By Rudi Filapek-Vandyck

The S&P500 closed 0.23% lower, down 2.99 points to 1310.33. The Nasdaq lost yet another 10.02 points, or 0.35%, to close at 2827.34 and the DJIA shed 26.41 points to 12,393.45.

The global investment community is awaiting good news from a (potentially) coordinated support initiative from the main central banks in the US, Europe, Japan and possibly Canada, the UK, China, Russia, Brazil and India as well. There are no two ways about it.

If you are curious as to why equities aren't falling in a more dramatic fashion, re-read the previous sentence. It really is all one needs to know to understand the present framework for equity markets the world around.

As we enter the sixth month of the year that supposedly was meant to bring smoother sailing for risk assets, investors have once again been confronted with the harsh reality that four months of hope and exuberance have once again been annihilated by one bad performance in the month of May. Similar to the scenario that unfolded in 2011, May 2012 proved one of the worst monthly performances in the post March 2009 era and there really is nothing left of the gains booked between January-April. In Australia, share market indices are now in the red for the year and it's worse for the likes of BHP Billiton ((BHP)), Newcrest ((NCM)) and Santos ((STO)).

European bourses added to the May month's losses yesterday. SPI futures are suggesting modest losses at the open in Sydney today.

It's easy to blame "Europe", or the Greeks, the Irish (referendum today), the Spanish and whoever else that could be held responsible for today's state of global limbo, but in the background of the ongoing European debt saga there is some serious slowing down going on in the likes of Brazil, Japan, the UK, China and... the US. Yesterday's data -again- brought home that same message.

Somewhere in those data sits an unquantifiable impact from the troubles in Europe, but the observation stands, regardless. Nearly four years after staring into the abyss, global economies are finding it tough to grow without central banks' support and Australia is no exception. As an illustration of how market expectations are once again shifting towards additional stimulus, the National Australia Bank yesterday officially revised its RBA forecasts to two cuts of 25bp each next week and in July. Westpac is forecasting cuts of 100bp in the year ahead (which would take the official cash rate to 2.75% from 3.75% today).

Some expert voices are suggesting the RBA should seriously consider lowering the cash rate by 50bp at next week's meeting.

Yesterday's data releases in the US failed to match market expectations. All of them. US GDP growth in the March quarter was revised down to 1.9% from the initial reported 2.2%. The ADP survey showed US private sector jobs rose by 133,000 in May, which is pretty disappointing given tonight's non-farm payrolls data are anticipated to show an increase of 150,000. Market forecast was for a 148,000 gain for the ADP survey. New claims for unemployment insurance in the US rose for the fourth straight week, up by 10,000 to 383,000. And the Chicago purchasing managers index eased from 56.2 to 52.7 in May. Declines of nearly 4 points in these surveys are usually not something that should be casually ignored.

No surprise then, US equities opened sharply lower overnight. The Dow Jones, for example, suffered a loss of 103pts at the open, subsequently clawed its way back to be up 70pts in late trade, but ultimately the sellers moved in again and the end result was for a small loss. Oh Central Bankers, Holy Art Thou, now come and rescue our sorry arse!

Remember that widely reported research report by Goldman Sachs earlier in the year stating equities now offered a once-in-a-lifetime opportunity, while US Treasuries were in a bubble, ready to deflate? At that time the yield on US Treasuries was around 2%. Yesterday, US long term treasury yields fell to new record low, with US 10yr yields falling by 6pts to 1.56pct. US 2yr yields fell by 1point to 0.266pct. There's no money to be made here, this is all about capital preservation and the lack of safe havens.

A recent survey by UBS into European funds managers' strategies revealed most managers preferred cash above any other alternatives and it is not difficult to see why.

In FX markets, the euro continued its slide. The European currency fell from highs around US$1.2430 to lows near US$1.2340 and closed US trade near US$1.2355. The Aussie dollar held between US96.80c and US97.70c and ended US trade near US97.30c. And the Japanese yen rose from 78.90 yen per US dollar to JPY78.22 and ended US trade near JPY78.35.

Commodity markets were a sea of red, though most losses remained contained on the day. US Nymex crude fell by US$1.29 or 1.5% to US$86.53 a barrel. London Brent crude fell by US$1.60 to US$101.87 a barrel. US crude lost 17.5% in May after three monthly gains, while Brent fell by 14.7%. The June Comex gold futures price fell by US$1.50, or 0.1% to US$1,564.20 an ounce. Gold bulls will point out gold continues to outperform other commodities, the bears will add it's incurring net losses regardless.

Meanwhile, data released by the ECB showed Spain's banks lost E97bn of capital in Q1 this year as funds flow out of Spain. This has likely continued through Q2.

On the calendar today, the Performance of Manufacturing index is released in Australia today (uh oh). Of more importance will be the release of two PMI surveys in China. In the US, employment (non farm payrolls) data are released together with the ISM manufacturing gauge, personal income and car sales data. More fodder for central banks in action speculation?

All