The local sharemarket has finished May in the red after a busy month for investors that saw doubts about the future of US quantitative easing, a Chinese economic slowdown, falling commodity prices, a resurgent US dollar and volatility in global stocks.
The S&P/ASX 200 index shed 4 points to 4926.6 on Friday, while the broader All Ordinaries Index slipped 3 points to 4914.
Over the month, the ASX 200 index dropped by 5.1 per cent, reversing almost all of April's gains.
The All Ordinaries was 4.93 per cent down in May, while the Australian dollar fell by 6.92 per cent. It was trading at US95.53¢ late Friday.
The Reserve Bank's cut to the cash rate, which saw it fall to a half-a-century low of 2.75 per cent, and the subsequent fall in the Australian dollar against its US equivalent later that week set the tone for the month.
At the same time, the much-anticipated private expenditure data for the current and coming financial year, released on Thursday, suggested the mining investment boom was in its final days.
A key theme in May was growing optimism about the US economy amid growing expectations the US Federal Reserve could wind back its quantitative easing program by the end of this year.
Speculation over the Federal Reserve's next steps saw mixed reactions in global markets, with uncertainty driving investors' actions, analysts said.
"It's extraordinary policy we've had. It's unchartered waters, so with all that kind of uncertainty, markets don't seem to be sure how to trade," Deutsche Bank equities strategist Tim Baker said, adding the US markets "held up reasonably well".
UBS head of strategy David Cassidy said the falls on the Australian sharemarket in May meant equities were looking more fairly valued.
"I'd still be a bit cautious on areas like the banks, but I think valuations are looking better than they were, given we've had a 10 per cent pull-back through the course of the month, so they are more reasonably priced now," Mr Cassidy said.
"The market looks to offer better prospects from here relative to a month ago."
RBS Morgans' director of equities, Tony Dennis, said the big banks and Telstra bore the brunt of the move into the red as foreign capital exited the sharemarket, while companies with US earnings benefited from the weaker Australian dollar.
"You saw the resource stocks that had underperformed for that period started to do a whole lot better and you've seen a very nice gain - 10 per cent or so - out of BHP," Mr Dennis said.
"It signalled the end of one phase of the market. What everyone is wrestling with in the market is: what is the new trend?"
China's slowdown, also dominated attention over the past month. This weighed on the dollar and commodity prices.
"The downward revision of the growth outlook for China began in April with the release of the March data but continued into May with weaker numbers in April," RBS currency strategist Greg Gibbs said.
"We've seen some further weakness in iron ore and steel prices in China. So there's continued concern around the growth outlook there and what that means for Australian resources companies."
Iron ore prices slid 13.76 per cent for the month, falling from a high of $US130.20 on May 8 to a low of $111.60 on Thursday. Spot gold fell 3.99 per cent and spot silver 6.2 per cent over the same period.
The dollar maintained its 19-month low on Friday as strategists revised down their forecasts. During the month, the dollar went from a high of US102.51¢ on May 9 to a low of US95.4¢ on Wednesday.
"We're forecasting US93¢ near year-end and below 90s next year. That feels like the trend," Mr Gibbs said. "The only question in the next month or two is we could stabilise as we already moved significant recently and there'll be some doubts over how fast those medium-term factors unfold."