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Global Wrap

US Stocks fluctuated, with the bellwether indices swinging between gains and losses before eventually finishing out the session with modest gains as a German court cleared the way for Europe’s bailout fund ahead of the FOMC’s call on monetary policy tonight.  Hence, the Dow Jones Industrial Average managed to reach a fresh multi-year high for the second straight session, while the CBOE VIX fell as much as 5 percent. Separately, options to protect against losses in small-caps as judged by the Russell 2000 fell to the cheapest level in a year relative to large-caps, a sign that traders are becoming more confident in the recovery. On the economic front, mortgage applications rose for the first time in six weeks as borrowing costs neared a record low, while prices of imported goods rose for the first time in five months.

European Stocks mostly rallied, with only London’s FTSE 100 treading below water, after Germany’s top constitutional cleared the way for a ratification of the euro area’s permanent bailout fund. Hence, the Stoxx Europe 600 Index closed at its highest level since July last year and has now advanced 17 percent from its lows of the year. In Germany, the  Federal Constitutional Court in Karlsruhe dismissed motions filed by groups including an opposition political party that sought to halt German ratification of the €500 billion fund. The court stipulated that Germany set a cap of about €190 billion on its liabilities before ratifying the ESM, unless parliament decides to back extra funds. In acquisition news, BAE Systems (363.6p, +10.6%) rose as it said it’s in talks with EADS (€28.50, -3.9%) about a combination.

Commodities fluctuated, with industrial metals showing fresh signs of consolidation as Nickel shed more than a percent in London trade, while Iron ore in China ended a four day winning streak to settle more than 2 percent lower at $98.1/ton. Platinum, however, rallied to a five month high at $1657/oz on concern that supplies will be further disrupted by more labour unrest in South Africa, the world’s biggest producer. Gold and Silver, meanwhile, were little changed at $1730/oz and $33.28/oz respectively, notwithstanding that the USD Index slid to a new multi-month low on concerns that the Fed will restimulate the monetary base. Corn was offered below $7.70/bushel, or its lowest levels since mid-July on signs that the harvest will shrink less than earlier feared.  Meanwhile, WTI Oil prices gravitated around $97/barrel

Treasuries were sold throughout the session in the wake of the German Constitutional Court decision to uphold the legality of the ESM. The subsequent improvement in risk sentiment weighed on Treasuries as the curve steepened into the 10-Year Auction, which was not impressive. The sale attracted a bid-to-cover of 2.85 times and saw the lowest indirect participation since October, 2011 at 36.2 percent. Spanish 10-Year Yields were little changed at 5.6 percent.

US sector action was mostly positive, with only three of ten S&P 500 industries ending in negative territory. Telco’s – AT&T ($37.72, +0.3%), Verizon ($44.89, +1.5%) – were the winner, extending recent outperformance as a defensive play. Industrials – Caterpillar ($89.12, +0.6%), Deere ($78.79, +0.7%), General Electric ($21.89, +1.4%) – and Financials –Citigroup ($33.05, +1.2%), Goldman Sachs ($118.24 +1.3%), JPMorgan Chase ($39.92, +0.8%) – were close behind.

Facebook ($20.93, +7.7%) rallied as Apple ($669.79, +1.4%) debuted the iPhone 5 with tighter integration of the former.

Global Wrap

US Stocks advanced, sending the Dow Jones Industrial Average to its highest level since December, 2007 on the eleventh anniversary of the September, 2011 terror attacks that have shaped and defined the 21st century. Speculation that the Federal Reserve may unveil some form of additional stimulus was cited as a catalyst for the trading rally ahead of tonight’s ruling from the German Constitutional Court on whether the nation will participate in the $640 billion European Stability Mechanism. Volume for listed stocks across US exchanges was 5.9 billion shares, or roughly in line with the three-month average. On the economic front, the US trade deficit widened in July for the first the first time in four months as a global slowdown cut demand for exports. Meanwhile, a gauge of small business confidence rebounded.

