South Africa 40 Cash Index: forecast dividend reminder and key data to watch
The South Africa 40 Cash Index is testing resistance ahead of busy news week and cash adjustment expected
The South Africa 40 Cash Index broke trend line resistance and is also now testing a break of 72840 level as well.
The longer-term trend is still considered up while the price trades firmly above the 200-day simple moving average (200MA) (blue line).
Should today’s candle confirm a break (with a close above) of the 72840 level, we assume the short-term trend now to be aligning with the longer-term uptrend.
In this scenario, long entry is considered with 75250 the next upside resistance target from the move.
The index has now moved into overbought territory, although trend is considered to take precedence in this scenario (should it confirm).
The overbought signal would however suggest keeping a relatively tight stop loss on the trade, possibly using a close below the 72200 level as the failure level for long trades.
Local GDP news
Statistics South Africa’s (STATSA) reported that local gross domestic product (GDP) decreased by 1,3% in the fourth quarter of 2022.
Contractions in the following sectors were highlighted:
The finance, real estate and business services industry decreased at a rate of 2,3% in the fourth quarter, contributing -0,6% point to GDP growth
The trade, catering and accommodation industry decreased by 2,1% in the fourth quarter, contributing -0,3% point to GDP growth
The mining and quarrying industry decreased by 3,2%, contributing -0,1% to GDP growth
The agriculture, forestry and fishing industry decreased by 3,3% in the fourth quarter, contributing -0,1% to GDP growth
The manufacturing industry decreased by 0,9% in the fourth quarter, contributing -0,1% to GDP growth
Real annualized GDP for 2023 increased by 2%.
Cash adjustment expected
The South Africa 40 Cash Index will adjust for a dividend in the underlying index on Tuesday the 7th of March 2023, currently estimated at around 89.3 points.
Key economic data out this week
This week sees several macro catalysts that could in turn have bearing on global sentiment and in turn the South Africa 40 Cash index. A summary of which is as follows:
5pm Tuesday, Fed Chair Jerome Powell testifies
Friday, Bank of Japan (BOJ) monetary policy decision and statement
9am Friday, UK GDP
3:30pm Friday, US Non-Farm Payroll data, Unemployment Claims and Average hourly earnings
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