% to end at a VWAP of $5.9318. Partially
weighing down the market was Ecocash that trimmed 14.35% to $0.4231,
followed by construction group Masimba that plunged 11.09% to $2.3115.
Telecommunications  company  Econet was  2.02% lower at $5 .0001 while,
Delta slipped 1.01% to $20.3153. Sugar processor Star Africa tumbled 0.83%
to $0.0146 .

Activity aggregates were mixed in the session as volumes traded tumbled
41.13% to see l.16m shares worth $8.2Hn exchange hands. This represented a
16.46% increase in turnover . Volume drivers of the day were Econet
(21.83%), Delta (20.67%), Ok Zimbabwe (14.79%), Star Africa (11.68%) and
Proplastics (10.46%). Delta was the top turnover driver of the day as it
claimed 59.56% of the aggregate while, the other notable value driver was
Econet that claimed 15.48% of the same. In the ETF category, the Old Mutual
ETF and Datvest MCS added 6.94% and 0.33% respectively. The Cass Saddle ETF
succumbed 13.04% to $0.0200. The Tigere REIT shed 0.17% to settle at $1.1010
as   .41m units exchanged hands.-efesecrities

 <mailto:info at bulls.co.zw> 

Global Markets

Kenya

Kenyan shilling holds steady with tourism and manufacturing dollar inflows

(Reuters) – The Kenyan shilling was unchanged on Tuesday as dollar inflows
from the tourism sector balanced demand from the manufacturing sector,
traders said.

Commercial banks quoted the shilling at 128.50/129.50 per dollar at 0741
GMT, the same as Tuesday’s closing rate.

South Africa

South African rand steadies, markets focus on Fed rate cut

(Reuters) – The South African rand held steady in early trade on Tuesday,
with investor focus on Wednesday’s U.S. Federal Reserve policy decision
which could see it deliver a big interest rate cut.

At 0750 GMT, the rand traded at 17.6250 against the dollar, not far from its
Monday closing level of 17.6225.

Markets are certain the Fed will cut rates when it makes its policy
announcement on Wednesday and are leaning towards more aggressive easing in
the world’s biggest economy.

“Markets have started positioning themselves for a 50bps (basis points) rate
cut by the Fed,” said Andre Cilliers, currency strategist at TreasuryONE.

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

On Wednesday, local investors will look to South Africa’s August consumer
inflation figures and on Thursday, the South African Reserve Bank will
announce its policy decision.

Economists polled by Reuters predict a 25-basis-point rate cut by the
central bank of Africa’s most industrialised economy

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar trades in the doldrums as rates and data weigh on outlook

The US dollar is languishing near one-year lows, in the latest sign of
uncertainty gripping Wall Street traders as they brace for the Federal
Reserve’s looming interest rate decision.

The US dollar index, which measures the greenback against a basket of six
rival currencies, has fallen 3 per cent since the start of August, leaving
it teetering just above August’s lows, which were its weakest point in more
than a year.

The dollar is sensitive to interest rate expectations as well as predictions
about the health of the US economy. It has moved lower in recent weeks as
weakening US data has cemented bets that the Fed will loosen monetary policy
for the first time since 2020 on Wednesday at the conclusion of the central
bank’s September meeting.

Putting more pressure on the greenback, traders have cranked up their
expectations in recent days of a 0.5 percentage point interest rate cut —
double the size of a more traditional 0.25 percentage point decrease that
markets had previously priced in. Any such reduction would knock US
borrowing costs down from their current range of 5.25 per cent to 5.5 per
cent, a 23-year high.

“Two things have helped drive the dollar lower: bets on the Fed trade and
long dollar positioning to begin with, which has been squeezed out,” said
Mark McCormick, global head of FX and EM strategy at TD Securities,
referring to traders scaling back their bets on a rising US currency.

At the same time, the appreciation of other major currencies has put
downward pressure on the dollar, with the yen strengthening past ¥140 to the
greenback this week for the first time since July last year. The Japanese
currency’s advance underscores increasing divergence between traders’
expectations for US and Japanese monetary policy, with the Fed expected to
cut borrowing costs just as the Bank of Japan starts raising its own
benchmark lending rate.