European Stocks mostly climbed, with Germany’s XETRA DAX adding more than a percent, albeit the UK’s FTSE 100 finished marginally underwater. Deutsche Bank (€33.15, +4.1%) rallied as the region’s biggest bank by assets said it will cut jobs and review pay practices to boost profitability. The German lender will slash costs by €4.5 billion and target a return on equity of at least 12 percent by 2015. Regional Banking Peers – BNP Paribas (€39.01, +2.1%), Credit Suisse (CHF 20.27, +0.9%), Royal Bank of Scotland (264.7p, +4.6%), Société Générale (€24.66, +1.0%) – were also bid.

Commodities were little changed, albeit industrial metals continued to capture a modest bid tone, however Copper did begin to show signs of consolidation as it failed to hold onto $3.70/lb. Meanwhile, Iron ore in China, the world’s biggest steelmaker, rose for a fourth straight day, climbing 5.5 percent to $100.20/ton. Crude also climbed, breaking out to close at a three-week high at $97.17/bbl as the EIA upgraded its expectations on the pace of global oil consumption this year and next. The USD Index extended losses to hit its weakest levels since early May, albeit Gold was flat at $1731/oz.

Treasuries fell as a reversal in risk sentiment was buoyed by confirmation that the German court ruling on the ESM will still be on tonight, despite a new challenge. After little reaction to better than expected July trade data, the long end saw weight from Moody’s warning of the possibility of a US rating downgrade if budget negotiations do not result in a downtrend in the debt/GDP ratio. Nevertheless, Uncle Sam’s 3-year auction found solid demand, attracting a record bid-to-cover of 3.94. Spanish 10-Year Yields rose to highs at 5.8 percent on worries that the state won’t ask for a bailout

US sector action was generally positive, with 8 out of the S&P 500’s 10 sectors finishing higher, while advancers beat decliners by a factor of 1.86 times in the benchmark. Energy – Anadarko Petroleum ($71.62, +1.7%), Chevron ($114.18, +0.2%), Halliburton ($35.35, +3.2%) – and Financials – Bank of America ($9.03, +5.2%), Goldman Sachs ($116.69, +1.8%), JPMorgan Chase ($39.60, +2.2%) – outperformed. Meanwhile, Morgan Stanley ($17.25, +3.9%) and Citigroup ($32.66, +2.6%) valued Smith Barney at $13.5 billion as part of a deal for the former to own the whole unit by 2015

Resource Stocks regained traction. Cliffs Natural Resources ($41.68, +6.4%) was the standout, while Coal Miners – Alpha Natural Resources ($7.45, +7.7%), Peabody Energy ($24.34, +2.7%) – were also bid. In other news, Facebook ($19.43, +3.3%) rose as much as 4.8 percent after-hours as Mark Zuckerberg addressed the group’s stock slump.

Global Wrap

US Stocks slipped into the close, with the bellwether indices ending on session lows after earlier holding onto positive territory, though the NASDAQ composite was underwater and lagged throughout the entire day. Volume moderated from the end of last week’s elevated levels, with 5.6 billion shares changing hands across US exchanges, or 7.3 percent below the three-month average. Traders cited profit-taking and defensive positioning ahead of a German constitutional court ruling on whether the state may contribute to the Euro zone’s rescue fund and this Thursday’s FOMC rate decision as key reasons for the reversal in risk sentiment. The CBOE VIX, widely considered the best gauge of fear, rose more than 13 percent to 16.28. A lack of key catalysts, including macro data or corporate events, kept many at bay.

European Stocks declined, though losses were only mild with Brittan’s FTSE 100 and Germany’s XETRA DAX ditching less than 0.1 percent. Another round of disappointing Chinese trade and industrial output figures reignited fears of a slowdown that is gaining traction, while a state paper said that the likelihood of the PBoC cutting interest rates again this year has dropped. On the acquisition front, Xstrata (1026.5p, +1.2%) advanced after Glencore (370p, -2.1%) proposed that the former’s CEO, Mick Davis, should run the combined entity for six months before being replaced by its own CEO Ivan Glasenberg. BHP Billiton (1910p, +0.2%) and Rio Tinto (3069, +1.6%) saw some upside as spot Iron Ore jumped nearly seven percent yesterday to $95/tonne.  Anglo American (2001.5p, +1.5%) was also bid as metals rose.

