CMC Markets Weekly Report

Stocks in the U.S. closed lower in thin trading Friday as investors hesitated to stay long over the three-day Memorial Day holiday weekend amid ongoing worries over the euro zone.

The Dow Jones Industrial Average fell 74.92 points or 0.60 percent, to close at 12,454.83. The blue-chip index has yet to see a two-day win streak this month.

The S&P500 slipped 2.86 points, or 0.22 percent, to finish at 1,317.82. The Nasdaq erased 1.85 points, or 0.07 percent, to end at 2,837.53. The Dow and Nasdaq are on pace for their worst month since 2010.

European shares closed flat, as some traders looked to book profits on the back of a two-day rally with fears over Greece still lurking in the background.

Adding to jitters, Spain's Bankia asked the state for a bailout of 19 billion euros, more than double what the government had expected earlier this week. Shares of the Spanish bank were halted earlier during European trading. And S&P downgraded the bank to 'double-B-plus' from 'triple-B-minus.' The agency also cut its ratings on another four Spanish banks. Meanwhile, concerns continued to brew over ongoing flight of capital from European banks.

Not even a better-than-expected consumer sentiment report could help lift equities. Consumer sentiment climbed in May to its best level since October 2007, with the index hitting 79.3, according to the Thomson Reuters/University of Michigan's final reading.

Major currencies were mixed against the greenback in European and US trade. The Euro rose from lows around US$1.2500 to highs near US$1.2600 in European trade but then lost all the gains and closed US trade at US$1.2515. The Aussie dollar rose from lows around US97.25c to US98.00c but ended US trade near US97.55c. And the Japanese yen held between 79.48 yen per US dollar and JPY79.70 and ended US trade near JPY79.65. The Aussie dollar is US97.85c this morning with euro at US$1.2560.

Benchmark crude oil prices rose for a second day but closed lower for the fourth straight week. Supporting prices was lack of progress on negotiations with Iran on its nuclear program. Also providing support was data showing US consumer sentiment at 4 year highs. US Nymex crude rose by US20c to US$90.86 a barrel. London Brent crude rose by US28c on Friday to US$106.83 a barrel. Over the week Brent lost 31c and Nymex fell by 62c.

Base metal prices were mixed on the London Metals Exchange on Friday. Zinc rose by 1.3 percent while copper rose 0.2 percent. Other metals fell up to 1 percent. Over the week metals were again mixed with nickel, zinc and tin up by as much as 1.3 percent while other metals eased. Aluminium lost 2.6 percent. The gold price rose on Friday, as traders squared positions ahead of a US holiday weekend. The June Comex gold futures price was up by US$11.20 or 0.7 percent to US$1,568.90 an ounce. Over the week the gold price fell by 1.4 percent.

On the economic front, the Australian calendar kicks off with retail sales for April on Wednesday and construction work done in Q1 and dwelling approvals for April on Thursday. There's also an update on private capex for Q1 and an update on capex intentions.

While the US goes quiet until Tuesday, the week ahead offers the Case-Shiller house price index, consumer confidence, pending home sales, chain store sales and, importantly, the May unemployment numbers. The March quarter GDP result will also be revised on Thursday.

Friday is the first of the month, meaning it's global manufacturing PMI day. China will see the release of both the official and the HSBC survey.