The dollar’s recent decline has contrasted with US stocks moving sharply
higher, with the benchmark S&P 500 touching a fresh intraday record on
Tuesday, highlighting ongoing division among investors across different
asset classes about the outlook for the world’s biggest economy.

The dynamic suggests the dollar is focused solely on the fate of the US
economy, neglecting bigger and more recent declines in China and Europe,
which could ultimately drive global cash stateside, as foreign investors
favour better-performing US stocks and traditional safe havens such as the
dollar and US Treasury bonds.

“The dollar is priced for a US-only slowdown,” said McCormick. “The dollar
is ignoring what is happening in China and what is happening in the
eurozone. Just because US equities underperformed for two months doesn’t
mean there is a better place to put your money: China and Europe are
underperforming.” 

Strategists also noted that the US economy, unlike peers such as Japan, is
not particularly reliant on exports, meaning limited implications for US
companies with international operations from the dollar’s recent weakness.

“We’re too big and too insular an economy to be impacted by the kind of
moves in the dollar that we’ve seen so far,” said Ajay Rajadhyaksha, global
chair of research at Barclays.

This all suggests to Karl Schamotta, chief market strategist at Corpay,
global payments and foreign exchange risk management firm, that the dollar
is poised for a move higher soon.

He pointed to a historical trend in foreign exchange trading referred to as
the “dollar smile”, a dynamic that illustrates the US currency’s exceptional
role in financial markets: it traditionally performs well both when the US
economy is booming and outperforming peers, and when the global economy is
in a downturn, and investors seek out the protection of the US currency. 

Still, strategists said dollar pricing may soon flip.

“We’re at the bottom of the smile right now. Global expected growth
differentials have narrowed. The US has lost momentum, but it is still doing
relatively well,” said Schamotta. “There is an overly crowded trade against
the dollar.”

Schamotta pointed to data, including a report from Tuesday morning that
showed US retail sales unexpectedly rose in August, a sign of stable
consumer spending. He also pointed to the Atlanta Fed’s GDP tracker, which
monitors real time expectations for US growth. It currently shows the US GDP
is expected to grow 3 per cent year on year in the third quarter. 

“Numbers like retail sales and the Atlanta Fed’s Nowcast are telling us that
the US economy is still on a strong footing, despite a deceleration. The
only area of weakness is a labour market that has corrected from overheated
levels during the pandemic,” said Schamotta.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold flat as investors focus on Fed

Gold prices were flat on Wednesday as investors weighed chances of an
outsized interest rate cut by the Federal Reserve later in the day.

Spot gold

was little changed at $2,571.28 per ounce, as of 0224 GMT. Bullion rose to a
record high of $2,589.59 on Monday.

U.S. gold futures

rose 0.2% to $2,597.60.

The Fed is expected to announce a cut to interest rates for the first time
in more than four years at 1800 GMT. Chair Jerome Powell will hold a press
conference afterward.

Markets are now pricing in a 65% chance of a 50-basis-point rate cut,
compared with 34% a week earlier, according to the CME FedWatch tool.

“I think there’s a real risk that market pricing is too dovish, and that the
Fed won’t deliver a dovish 50-bp cut. And, that could see yields and the
dollar rip higher and weigh further on gold,” City Index senior analyst Matt
Simpson said.

“But, let’s not lose sight of the established bullish trend and bullish
market positioning, and dips towards the lows around $2,500 are likely to
appeal to bears.”

Zero-yield bullion tends to be a preferred investment in a lower interest
rate environment and during geopolitical turmoil.

Meanwhile, data released on Tuesday showed that U.S. retail sales
unexpectedly rose 0.1% in August, suggesting that the economy remained on
solid footing through much of the third quarter.

In the Middle East, militant group Hezbollah promised to retaliate against
Israel, accusing it of triggering explosions in Lebanon on Tuesday that
killed nine and injured nearly 3,000.

On the physical front, India’s August gold imports stood at $10.06 billion,
compared with $3.13 billion in July, according to the trade ministry.

Among other metals, spot silver

fell nearly 1% to $30.42 per ounce, platinum

edged 0.2% lower to $979.85 and palladium

shed 0.6% to $1,109.42.

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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