Top 40 Heads to the US CPI Under Pressure

The JSE Top 40 Index Futures (JSE: J200) The JSE Top 40 Index Futures (J200) are caught in a wait-and-see mode, hovering around the R67,000 mark as investors await the crucial US Consumer Price Index (CPI) data later today. This economic indicator will significantly influence global market sentiment and potentially trigger a breakout or breakdown in the index. 

While South African consumer confidence surged to a 20-month high in February, business confidence remained subdued, painting a mixed picture of economic recovery. Also, recent disappointments from Naspers and Richemont dampened investor spirits, highlighting concerns about profit growth in key sectors. 

All eyes are on the US CPI data, expected at 0.2% monthly and 2.9% year-over-year. A softer-than-expected reading could ignite risk appetite and support the index. Conversely, a hotter-than-anticipated figure could strengthen the USD, potentially weighing on South African equities. 


On the 4-hour chart, the index futures currently trade at R67,074.42, having recently broken below the 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line). This signifies a period of technical weakness. However, the Relative Strength Index (RSI) sits at 43.99, indicating neutral momentum. A move above 50 could signal bullishness, while a drop below 40 could suggest further downside risk. 

Short-term trading opportunities could arise towards the initial support at R66,338.35 should the bearish sentiment sustain a push lower. A break below the R66,338.35 level would likely bring the R65,267.58 support level into play in the short term. 

However, short-term trading opportunities could exist towards the resistance level at the R67,976.07 price level should the bulls sustain a push above the R67,350.75 significant level. A break above the initial resistance could confirm the bullish momentum, likely bringing the R68,601.27 and R69,479.65 resistance levels into play. 


he J200 faces a pivotal moment. The US CPI data will hold the key, with a dovish surprise potentially triggering a breakout above R67,976.07 towards higher levels. However, a hawkish outcome could lead to a breakdown below R66,338.35, potentially extending the recent downtrend. 

Sources: TradingView, Moneyweb, Business Day, Dow Jones Newswire. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

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