The US dollar became the story last week, falling as the euro defied gravity and the doubts about Greece and the eurozone’s financial health to end higher, sending some commodities lower on the day.
Wall Street lost ground for the fourth week, after a small gain on Friday which was assisted by the weaker US dollar boosting metals prices and basic materials stocks.
Markets in Asia and Europe also slid for a fourth week, with the Chinese market registering a sizeable drop (See separate story).
But Friday wasn’t a good day for a trend.
Thin trading made for a lackluster day on Wall Street, with investors and trading firms more interested in the Memorial Day holiday weekend that will keep US markets closed tonight.
As a result, volume was the second lowest of the year so far.
The Dow added 38.82 points, or 0.31%, to 12,441.58. The Standard & Poor’s 500 Index rose 5.41 points, or 0.41%, to 1,331.10 and The Nasdaq Composite Index gained 13.94 points, or half a per cent to 2,796.86.
For the week, the Dow lost 0.56%, the S&P shed 0.16% and the Nasdaq dropped 0.2%.
It was the fourth straight week of losses for both the Dow and the S&P 500. For the Nasdaq, it was the third decline in the last four weeks.
About 5.44 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, the second-lowest trading volume so far in 2011 by a thin margin. It fell way below last year’s estimated daily average of 8.47 billion.
The US dollar Index fell Friday, sending it below 75 for the first time in more than two weeks.
The Swiss franc, meanwhile, touched record levels against the dollar and euro, indicating that concerns over Eurozone debts remained strong.
The dollar index was down about 0.9% for the week, the biggest weekly fall since mid January.
The euro ended at $US1.4294, 1.1% up over the week, which reversed the previous week’s fall against the greenback.
But at one stage the euro jumped back above $US1.43 as poor economic data on Friday worried markets about the direction of the economy.
Highlighting the surreal nature of the euro’s rise last week were reports over the weekend that Greece believes it has missed targets set by its financiers for the next payment from its bailout fund.
Reuters said that "Greece’s hopes of averting default dimmed on Saturday as fears grew the country may have missed fiscal targets set by its lenders while policymakers bickered on how to respond to the deepening crisis.
"The country’s finance minister denied a report in German weekly magazine Spiegel that international inspectors will report that Greece failed on all its fiscal targets, a condition for getting a key, fifth tranche of a 110 billion euro bailout.
"Negotiations continue and will be completed in the next few days. We have every reason to believe the report will be positive for the country," George Papaconstantinou told Greek Mega TV.
So it’s no wonder that German government bond yields are falling with the 10 year bond seeing its yield under 3% for the first time since the start of the year.
US 10 year bond yields remained at 3.06%, the lowest for the year so far on these growing fears that the US economy is continuing to slow, instead of picking up steam after the weak first quarter.
The greenback’s weakness saw the Aussie dollar ended at $US1.071 on Saturday morning, up a cent over the week.
The Australian sharemarket is poised for modest gains when they reopen on Monday, with the SPI 200 share futures index up just 4 points to 4694 on Saturday morning.
That compared to Friday’s physical close for the ASX200 index of 4684, up 23.8 points, or 0.5% on the day, but down 1% for the week.
The All Ordinaries index gained 25.2 points on Friday, or 0.5%, at 4760.3.
In Asia, the MSCI Asia-Pacific Index fell 0.2% last week, its fourth straight drop, completing the biggest string of weekly losses since June 2009.
Friday saw markets in Australia, (up 0.5%), Hong Kong (up 1%), Taiwan (up 0.3%) and India (up around 1%) advance.
But for the week markets eased.
Tokyo’s Nikkei fell 0.9%, South Korea’s Kospi index was off half a per cent, Australia of course lost 1%. China was down 5.2%.
Hong Kong rose 0.9% and 09.8%, which wasn’t a bad outcome given the sharp falls in Shanghai.
In Europe, the Stoxx Europe 600 Index fell 0.2% last week as national benchmarks in every west European country except Spain and Norway dropped. That took the fall so far in May to 1.7%.
On Friday, European stocks closed higher. Britain’s FTSE 100 added 1%, the DAX in Germany was up 0.7% and France’s CAC 40 advanced 1%.
The Italian market fell 1.9% as the fallout from the downgrading of Italy’s credit rating outlook continued. London lost 0.2%, the DAX was off 1.4%, Paris lost 1.0%.
