JSE Top 40 Eyes R85,897 as Rand Gains and Global Sentiment Fuel Surge

The JSE Top 40 Index has risen to R84,864 and is getting close to the key resistance at R85,897. This move has been driven by a stronger South African rand which gained 0.45% against the US dollar to 18.4566. A softer dollar tends to boost emerging market assets and SA equities are riding that wave.

As the rand firmed it drew foreign capital back into the market especially in the resource and financials sectors. Investor sentiment has improved across the JSE with momentum building above the R83,997 level and well above the 50 period EMA of R82,846 – a sign of institutional interest.

Quick Stats:

• USD/ZAR: Down 0.45% to 18.4566

• Key support: R83,997

• Technical indicator: 50 EMA at R82,846

Global Winds Push Local Momentum

The JSE’s gains aren’t just local. Global factors are helping to lift sentiment across SA markets. Optimism around a possible thaw in US-China trade tensions has lifted Asian equities and US futures. This global “risk-on” mood is spilling over into emerging markets like SA.

The upcoming US Nonfarm Payrolls (NFP) report is another key variable. If job growth slows more than expected it could support the case for Fed rate cuts – and boost appetite for higher yielding assets abroad.

Contributing Factors:

• Rising US and Asian equities

• Eased trade tension fears

• Dovish Fed tone if NFP disappoints

Local Data in Focus

Locally investor focus is now on several economic indicators. These include the Manufacturing PMI, April vehicle sales and an inflation linked bond auction. Each of these will give us insight into SA’s economic health and may influence short term moves on the JSE.

A strong PMI will reflect growth in the industrial sector, better than expected car sales will signal resilient consumer demand. The bond auction may attract offshore participation – another catalyst for the local market.

What to Watch:

• Manufacturing PMI release

• April vehicle sales

• Bond auction and investor participation

Technical Outlook: Trend Holds, Breakout Possible

Technically the JSE Top 40 is in a trend continuation phase. As long as it stays above R83,997 the bulls are in control. Momentum indicators like MACD have turned green. If it breaks R85,897 on strong volume the next target is R86,945.

Trade:

• Entry: Above R85,000 with volume

• Stop-loss: Below R83,900

• Targets: R85,897 and R86,945

Conclusion

With global optimism and a supportive currency, SA equities are looking good. Add in improving technicals and local data and it’s no surprise investors are getting more confident on the JSE’s short term outlook.