JSE Top 40 Pulls Back to 110,500 After 4% Ceasefire Rally – Will Relief Hold or Face Fresh Selling?

Quick overview

The FTSE/JSE Top 40 Index closed on April 8 at 111,665 – up by a considerable 4.16% – but then pulled back sharply on April 9 to around 110,453 – down 1.09%. The All Share Index (ALSI) followed a similar trend, closing April 8 at 119,524 (+3.96%) before easing back to around 118,205 (down 1.1%) on April 9.

Why has the JSE given back some of its gains after that rally?

A two week US-Iran ceasefire ended up triggering a pretty sharp relief rally on April 8 after easing oil supply worries and sending risk appetite soaring. But now investors are taking some profits off the table and are having doubts about the fragility of this truce and whether its actually going to stick, which is bringing things back down again on April 9.

Recent Price Action

On April 8, both indices really surged on the ceasefire news, including the temporary plan to reopen the Strait of Hormuz. The drop in oil prices is good news for South Africa because it lowers the country’s energy import costs, and that in turn is helping to strengthen the Rand. All that made for a pretty enthusiastic risk-on move with some pretty elevated trading volume on the day.

On the Monday after the Easter break (April 7) we actually saw the market weaken by about 1% after earlier oil spikes and Rand pressure had taken their toll. The Top 40 Index is still a long way from its 2026 peak near 121,000-129,000, but its still showing some impressive longer term gains (+43-48% over the past 12 months in ZAR terms).

Key Drivers Today

• Geopolitics & Oil/Rand: For now, the ceasefire has provided some short term relief by sending oil prices down, but all the uncertainties and doubts about the truce and its potential to be broken, plus that two-week timeframe, are still weighing on investors’ minds and are causing some caution and profit taking.
• Sector Moves: On April 8, it was the resource-heavy stocks (mining, energy) that drove the market higher, but today they’re pretty much all over the map. Sasol is still a bit of a wild card for now because of its oil exposure, while gold and platinum producers are still benefiting from all the safe-haven flows into the sector.
• Macro Factors: Lower energy costs are good news for South Africa because they ease the pressure on the country’s inflation rate, and the Rand’s recent strength is helping importers, but it’s also making things a bit tougher for exporters and miners.

JSE Top 40 Technical Analysis

The Top 40 Index ran right up against the 114,450 resistance zone and got rejected with a pretty bearish candle, confirming that the short term momentum has started to turn against the index after that impulsive rally.

Price is now heading down towards the rising trendline and the 50-day simple moving average near 109,500, which is now acting as some immediate support.

The overall structure of the market remains pretty constructive, though – we’ve still got higher lows since late March. As long as we hold above 110,000, the overall bias is still bullish, but if we break below 109,500, then we could see a move down towards 107,750 and 105,150. If, on the other hand, we can get back above 112,125, then we might well see a move up towards 114,450.

Trade Idea: Preferred strategy would be to take a buy around 109,500 and target 112,100 and 114,400. We’d be looking to stop out below 107,700.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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