Commodities fluctuated, with industrial metals jumping at the expense of precious metals and agriculture. In London trade, Tin and Zinc rallied at least two percent, while Copper, Nickel and Lead climbed more than a percent respectively. Separately, a report showed that hedge funds raised bullish commodity bets to the highest in 16 months amid speculation that the Americans, Chinese and Europeans will revive the global economy via fresh stimulus. Corn closed at its lowest level since July at $7.83/bushel as the US harvest accelerates following this summer’s droughts. At the same time, WTI Crude was little changed $95.64/bbl as traders waited to see if the Fed will announce more stimulus.

Treasuries slid into the US session, while paring gains from Asia as they digested news of the Jobs report from Friday and generally soft Chinese data. The long-end underperformed with the 10-30 spread steepening as the market braced for potential QE, though price action was mild given event risk later this week. 10-Year Yields settled out at 1.65 percent.

US sector action was broadly negative, with only Telco’s – AT&T ($37.42, +0.3%), Verizon ($44.06, +0.8%) – bucking the trend, while Consumer Staples – Pepsi ($71.84, -0.4%), Procter & Gamble ($68.51, unch), Wal-Mart ($73.51, -0.4%) – also outperformed on defensive allocation. Techs, meanwhile, lagged with Intel ($23.26, -3.8%) extending losses for a second day as the company lowered guidance on weaker-than-expected demand for its chips. Apple ($662.74, -2.6%) also declined after earlier hitting an all-time high at $683.29 ahead of the expected announcement of the iPhone 5.

Financials lagged. Major Banks – Bank of America ($8.58, -2.5%), Citigroup ($31.83, -0.8%), Goldman Sachs ($114.68 -1.4%), JPMorgan Chase ($38.76, -1.4%), Wells Fargo ($34.59, -1.2%) – were offered across the board, meanwhile AIG ($33.30, -2.0%) declined after Treasury said it will sell most of its stake in the insurer, leaving it with a minority holding.

Global Wrap

US Stocks extended gains, with the S&P 500 hitting a new post GFC high, or its highest level since May, 2008 as a weaker-than-forecast jobs report restored optimism that the Fed will likely unveil additional stimulus measures. Hence, the market was able to finish on session highs, albeit the range was narrow. Volume across US exchanges was 6.51 billion shares, or 7.8 percent above the three month average. Meanwhile, speculation that the Chinese are stepping up stimulus measures also supported risk sentiment after the Shanghai Composite added as much as 4.5 percent. The ratio of outstanding puts to sell US stocks versus calls to buy matched the lowest level since May, a sign that the market may rise further option traders cut bearish bets, while the CBOE VIX dumped nearly eight percent.

US Nonfarm payrolls rose less than projected in August and the unemployment rate was unexpectedly driven down to 8.1 percent by Americans leaving the labour force. The economy added 96,000 workers after a revised 141,000 increase in July that was smaller than initially estimated. That compared with the median estimate for a gain of 130,000 as calculated by Bloomberg. Factory employment fell by the most in two years, in line with the recent contraction in the ISM manufacturing PMI. Most disappointingly, the Participation Rate fell to a 32-Year low at 63.5 percent.

Commodities danced, with precious and industrial metals leading the way as revived Fed stimulus expectations spurred demand for inflation hedges. Gold rose to a 7-Month high at $1741/oz, while Silver added more than 3 percent to settle at $33.68/oz. In London trade, Copper and Zinc rose more than 3 percent, while Aluminium and Nickel both climbed at least two percent. Separately, a survey conducted by Bloomberg showed that Copper traders are the most bullish in almost 11 months. The US Dollar Index fell the most since October, helping fuel the bid in commodities.

