Daily Report 120914 2014-09-12
Macro economy
Yesterday evening, the rebounding of crude oil offset concerns rising from the increasing tensions of geopolitics and timing of rate hike by the Fed. The S & P 500 index stopped the downward trend and rebounded, closing higher for the last two days. In terms of data, the U.S. initial jobless claims in the week beginning from September 6 surprisingly rose to a two-month high. Since the health-care spending rebounded, the U.S. economy growth rate in Q2 may be revised to 4.6%. Meanwhile, revenue increases boosted by the rapid growth of economy. During the first 11 months in this fiscal year, the U.S. budget deficit shrank by 22%, indicating the U.S. economy is recovering. As for the Europe, the ECB president Draghi appealed again on Thursday to the Euro Zone governments for strong policy to stimulate investment. He claimed that the ECB can hardly boost the economy merely by itself and fiscal policy and monetary policy should be adopted in the same time.
Domestically, influenced by the slowdown of economy and anti-monopoly probe, according to report released from China Association of Automobile Manufacturers, passenger vehicle sales in August rose by 8.5% on year-on-year basis, which is the lowest growth rate in the recent three months. The price information in August was released by the National Bureau of Statistics yesterday, during which the data is generally lower than the market expectations. Specifically, the CPI increases by 2% on year-on-year basis, lower by 0.3% compared with that in July. Besides, the growth rate drops to a four-month low. The PPI slumps by 1.2% on year-on-year basis. It is believed total demand is not capable to drag up the inflation when the economy is weak. The future price is expected to remain moderate fluctuation. Attentions should be paid to the data of industry, investment, consumption and credit in August which will be released soon.
                                                                                                                  
 

Steel
The rebar fluctuated slightly around a low price level yesterday, with positions increasing by 44 thousand lots. In terms of macro economy, the Central bank adopted a positive repurchase of RMB 10 billion yesterday. It is also the first net return of funds during the past five weeks. The positive repurchase dispelled expectations of easing policy. As for the industry, the billet steel spot rose by RMB 10 yesterday, but the steel still dropped in the east China market. However, the decrease of steel narrowed slightly. Steel increased tentative in some cities in the north China while the market remains cautious. In terms of operations, the short-term steel decline is slowing down and the market expects the steel to go flat, but it is believed that the steel won’t change significantly considering there is no obvious improvement of supply side and demand side. It is expected that the steel will remain fluctuating marginally around a low price level. 
                                                                                                                    Dong LV (Investment Certificate NO. TZ008452)