The JSE continued to tumble in line with international markets today, the ALSI fell 1.65% today, registering the worst quarterly performance since the end of 2008. The ZAR firmed slightly against the US$ due to better-than expected trade data.
International markets are reacting to concerns about the outlook for Europe and investors were worried about weak job numbers coming out of the U.S. on Tuesday. There has been a lot of weak economic data out this week especially from the US and Europe. The US job numbers out tonight is a critical number and all markets will be waiting on this.
On the local front the trade deficit narrowed sharply in May on higher exports which is supporting the ZAR. The Rand was trading at around R 7.63 to the US$ this afternoon slightly up from Tuesday's close of R 7.68.
The ZAR has lost about three percent against the US $ since January 2010 and is currently tracking the Euro. Economists expect the Rand to continue to depreciate during 2010.
The looming Eskom strike is also causing uncertainty for investors and it is a huge threat to the local economy, should Eskom workers go on strike.
In the short term the outlook for stocks are bearish and the Top 40 fifty day moving average hovered just above the 200-day moving average. If the 50-day line falls below the 200-day, it would create a formation called a "death cross", this is usually seen as a signal for further selling.
The Top-40's 14-day relative strength index, or RSI, was at 37.4, indicating it could still fall further before hitting the 30 level, where a stock or index is considered oversold.
Financial firms have been particularly hit hard First Rand fell 3.4 %, Investment bank fell 2.9%
MTN Group fell 2.2% The short-end of the curve has fallen much more aggressively in recent weeks than the long end as market players increasingly price in a rate cut when the central bank meets on July 21-22.
Just remember that markets are volatile and the markets are all over the place, buckle up and hold out during the storm.