Treasuries finished higher, with the complex roaring across the curve on the weak jobs report, though flatteners eventually ran out of steam as the long-end was weighed down by upcoming supply this week. 10-Year Yields ran to as high as 1.73 percent then slid to as low as 1.58 percent, before finishing at 1.66 percent on extremely heavy flow and clearly volatile conditions. Spanish 10-Year borrowing costs, meanwhile, slipped to a 5-Month low at 5.63 percent

US equity sector action was mixed, with 5 out of 10 industries posting upside in the range of 0.6 to 2.0 percent. Materials, however, rallied sharply. Volume in shares of Alcoa ($9.10, +3.9%), BHP Billiton ($67.70, +3.8%), Peabody Energy ($23.71, +10.8%), Rio Tinto ($48.64, +6.8%) and US Steel ($20.89, +8.8%) was nearly double its 30-Day average. Meanwhile, flow in Cliffs Natural Resources ($39.91, +14.5%) was 3 times its 30-Day average as Iron ore contracts for the first quarter of 2013 rose as much as 8 percent to $105/metric ton, or the most in 5 months.

Financials also finished higher, with the Major Banks – Bank of America ($8.80, +5.4%), Citigroup ($32.07, +3.1%), Goldman Sachs ($116.33, +2.5%), JPMorgan Chase ($39.30, +1.6%), Morgan Stanley ($17.08, +5.1%) – all supported.

Dow components Kraft ($39.99, -5.5%) and Intel ($24.19, -3.6%) fell as they warned of weaker-than-expected profits.

Glencore (378.05p, -3.6%) raised its bid for Xstrata (1014p, +3.6%) by 9 percent to overcome opposition from holders.

Global Wrap

US Stocks danced, sending the S&P 500 to a new post-GFC high, or its highest level since 2008 as the ECB at last announced specifics of its bond-buying plan, while economic data secured optimism in the American economic recovery. Heavy rotation into risk assets allowed the bellwether indices to finish on session highs on stronger flow, with 7.1 billion shares changing hands across US exchanges, or 18 percent above the three-month average. Wall Street’s gauge of fear, the CBOE VIX, ditched more than 12 percent to settle at 15.60, or the lowest in two weeks. Ahead of this Friday’s official jobs report, ADP employer services said private businesses added 201,000 jobs in August, easily topping expectations.

US Service industries expanded in August at a faster pace than forecast, offering support to an economy that lost momentum in the first half of the year, primarily in the manufacturing sector. The Institute for Supply Management’s non-manufacturing index climbed to a three-month high of 53.7 from 52.6 in July.  The survey’s employment gauge rose to 53.8, the highest since April, from 49.3 in the prior month, but the new orders index decreased to 53.7 from 54.3.

ECB President Mario Draghi said policy makers agreed to an unlimited bond-purchase program to regain control of borrowing costs in the Euro area and fight speculation of a currency break-up. The program “will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro,” Draghi said after the ECB held its benchmark rate at a record low of 0.75 percent. The program, called Outright Monetary Transactions, will target government bonds with maturities of one to three years, including longer-dated debt that has a residual maturity of that length. Purchases will be sterilized, meaning that the overall impact on the money supply will be neutral, and the ECB will not have seniority, Draghi reported.

Treasuries declined, with 10-Year Yields rising the most in more than a month to 1.67 percent after better US economic data and the ECB’s bond-buying plans curbed demand for safe-haven assets, while undermining the case for the Fed to unveil more stimulus. European core debt was also offered, with 10-Year Bund Yields adding as much as 9.3 basis points to a multi-week high at 1.57 percent. 2-Year Italian and Spanish borrowing costs tumbled, shedding 18 basis points and 14 basis points respective to 2.27 and 2.96 percent respectively, or the weakest levels since March and April.

The Euro rallied to its highest level since July 2nd at $1.2652, before upside momentum stalled as Draghi’s comments regarding sterilised bond buying were in line with Wednesday’s newsier reports. The USD Index, meanwhile fell towards its lowest levels since May, sending Gold for immediate delivery to as high as $1713/oz, before the metal pared its gains.

US Sector action was positive, with all ten S&P 500 industries adding between 1.1 and 2.6 percent. Materials – Alcoa ($8.76, +2.8%), Freeport ($36.34, +3.1%), Newmont ($50.90, +2.6%), US Steel ($19.21, +3.5%) – and Financials – Bank of America ($8.35, +5.0%), Citigroup ($31.12, +4.5%), Goldman Sachs ($113.54, +3.3%), JPMorgan Chase ($38.69, +4.3%) – outperformed. European Banks – Credit Suisse ($20.34, +5.7%), Deutsche Bank ($37.61, +7.1%) – also spiked.

