JSE Top 40 Cash Index price forecast: Local inflation and Federal Reserve testimony key risk catalysts
South Africa Top 40 Index rebound likely to be affected by local inflation and US Federal Reserve data
The South Africa Top 40 Cash Index has started to rebound from oversold territory, although traders will be mindful of upcoming events this week which could have a material effect on the index short term.
A summary of key events which could affect movements on the SA40 Index this week are as follows:
Tuesday 21 June: SA40 Index to reflect dividend adjustment in the underlying index, currently expected at 25.7 points
Wednesday 22 June: Consumer Price Index (CPI) expected to marginally breach the Reserve Bank’s targeted band (3% to 6%) possibly reaching 6.2% year on year
Wednesday 22 June: Federal Reserve Chairperson to testify on the Semi-Annual Monetary Policy Report before the Senate Banking Committee
Wednesday 22 June: Federal Reserve Chairperson to testify on the Semi-Annual Monetary Policy Report before the Senate Banking Committee
While the cash adjustment to the South Africa 40 Cash Index this week is expected to be small, markets will watch for the CPI inflation print on Wednesday in lieu of the outlook for local monetary policy, movements on the rand and in turn the index.
The US Fed testimony by Jerome Powell is likely to be the most influential scheduled economic event affecting global market sentiment and in turn have the potential to influence our domestic market significantly as well.
South Africa 40 Cash Index – Technical View
Gap resistance at 61340 on the South Africa 40 Cash Index was tested last week before we saw a renewed decline on the index.
The price has since started to rebound from oversold territory and off the 59150 support level before moving towards gap resistance once again.
Until such time as we close above gap resistance our trend bias remains down.
Short entries are considered should a bearish price reversal occur before gap resistance or on a break (confirmed with a close) of support at 59150.
Should we instead see a close above gap resistance at 61340, would then reassess the merits of a long trade with a conservative upside profit target.
Should any of the of these scenarios manifest we will update our guidance accordingly with targets and failure levels.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only
