By Greg Peel

The Dow closed down 62 points or 0.5% while the S&P lost 0.8% to 1391 and the Nasdaq dropped 1.2%.

Nicholas Sarzoky's fate now appears to be all but sealed as we head into the French presidential run-off on Sunday. He was universally deemed to have been well beaten by his socialist rival Francois Hollande in last night's television debate, and he is fast losing endorsement from other parties. Right wing candidate Marine Le Pen, who scored 18% of the vote in the first round, cannot by definition support a socialist. But nor will she support Sarkozy, rather telling her supporters to abstain.

And last night centrist candidate Francois Bayrou, who scored 9% of the first round, endorsed Hollande. Sarkozy has been madly attempting at the eleventh hour to make concessions to the supporters of the minor parties, particularly Le Pen's National Front, but this is only being seen as the last desperate efforts of a condemned man.

While the outcome of the final vote won't be known until after Sunday night, and presumably if the voting were close Monday may not see a clear result, one would be foolish to assume Sarkozy will be returned. Markets nevertheless seem have taken this in their stride given a Hollande victory would hardly be a shock at this point. Wall Street has wobbled this week but has not plunged. It is similarly assumed the incumbent Greek government will be replaced after Sunday's election, most likely with a disparate and unstable coalition of aggrieved minor parties. The bottom line is all the Greek politicians want to renegotiate the country's crippling austerity requirements, but the IMF won't have a bar.

So riddle me this Batman: Hollande is anti-austerity and pro-stimulus. Might markets see a stimulated Europe as a better global economic bet than a depressed Europe at this stage? Greece may not survive as a eurozone member, either by its own hand or the hands of others. Despite initial ramifications, wouldn't it just get a tiresome and exceedingly irritating problem out of the way once and for all? One thing is certain ? the Greeks do not evoke a lot of global sympathy for their self-afflicted plight.

Wall Street was weaker from the open but mostly due to a soft reading on the US service sector PMI, as well as reflecting squaring up ahead of tonight's jobs number. The service sector in the US represents 75% of GDP and its PMI fell to 53.5 in April from 56.0 in March ? more than expected. Mind you, Australia would kill for any PMI over 50.

The service sector is Australia's biggest employer and in April its PMI plunged to 39.6 from 47.0. Numbers under 40 are rarely seen, except in crises. It means Australia's service industry spent last month very, very hard on the brakes. What the country needs now is a significant response from the central bank. Oh wait...

China's services (or non-manufacturing) PMI also fell in April, to 56.1 from 58.0, but that's still a pretty solid number. The UK's dropped to 53.3 from 55.3 and the eurozone will report tonight. The eurozone's number is expected to be lower which would mean a clean sweep of falling services PMIs in all the reporting regions. A slowing global economy, if for only one month.

On the flipside, US weekly new jobless claims fell by more than expected last week and with 400 of the S&P 500 stocks now having reported, 67% have beaten to provide 6% earnings growth to date when only 2% was expected. Wall Street really, really wants to buy on the domestic earnings numbers which is why European jitters are such an excruciating frustration.

You'd think heightened fears in Europe might be enough to send gold breaking up from its recent range but no, last night gold fell US$18.00 to US$1636.00/oz. The US dollar index was up only a tad at 79.21 so it wasn't really a currency thing. Gold has been wobbling a bit lately as the whole QE3 debate has raged, with a bias to the downside as QE3 looks less likely. But there was also strong speculation the ECB might cut its cash rate last night, yet it didn't.

A rate cut wasn't even discussed, ECB president Mario Draghi suggested, which seemed strange for an economy with eleven out of seventeen members now having seen two consecutive months of GDP contraction and recent data suggesting a downward slide. Perhaps Draghi would rather await the aforementioned election outcomes before making any premature policy changes, which might be sensible.

Oil has also been stuck in a range of late but, again, on weakening global data it seemed only a matter of time, assuming no change on the Iran front. A greater than expected build in last week's US crude inventories was the trigger to send West Texas down US$2.60 to US$102.62/bbl and Brent duly followed, falling US$2.12 to US$116.08/bbl.

Base metals continue to bounce back and forth, with last night's LME session mostly weaker with copper down 1%.

The Aussie dollar took one look at Australia's disastrous service sector PMI and yelled "more RBA cuts!" before falling 0.7% to US$1.0264.

The SPI Overnight was down 12 points or 0.3%.

On the subject of the RBA, it will release its quarterly statement on monetary policy today, which will include updates on GDP and inflation forecasts, while tonight all eyes will be, as per, on the US jobs numbers. Consensus has 168,000 jobs being added. Tonight also sees the eurozone's service sector PMI and retail sales numbers.

And then Sunday brings the elections in Europe. Strap in.

All