AIG ($34.22, -1.7%) lagged. The bailed out insurer is planning a $5 billion buyback and will offload more its stake in AIA.

Global Wrap

US Stocks fluctuated, with the S&P 500 swinging between positive and negative territory on multiple occasions during the session ahead of tonight’s ECB’s decision on monetary policy which is now almost certainly expected to disclose a bond buying plan after preliminary details were leaked. Hence, while that news produced a positive knee-jerk reaction across US Stock Futures during the European session, the market failed to maintain any significant gains. Turnover across US exchanges was 5.7 billion shares, or 6.4 percent below the three-month average. On the economic front, the productivity of US workers rebounded more than initially estimated in the second quarter, a sign that employers may need to step up hiring as they exhaust their existing workforces; however the news was largely ignored.

Details of the ECB’s bond buying program were leaked. Two central bank officials said that Mario Draghi’s plans involve the unlimited purchases of government debt that will be sterilised to assuage concerns about printing money. Under the blueprint, which may be called “Monetary Outright Transactions,” the ECB would refrain from setting a public cap on yields and will target short-dated maturities of up to about three years. The informants said that policy makers are most likely to adopt the proposal, albeit with Germany’s Bundesbank remaining the major objector.

Commodities mostly declined, with Agriculture leading the way, while Precious Metals remained reasonably well bid on stimulus expectations. Wheat declined more than two percent to $8.67/bushel, while Corn finished at a three-week low at $7.90/bushel after USDA figures showed that the premiums companies were paying for corn at major shipping terminals fell by as much as 6.25 cents. Gold was little changed at $1693/oz, though one prominent fund manager said that it may rise to $1900/oz by March as investors are increasing holdings of the yellow metal at the fastest pace in six months. Base Metals managed to outperform, with Aluminum, Copper and Lead all adding at least a percent in London.

Treasuries declined, with yields rising from almost one-month lows after the ECB’s leaked bond-buying details curbed demand for safe haven assets. The complex managed to finish on intraday lows after Reuters reported that the ECB is prepared to drop preferred creditor status on purchases in the new program. Spanish 2-Year Yields declined to the lowest since April at 3.04 percent in response to the news, before paring losses. Bunds, however, finished sharply lower after Germany received only €3.93 billion of bid at a 10-Year auction, less than the state’s maximum target of €5 billion.

US Sector action remained mixed, albeit Materials – Alcoa ($8.52, +1.2%), Cliffs Natural Resources ($34.72, +3.1%), Mosaic ($58.81, +3.6%), Newmont ($49.62, +0.3%) – were the winner despite weak spots including Freeport-McMoRan ($35.25, -1.0%) and US Steel ($18.57, -1.1%). Telco’s – AT&T ($36.93, +0.3%), Verizon ($43.80, +0.2%) – and Consumer Cyclicals – Disney ($50.79, +2.3%), Ford ($9.57, +1.7%), News Corp ($23.75, +1.0%) – were the next in line.

Facebook ($18.58, +4.8%) rallied after Mark Zuckerberg said he has no plans to sell his shares for at least 12 months.

FedEx ($85.00, -2.0%) tipped after the package-delivery company reduced its guidance on a weakening global economy

Nokia ($2.38, -15.9%) slumped as its two new smartphones to compete with Apple ($670.23, -0.7%) failed to impress.

Global Wrap

US Stocks fell out of the open, with the Dow Jones Industrial Average shedding as much as 54 points, before the major indices managed to pare losses into the close as speculation the European leaders will announce new steps to support the region’s financial system drew in tepid bargain hunting. Flow remained fairly light, with volume across US exchanges hitting 5.6 billion shares, or 7.3 percent below its three-month average. The CBOE VIX rose to a 5-week high at 18.96 as option traders slowly increased bets that the market has already peaked out in the current cycle. Nevertheless, the measure is still more than 35 percent below this year’s June high and nearly 63 percent below 2011’s August highs.

