After the weakness of the previous week, last week saw a slightly better performance from the Australian market relative to what happened in some other markets offshore.
Some US and European shares fell 0.1%, Japanese shares lost 1.8% and Chinese shares fell 0.8%.
But Australian shares were little changed in contrast (up 0.06%).
Budget fears are continuing to drag on Australian consumer stocks, and the weakening global iron ore price hit the big miners.
The Aussie dollar ended solid at 93.60 USc at the close of trading early Saturday.
In the US, the Dow closed at 16,583 early Saturday, our time. That was a rise of 0.2% on the day, half the weekly rise of 0.4%.
The broader Standard & Poor’s 500 lost 0.1% (it closed at 1,878 points) and the Nasdaq fell 0.1% as well, ending the week on 4,071.
The release this week of Cisco’s latest quarterly figures will have an impact on market sentiment, especially the tech sector and Nasdaq.
But one sector to watch is small caps on Wall Street. They have been sold down heavily in the past week or so.
The Russell 2000 index is the main indicator for the US small caps and at one stage last week it had fallen nearly 10% (which represents a correction from the previous peak on March 4).
The index rose 0.2% on Friday to retreat from the 10% down level.
Marketwatch pointed out that two key Exchange Traded Funds covering small caps lost ground last week (and had much bigger falls than the bigger cap sectors).
The First Trust Dow Jones Internet ETF saw a 3.6% weekly fall, while the iShares Russell 2000 ETF lost 1.8%
US analysts are divided on what this means.
Some think it’s a sign of investors merely ignoring small caps as the sell off in tech related issues on Nasdaq and among the so-called ‘momentum stock’ has seen big falls.
Investors have switched into stocks in more traditional areas, such as consumers and utilities.
That’s partly why the Dow and the S&P 500 have been at near record, or record levels in the past month.
Others say the sell off in small caps should be seen as a another major area of US markets (after techs and biotechs) where investors have lost faith, for the moment.
The sell-off in the ETFs has also seen big fund outflows (over $US2 billion for one in the past 10 days or so).
By the close on Friday, 20 stocks in the Russell 2000 had fallen 25% and 17 had fallen 10% or more.
Some falls ranged from 30% to more than 60% last week.
These are often thinly held stocks, so a bit of bad (or good) news can see big moves in the share prices.
But more and more analysts are drawing attention to the weakness and starting to wonder if this isn’t a signal to the wider market that small companies are not enjoying the best of times, despite signs the US economy is rebounding from its winter slowdown.
Meanwhile, the fall in the Chinese market over the week came despite encouraging news on trade (exports and imports were solid to a bit better than forecast) and moderate inflation data.
The 0.8% fall in the Shanghai market means that market is now down 5% for the year so far, which sort of matches the slowing in the wider economy.
But with consumer pricers up an annual 1.8% in April and producer prices down 2%, there’s no price pressures of concern anywhere in the economy.
It was the slowest rate of consumer inflation since October 2012 and producer prices have now fallen for 26 consecutive months.
In Australia, the ASX 200 Index ended on 5260.8 points, while the All Ordinaries Index finished on 5422.1.
On Friday the ASX 200 and the All Ords each fell 0.3% over the day, after early loses.
The share price futures contract is pointing to a slow start to trading this morning.
