S&P 500 struggles ahead of inflation figures, Challenger is a buy: ASX to open flat

Market Reports

by Melissa Darmawan

The Australian sharemarket is to open flat following Wall St’s mixed performance. US stocks gave up their gains as selling eased towards market close. The S&P 500 closed 0.1 per cent lower after dabbling down 0.3 per cent intra-session with the index coming off two straight weeks of gains. The Dow Jones closed lower while the tech heavy Nasdaq inched up. The performance followed recent swings over the past few weeks as investors mull on the pace of the economic recovery versus inflation ahead of the consumer prices data this Thursday. Investors and traders alike are concerned that a rise in prices could prompt the Federal Reserve to withdraw its support on keeping interest rates low. Materials was the worst performer on the S&P 500 down over 1.2 per cent while Real Estate was the best performer up 0.9 per cent. A stand-out in the session was Biogen, spiked 38.3 per cent after the Food and Drug Administration approved the company's drug for treating Alzheimer's disease while meme stock AMC Entertainment added almost 15 per cent. The 10-year bond yield was mainly flat with a marginal increase of 1 point, while oil prices fell after Chinese crude oil imports, fell 14.6 per cent in May to its lowest point this year. Across the Atlantic, European markets closed mixed ahead of the Central Bank set to meet on Thursday with mining giants BHP and Rio Tinto shed over 1.2 per cent as the iron ore price fell. Gold gained while the Aussie dollar rose against the dip in the greenback.

Figures from around the globe

Wall Street was closed mixed yesterday: The Dow Jones Industrial Average fell 0.4 per cent to 34,630, the S&P 500 fell 0.1 per cent to 4,227 and the NASDAQ closed 0.5 per cent higher at 13,882 points.

European markets closed mixed: London’s FTSE added 0.1 per cent, Paris gained 0.4 per cent and Frankfurt closed 0.1 per cent lower.

Asian markets closed mixed: Tokyo’s Nikkei added 0.3 per cent, Hong Kong’s Hang Seng lost 0.5 per cent while China’s Shanghai Composite closed 0.2 per cent higher.

ASX futures

Taking all of this into equation, the SPI futures are pointing to 0.1 per cent gain.

ASX 200

Yesterday the Australian sharemarket closed 0.2 per cent lower at 7,282 as AUSTRAC’s crackdown on National Australia Bank and three casinos saw investors sell down on fears in what lies ahead. The financial crimes watchdog found “serious and ongoing breaches” in how the bank, Crown Resorts, SkyCity and Star Entertainment prevent financial crimes. NAB shares tumbled over 3 per cent and brought down its banking peers as they transacted in the red.

The best performing sector was Technology up 2.8 per cent while the worst performer was Financials down 1.07 per cent. Skycity Entertainment (ASX:SKC) was the worst performing stock dropped 6.47 per cent while electronics design software company Altium (ASX:ALU) soared 39.03 per cent higher after the board rejected a $5 billion takeover proposal from Nasdaq listed software giant Autodesk after saying the offer undervalued the business.
Local economic news

ANZ and Roy Morgan are set to issue the weekly consumer sentiment survey while NAB will release the business survey for May.


Our weekly stock to watch this week is Challenger (ASX:CGF). David Thang, Senior Private Wealth Adviser at Sequoia (ASX:SEQ) rates Challenger as a buy. From a technical angle, Challenger is bullish for a number of reasons.

A zone of support was respected between $5.00 and $5.10 as shown by the orange arrow during the month of May. This area of support is significant for a number of reasons, being structural support between April to June 2020, psychological $5.00 round number, along with the 50% and 61.8% Fibonacci retracement cluster.

At the end of May, a bullish doji formed, which is suggestive of a resurgence in positive sentiment. Upward momentum has gathered traction over the course of June, therefore increasing the probability of further upside over the near term. Should this bullish case come to fruition, then resistance (i.e. target level) is evident at the February 2021 high of $7.37 over the broader horizon.

Shares in Challenger (ASX:CGF) closed 0.18 per cent lower at $5.41 yesterday.


Infratil Limited (ASX:IFT) is paying 10.33 cents unfranked


One Australian Dollar at 7:50 AM was buying 77.58 US cents, 54.70 Pence Sterling, 84.73 Yen and 63.61 Euro cents.


Iron Ore has lost 2.4 per cent to US$202.42
Iron Ore futures suggest a 3.6 per cent loss
Gold has gained $6.80 to US$1899 an ounce.
Silver has gained $0.12 to US$28.02 an ounce.
Oil has lost $0.39 to US$69.23 a barrel.

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