US Manufacturing shrank for a third month in August, the longest decline since the recession finally ended in 2009, according to PMI figures released by The Institute for Supply Management. The headline manufacturing index fell to 49.6 last month from 49.8 in July, missing estimates and was the lowest reading since the middle of 2009. Measures of orders and production dropped to three-year lows. The new orders index fell to 47.1, while the employment index fell to 51.6. The measure of orders waiting to be filled fell to 42.5 from 43. The inventory index rose to 53 from 49.

Commodities fluctuated as weaker economic data weighed on energy prices, while Gold for December delivery rose above $1,700/oz for the first time since March on bets that global central banks will boost stimulus measures. In Agriculture, Soybeans hit a new record at $17.89/bushel after a researcher said output may fall beyond USDA estimates following the summer drought and damage from Hurricane Isaac. WTI Crude and Brent Crude fell more than a percent to $95.30/bbl and $114.19/bbl respectively on fears that weakening global growth will curb demand. Natural Gas, however, rose for a fourth day to $2.85/btu on talk that this week’s inventory report will show a smaller-than-usual stockpile build.

Treasuries declined after the long weekend as the market consolidated Bernanke driven gains from last week. Bond buying expectations from the ECB took centre stage and restricted the complex from paring losses, despite a short-lived corrective bounce on the weak ISM mfg print. The belly lagged the wings as 10-Year Yields rose to as high 1.59 percent.

US Sector action was mixed, with defensive groups outperforming at the expense of growth exposed names. Telco’s – AT&T ($36.81, +0.5%), Verizon ($43.70, +1.8%) – and Consumer Staples – Colgate-Palmolive ($107.22, +0.9%), Kraft Foods ($41.84, +0.8%), Procter & Gamble ($67.40, +0.3%) – were the day’s winners. Materials – Alcoa ($8.42, -1.6%), Freeport-McMoRan ($35.62, -1.4%), DuPont ($48.83, -1.9%), US Steel ($18.78, -3.4%) – and Industrials – Caterpillar ($82.66, -3.1%), Deere ($74.12, -1.3%), General Electric ($20.51, -1.0%), United Technologies ($78.35, -1.9%) – lagged.

Cliffs Natural Resources ($33.68, -6.0%) fell to its lowest since October, 2009 as Iron Ore settled at $86.90/tonne.

FedEx ($87.54, -0.1%) fell as much as 4.3 percent after-hours as the group cut guidance after a weak global economy damped revenue from shipments. On a more positive note, Ford ($9.41, +0.8%) recorded car sales ahead of forecasts.

Facebook ($17.73, -1.8%) fell to a record, before rebounding as much as 2.9 percent after-hours on news that Mark Zuckerberg won’t sell any of his stock for at least a year. Apple ($674.97, +1.5%) is expected to launch a new iPhone.

Global Wrap

US Floor Exchanges Were Closed For Labor Day. Normal Operating Hours Will Resume Today.

US Stock Futures fluctuated, with the Dow Jones Industrial Average for September shedding as much as 63 points out of the Asian open yesterday, before returning into positive territory at the European open after an unexpected decline in China’s headline manufacturing PMI buoyed speculation that the world’s second largest economy will announce renewed stimulus measures. Meanwhile, traders continued to price in increased bets that the Fed will unveil a new asset purchase program at this month’s FOMC meeting. North American volumes should pick up tonight following the Labor Day long-weekend that unofficially marks the conclusion of the Summer Holiday period.

Commodities advanced, driven by Industrial Metals as Aluminum, Lead and Nickel all rose at least a percent in London trade, while Tin jumped more than two percent. Meanwhile, the USD Index caught strength in Asian hours as the weaker Chinese PMI manufacturing print encouraged early risk aversion, before the European bounce drove the TWI lower.

European Stocks ended higher, with French and Italian benchmarks adding at least a percent on expectations that the Chinese will be forced to revamp stimulus measures in the run up to this week’s key ECB policy meeting. On the regional economic front, the Euro zone’s headline manufacturing PMI contracted at a faster pace in August compared to what was initially reported. In contrast, the UK’s manufacturing index rebounded by 4.3 points to 49.5, which was more than economists forecast as output barely contracted. The volume of shares changing hands in Stoxx 600 companies was 35 percent lower than the 30-day average as US floors were closed for the Labor Day holiday.

