Stocks in the US ended the month of May with big losses, with the Dow and S&P 500 posting their worst one-day drops since mid-April.
The Dow Jones Industrial Average tumbled 208.96 points, or 1.36 percent, to close at 15,115.57 while The S&P 500 slumped 23.67 points, or 1.43 percent, to end at 1,630.74 and the Nasdaq fell 35.39 points, or 1.01 percent, to finish at 3,455.91
On the economic front, consumer sentiment hit its highest level in nearly six years in May, rising to 84.5 from 76.4 in April, according to the Thomson Reuters/University of Michigan's final reading on the overall index. Business activity in the Midwest rose in May, rebounding after a contraction in the month prior, according to the Institute for Supply Management-Chicago.
The weak spending and the lack of inflation pressures could dampen market speculation the US central bank might start scaling back monetary easing later this year.
Japan's Nikkei rebounded 1.4 percent, recovering some of the previous session's 5 percent slump. European markets finished in the red after data showed euro zone unemployment rose to a record 12.2 percent in April. Adding to woes, April retail sales in Germany were lower than expected.
In commodity markets, oil prices fell below $92 a barrel after OPEC said it would maintain its output target of 30 million barrels a day despite ample crude supplies.
Gold futures pulled back, locking in a second consecutive monthly decline on signs that the pace of coin and bar purchases were slowing. The most actively traded contract, for August delivery, fell $US19, or 1.4 per cent, to settle at $US1,393 a troy ounce on the Comex division of the New York Mercantile Exchange.
Copper on the London Metal Exchange closed lower Friday as investors awaited a key Chinese manufacturing data reading, expected to have negative implications for demand, while metals zinc and lead closed higher after a strong week. At the close of open-outcry trading, LME flagship metal copper was down 0.1 per cent on the day at $US7,308 a metric ton. Aluminum closed Friday down 0.1 per cent at $US1,906 a ton, while lead closed 1.3 per cent higher on the day at $US2,200.50 a ton.
The US dollar rose against major currencies in European and US trade on Friday. The Euro fell from near US$1.3045 to US$1.2945 before ending US trade near US$1.2995. At 7am AEST, the Aussie dollar was trading at 96.24 US cents, down from 96.41 cents on Friday.
Today marks the start of a busy week in local economic news, with the major releases including inflation and job ads data today, the RBA's June rates meeting tomorrow and first quarter GDP data on Wednesday.
In the US the ISM manufacturing index is released today together with construction spending and auto sales. Tomorrow it's International trade data and on Wednesday MBA mortgage applications, employment data and the ISM non-manufacturing index along with the Beige Book. Thursday will see jobless claims, Fed balance sheet/money supply along with ECB's announcement. Friday rounds off the week with the employment situation and consumer credit.