South Africa’s JALSH Rises 0.84% as Rand Holds Ahead of GDP Data
The JSE FTSE All Share Index (JALSH) rose 0.84% (856.17) on Monday to 102,388.45 ZAR. This comes as investor sentiment shifts...
Quick overview
- The JSE FTSE All Share Index rose 0.84% to 102,388.45 ZAR amid shifting investor sentiment and sector gains.
- The rand remains steady as expectations for US interest rate cuts increase following weaker payroll numbers.
- Investors are focused on upcoming GDP and sector data releases, particularly in mining and manufacturing.
- The JSE Top 40 Index shows strong buying interest, breaking above key resistance levels with a positive technical outlook.
The JSE FTSE All Share Index (JALSH) rose 0.84% (856.17) on Monday to 102,388.45 ZAR. This comes as investor sentiment shifts, with gains across key sectors despite caution in the market waiting for domestic data releases.
The rand was steady as expectations around US interest rates improved. Weaker US payroll numbers last week has increased the probability of Fed rate cuts which in turn strengthens the rand against the dollar.
Investors Await GDP and Sector Data
Markets are focused on upcoming data that will change the growth narrative. Stats SA will release Q2 GDP numbers on Tuesday at 0930 GMT after Q1 showed a 0.1% q/q growth. Mining and manufacturing weakened in Q1 while agriculture was a bright spot.
This week investors will watch:
- Mining production – key for exports and employment
- Manufacturing output – driver of industrial performance
- Current account – important for trade and investment flows
Bond markets were slightly stronger with the 2035 yield down 1.5 bps to 9.55% indicating cautious optimism.
Technical Outlook – JSE Top 40 Index
The JSE Top 40 Index broke above the descending trendline after weeks of consolidation and is now trading at 95,181 above the 50-SMA at 94,231 and well above the 200-SMA at 90,403. A series of higher lows shows buying interest is steady.
Recent long green candles show strong participation while the RSI at 64.8 is approaching overbought without divergence. Resistance is at 95,630 and 96,362 with a break above that to 97,000. Support is at 94,850 and 93,900.
Trade Setup (For Beginners): A long entry may be considered above 94,850 targeting 96,362 and 97,000 with a stop-loss below 94,200.
US Fed Policy Supports Rand Stability
The rand is supported by global developments. US nonfarm payrolls added only 22,000 in August well below the 75,000 expected and this has boosted expectations of a September Fed cut.
According to Investec Chief Economist Annabel Bishop the Fed easing could take the rand to R17.50/$ but further breakthroughs are uncertain. Markets now expect multiple cuts by year end which will weaken the dollar and support emerging market currencies.
Locally the South African Reserve Bank (SARB) is expected to cut the repo rate by 25 bps in September or November to align with global easing while maintaining the interest rate differential that supports the rand.
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