Schatz, Bobls and Bunds pared early strength to print losses as regional stocks recovered from morning weakness.     Euro-region nations, including Spain, France and Germany, are this week asking investors to stake more than €20 billion on second-guessing the ECB, selling the most debt in two months before the central bank’s meeting on Sept. 6.

Moody’s this morning revised its outlook on the Aaaa long-term issuer rating of the EU to negative from stable. “The outlook change to negative reflects the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget: Germany, France, the UK and the Netherlands, which together account for around 45% of the EU’s budget revenue,” the ratings agency said. “Moody’s believes that it is reasonable to assume that the EU’s creditworthiness should move in line with the creditworthiness of its strongest key member states considering the significant linkages between member states and the EU”.

European Equity Sector action was broadly positive, with all ten sectors in the Stoxx Europe 600 positing gains in the range of 0.4 to 1.2 percent. Consumer Staples – L’Oreal (€99.73, +2.0%) Nestlé (CHF 59.95, +1.0%), Unilever (2284p, +0.9%) – and Materials – Anglo American (1773p, +1.3%), BHP Billiton (1855p, +1.0%), Rio Tinto (2795.5p, +2.2%) – were the day’s winners. Meanwhile, Glencore (388.15p, +0.8%) said it is continuing to stick to the terms of a $33 billion bid for Xstrata (947.2p, -0.5%). Financials – Banco Santander (€5.68, +0.2%), Barclays (184.3p, +0.6%), Credit Agricole (€4.62, -0.5%), Credit Suisse (CHF 18.39, -0.3%), Royal Bank of Scotland (226.5p, +0.1%) – lagged ahead of event risk.

Global Wrap

US Stocks advanced, with the Dow Jones Industrial Average adding as much as 151 points as Bernanke said that he wouldn’t rule out steps to lower a jobless rate he described as a “grave concern” at the Fed’s annual symposium in Jackson Hole, WY. Hence, the bellwether indices managed to post their first August gain since 2009. In a sign that major funds are regaining conviction, post Bernanke’s widely anticipated speech, turnover on NYSE was at its highest level since August 3rd. The general expectation remains that volumes will continue picking up this week post tonight’s Labor Day holiday, which unofficially signals the end of the summer holidays. US stock markets will be closed tonight.

Chairman Ben Bernanke defended the effectiveness of unconventional monetary policies such as bond purchases and signalled he would deploy them again to attack joblessness. “The costs of nontraditional policies, when considered carefully, appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant,” he said.  “Unless the economy begins to grow more quickly than it has recently, the unemployment rate is likely to remain far above levels consistent with maximum employment for some time.”

Chinese Manufacturing unexpectedly contracted, according to official manufacturing PMI data released on Saturday. It was the first time in nine months the headline index fell below 50 amid weak demand and raw materials de-stocking. New orders fell further into contractionary territory, dropping to 48.7 in August from 49.0 in July and marked the fourth month below 50. Seasonally, due to festive demand, Aug and Sep are usually two of the busiest months.

Commodities danced as the USD Index fell to its lowest level since May on expectations that the Fed will be forced to increase the monetary base in a third asset purchase program. Hence, precious metals charged, with Silver rising nearly five percent to $31.74/oz, while Gold hit a five month high at $1693/oz.  Separately, Mint Sales of American Eagle gold coins rose 28 percent in August, the third gain in four months, while speculators increased bets on rising Gold prices to the highest level since March. Crude capped its biggest monthly gain since October, 2011 settling at $96.47/bbl. Corn and Wheat fell at least a percent on speculation of slowing demand, while Russia said it won’t curb Wheat exports.

Treasuries roared, sending 10-Year Yields 1.54 percent or the lowest level in nearly four weeks after trading as high as 1.86 percent just two weeks ago on fresh expectations that the Fed will commence new bond purchases.  “The fact that QE3 is still a very real possibility has the longer end of the Treasury market maintaining its strength,” a participant said.

