![](https://blog.trive.co.za/wp-content/uploads/2024/03/inv-1024-x-512-px-2024-03-28T110456.884.png)
Old Mutual Limited (JSE: OMU) reported a 28% rise in full-year profits, exceeding market expectations. This positive performance stemmed from double-digit sales growth and a significant increase in new business. The company declared a final dividend up 4%, showcasing confidence in future prospects. However, despite strong earnings, OMU’s share price has declined in the past six trading sessions, seemingly reflecting investor concerns over the broader operating environment.
While Old Mutual boasts strong sales and new business growth, particularly across its African operations, rising interest rates and challenging economic conditions in South Africa, including power cuts, introduce elements of risk. Despite these headwinds, Old Mutual maintains profitability and plans to launch a new South African bank in late 2024, potentially bolstering future revenue streams.
Technical Analysis
The post-earnings price rally appears to have stalled, with OMU’s share price opening slightly lower on the day of the release. This weakness aligns with the technical indicators. Despite the gap up on the aftermarket session, the share price opened below the crucial 50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line). Additionally, the recent bearish crossover of the 50-SMA below the 100-SMA suggests a potential shift in short-term momentum.
With the RSI (49.87) losing steam below the 50.00 level, the continuation of the downward pressure could bring the 1,140 cents into focus in the near term. A sustained break below the psychologically significant 1,140 cents level, accompanied by significant volume, could expose OMU to further downside pressure, potentially reaching 1,106 cents in the near term.
Conversely, renewed buying pressure during the session could bring the SMAs-enforced 1,202 cents resistance level into play in the near term. A breakout above this level, coupled with a bullish RSI reversal, could signal a return of positive sentiment and potentially pave the way for a move towards 1,234 cents and 1,265 cents.
![](https://blog.trive.co.za/wp-content/uploads/2024/03/image-67-1024x532.png)
Summary
Old Mutual’s share price currently navigates a tug-of-war between positive earnings and technical resistance. While strong fundamentals provide a supportive base, the recent price decline and bearish technical indicators suggest potential short-term weakness. Key levels to monitor include support at 1,106 cents and resistance at 1,202 cents. A break above or below these levels will offer further clarity on OMU’s near-term price trajectory.
Sources: TradingView, Old Mutual, SimplyWallStreet, Business Live, MoneyWeb.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.