The JSE Top 40 Index (JSE: J200) finds itself navigating turbulent waters as it closed a third consecutive week in the red, shedding 2.21% and extending the downtrend by nearly 50 basis points into the new week.
A cumulative year-to-date (YTD) loss of 6.34% reflects the persisting downside pressures, notably driven by the mining sector. Impala Platinum Holdings Ltd (JSE: IMP) stands as the Top 40’s casualty, down 21% year-to-date, mirroring the challenges posed by declining commodity prices, particularly in Gold and Platinum.
The index’s struggle is further exacerbated by the unwavering strength of the Greenback, supported by robust U.S. economic data and diminishing expectations for a Federal Reserve rate cut in March. With bets on a rate cut decreasing to 44.3% from a robust 75% at the year’s outset, the trajectory of the JSE Top 40 Index hangs in the balance, awaiting insights from South Africa’s upcoming inflation data and the Reserve Bank’s imminent interest rate decision, along with key inflation data from the U.S., due on Friday.
Technical
The JSE Top 40 Index has been navigating a challenging descent, encapsulated by a discernible downtrend marked by trading below the 100-day moving average within a descending channel pattern.
The recent attempt to breach the upper boundary of this channel faced formidable opposition, establishing a noteworthy resistance at the 67950.84 level, indicative of the downtrend’s robustness. The subsequent breach of a critical one-month low at 66171.76 underscored the downward momentum, reaffirming the trend’s strength.
A glimmer of relief emerged as the index found support near a two-month low at 65262.11, coinciding with oversold RSI conditions, prompting a brief rebound. However, the ascent was short-lived, stalling at the upper channel boundary coinciding with the 50% Fibonacci Retracement level, leading to a reversal. In the face of lingering bearish pressures, the 65262.11 level may face retesting, while a resurgence in buyer interest could pivot attention to the 50% level as a potential short-term upside target.
Summary
The JSE Top 40 Index faces persistent challenges, shedding 2.21% last week and 6.34% YTD, influenced by a struggling mining sector and a resilient Greenback. Technical analysis reveals a downtrend with key levels at 67950.84 and support at 65262.11. The index’s trajectory hinges on upcoming inflation data and the Reserve Bank’s decision, creating a delicate balance for investors amid prevailing uncertainties.
Sources: CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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