US stocks closed broadly lower for a third straight week last on emerging signs that US consumer demand may be weakening.
Markets across Europe and Asia were also weaker, though Australia gained for the first time in several weeks.
It certainly is, if the weak results for two of the country’s biggest retailers are any guide.
Wal-Mart’s US sales for the first quarter were again negative, while profits were so-so.
And the quarterly results for The Gap, America’s largest clothing group fell 17.5% after they came in under forecast and the company slashed its forecasts for the rest of the year.
That forced other retailers’ shares lower.
That forced investors to reassess the outlook for consumption and for growth, especially with a stalling in production in April and mixed results from the tech sector (Dell good on cost cuts, Hewlett Packard not so good and starting cost cuts).
As well new home sales fell and remain lower than a year ago, despite the claimed recovery in demand and falling mortgage rates.
In the US, the Dow was down 93.28 points, or 0.7%, to end at 12,512.04 early Saturday, our time.
The Standard & Poor’s 500 Index was down 10.33 points, or 0.8%, at 1333.27 while The Nasdaq Composite Index was down 19.99 points, or 0.7%, to close at 2803.32.
For the week, the Dow lost 0.7%, the S&P 500 was down 0.3% and the Nasdaq was down 0.9% (despite the boom listing of the Linkedin business networking site per cent).
In Australia, Wall Street’s losses put pressure on stock futures on Friday night and our market will open lower this morning if the 39 point fall is any guide.
Meanwhile, the dollar slipped slightly in offshore trade on Friday, last trading at $US1.0660.
Australian shares had their first weekly gain in a month last week.
The benchmark ASX200 index Friday down 24.2 points, or 0.5%, at 4732.2; while the All Ordinaries index lost 20.5 points, or 0.4%, to 4807.7.
The ASX200 was up 0.4%, ending three weeks in the red.
The start today won’t be as solid.
The uncertainty and wariness we saw a week ago intensified towards the end of last week with wall Street drifting lower.
Signs of a Wall Street sell-off are all over the place ad pressure for a correction builds.
The euro/US dollar rate and commodity prices are good indicators to watch for the pressures that are building over Greece’s looming second bailout and the growing questioning about the solidity of economic growth in the US, China and Europe.
The euro lost nearly 1% on Friday over disagreements on how to handle debt problems in Greece and ahead of Spanish regional elections yesterday that saw a week of big protests in Madrid and some other cities.
Overlaying all of these concerns is the looming end of the Federal Reserve’s easy money policies next month.
Investors are wondering if that means the days of cheap money risky punting will end quickly.
The sharp sell-off in commodities markets earlier this month was seen by many as the first warning sign of a coming market correction.
The US dollar has been strengthening since then, in another sign that appetite for risk is dwindling.
Next month’s end of the Fed’s massive bond-buying program, also known as quantitative easing, is expected to knock down the value of stocks, commodities and the euro, a recent Reuters poll of 64 analysts and fund managers found.
Reuters and Bloomberg point out that puts on the options market for the S&P 500 are outnumbering calls two to one at the moment, a bearish sign.
Another is the low volumes on Wall Street.
On Friday, 6.71 billion shares were traded on the New York Stock Exchange, NYSE Amex and Nasdaq, compared with the average of about 8.4 billion in 2010.
In Europe the Stoxx Europe fell 0.3% last week to be down 1.5% in may after the downgrade of Greece and differences emerged over its next bailout
The Greek market dropped 4.3% to what Bloomberg said was a 14 year low.
Greece’s 10 year bonds were sold off with the yield peaking and staying above 16% on Friday, which is collapse territory.
Bloomberg said benchmark market indexes fell in 13 of the 18 western European markets.
Germany’s DAX sank 1.8% the biggest drop in two months and France’s CAC 40 declined 0.7%. The UK’s FTSE 100 rose 0.4%.
There was a small regional election in the German city state of Bremen yesterday.
In Asia there was a slew of worries that saw the markets sold off for a third successive week.
Japan’s slide into recession, weak data from some other countries, the growing fears about Greece, the slowing in the US economy, all played a part in undermining sentiment.
The MSCI Asia-Pacific Index fell 1.1% last week, the third straight drop. It was down 1% the week before.
While Australia has a small gain, the Nikkei in Japan fell 0.4%, South Korea’s Kospi index dropped 0.4%, Hong Kong’s Hang Seng index slid 0.3% and China’s Shanghai Composite Index lost 0.4%.
