South African stocks snapped six straight sessions of gains on Tuesday, declining 0.33 percent after data showed a massive platinum strike had tipped the economy to the verge of a recession. Packaging firm Nampak shed 3.6 percent to 35.80 rand after it cautioned that business in South Africa, which accounted for three-quarters of it revenue last year, would "remain challenging" in the near future.
Sentiment was bruised after data showed Africa's most advanced economy shrank in the first quarter of this year, the first quarterly contraction since a recession in 2009, as mining output plummeted due to a protracted strike in the platinum sector. The gloomy GDP numbers gave investors an excuse to cash in stocks after the All-Share index topped 50,000 for the first time last week. "It's a reality check and we could see some profit-taking," said Christie Viljoen, an analyst with NKC Independent Economists. "With today's GDP numbers, we may see a pull back away from 50,000 in the short term." The benchmark Top-40 index drooped 0.33 percent to 44,859.43 while the broad All-Share slipped 0.39 percent to 49,824.45.
Technical factors also show the market is ripe for selling. The 14-day relative strength index, or RSI, a momentum indicator tracked by chartists, has strayed close to overbought territory in recent days on the two main indices. Adcock Ingram fell over 2 percent.
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