Daily Report 160914 2014-09-16
Macro economy
Influenced by the selling of excellent stocks in the bull market and the slump of network stocks and small-cap stocks yesterday, the NASDAQ composite index closed at a one-month low, dropping by 1.07%. The large-cap stocks performed better. Specifically, the Dow Jones Index rose by 0.3% while the S & P 500 index decreased slightly by 0.07%. In terms of data, the economic data released on Monday indicate the U.S. industrial production slides surprisingly due to the cooling down of the automobile manufacturing industry. This is also the first decline in the recent seven months. Besides, the U.S. industrial production is another data with a downward trend after the employment data. The Fed is going to hold a meeting from tonight for two days about the timing of rate hike. Previously, the bond purchasing has been shrunk. It is expected that further news will be released about the rate hike and attentions should be paid to the meeting.
Domestically, former People's Bank of China monetary policy committee member Fan Gang claimed during an interview that ‘China is capable to maintain its GDP between 7% and 7.5% during the year from 2016 to 2020. There is no chance that the GDP drops to 5%, 6% or even lower.’ However, a series of previous data has already demonstrated a downward pressure toward the China’s economy. Premier Li Keqiang declared that the reform and revolution will continue, but the expectation of outright easing may be fell through. According to current data, the GDP growth rate in Q3 is expected to slow down a little, which makes it difficult to accomplish the goal of growth rate at 7.5%.
The domestic gold opened slightly higher in the night market and fluctuated during the intraday trading. In terms of operations, previous short positions opened at RMB 260 and RMB 249.5 could be held, but marginally rebound is likely to take place after the oversold in a short term. During the intraday trading, defensive moves should be made based on the five-day moving average at RMB 247 and other moves are not recommended before further observations. The U.S. industrial production is not as good as expected, making investors relatively cautious before the Fed meeting on interest rate. The U.S dollar index fluctuates slightly around a high level while the gold marginally revised after oversell. Besides, the geopolitics brought uncertainties to the gold. Although Russia and Ukraine both agreed to cease fire previously, the war is reignited after eleven days. The exacerbated conflicts dragged up the gold in the short term, but it won’t be a long-term bolster. On the whole, investors should focus on the Fed meeting on interest rate and the Scotland referendum. The downward trend of gold is currently unchanged, but the risk of gold rebounds due to change of policy should be paid attention to.
During the night session, domestic silver price followed with gold, in short term it may not have momentum to continually drop. In terms of operation, previous holdings at RMB 4130 could be held longer. However, investors should make defense at RMB 4080 on 5days moving average. Intraday, wait and see what might happen. Recently, domestic future price has straight discount compare with the spot. Spot market appears to be really resilient. Moreover, it appears as gold market is weak whereas silver is strong. Still Silver may hardly get out of independent trend. Investors could have a certain level of future and spot spreading or gold and silver index strategy. 
                                                                                                                    Dong LV (Investment Certificate NO. TZ008452)