US Equity Sector action was broadly positive, with all but one sector in the S&P 500 posting gains. Growth-sensitive Materials – Alcoa ($8.56, +1.4%), Freeport ($36.11, +4.1%), Newmont ($40.68, 4.4%) – and Energy Shares – Anadarko ($69.27, +1.5%), Chevron ($112.16, +1.1%), ConocoPhillips ($56.79, +1.2%) – outperformed. Tech’s – Intel ($24.83, +2.3%), Microsoft ($30.82, +1.7%), Oracle ($31.65, +1.5%) – followed closely behind with the Major Banks – Bank of America ($7.99, +1.0%), Citigroup ($29.71, +0.2%), JPMorgan Chase ($37.14, +0.7%), Wells Fargo ($34.03, +0.5%).

Facebook ($18.06, -5.4%) fell to a new all-time low as a market research said the group may post $5.04 billion in sales this year, down from an earlier projection of $6.1 billion. The news at least two major brokers to reduce their price targets.

Global Wrap

US Stocks declined, with the bellwether indices finishing near session lows, on continued anaemic flow, amid worsening concerns over Europe’s debt crisis following reports that Spain may now delay its decision on seeking a bailout, while investors expressed doubt that tonight’s Fed symposium will deliver anything meaningful. Harvard Economist Martin Feldstein already told CNBC after the bell this morning that there won’t be any disclosure on QE3 by Bernanke. On the economic front, more Americans than forecast filed applications for unemployment benefits last week, however a separate release showed that Americans stepped up spending in July for the first time in three months on higher wages.

Federal Reserve Bank of Philadelphia President Charles Plosser said the potential risks involved with another round of large-scale bond buying outweigh the benefits. “I don’t think it really meets the cost-benefit test right now,” he said on a CNBC interview. “It’s possible they could bring down interest rates somewhat, but we have to remember it’s that simple given the headwinds that the economy faces.” “Increasing accommodation creates risks,” he said.

Commodities were little changed as the USD Index lacked direction ahead of speeches from global central bankers at tonight’s Fed symposium. Hence, Gold for December delivery ended modestly lower at $1657/oz as traders weighed whether Bernanke will signal a new round of asset purchases. In 2010 he foreshadowed $600 billion of bond buying at the annual Jackson Hole, Wyoming event. Crude dropped to a two-week low at $94.62/bbl as producers worked to restore Gulf of Mexico output after Hurricane Isaac passed with relatively minimal damage. Soybeans, meanwhile, rose to a record $17.71/bushel on speculation that Issac will damage crops as it moves north through the continental US.

Treasuries advanced, sending 10-Year Yields to a three-week low at 1.60 percent, before paring losses, as figures that showed inflation slowed buoyed demand at a $29 billion sale of Seven year notes. The well received auction earned a yield of 1.081 percent with a 2.80 bid to cover. After the close, Moody’s said Spain’s rating may still be cut and that its review will still continue through September. Spanish 10-Year Yields climbed to a two week high at 6.59 percent.

US Equity Sector action was broadly negative, with all ten S&P 500 sectors finishing lower. Tech’s – Apple ($664.06, -1.4%), Google ($681.68, -0.9%) – and Energy Stocks – Chevron ($110.93, -0.8%), Exxon Mobil ($87.20, -0.8%) – lagged. Health Care – Johnson & Johnson ($67.21, -0.2%), Merck ($43.12, +0.1%) – and Utilities – Exelon ($36.59, +0.1%), PG&E ($43.56, -0.7%) – outperformed amid an ongoing theme of Defensive allocation, but they still mostly showed downside.

In earnings news, recently listed Pandora ($11.52, +14.3%) surged after the Internet radio group posted a profit that topped expectations, while it also lifted guidance. Costco ($98.59, +1.5%) and Limited Brands ($47.90, +0.3%) advanced after both retailers topped same-store sales expectations in August. Sears ($52.90, -7.9%), however, plunged after it was reported that it will lose its place in the S&P 500 because its public float has remained below requirements.

Materials remained weighed down by Industrial Metals & Miners. Cliffs Natural Resources ($35.75, -3.0%) hit a new multi-year low as Iron Ore settled at $88.7/tonne. Freeport ($34.69, -2.5%) and US Steel ($19.32, -2.5%) both fell at least two percent, while Alcoa ($8.44, -1.2%) followed. Barrick ($37.09, unch) and Newmont ($48.55, +0.2%) outperformed.