Daily Report 120115 2015-01-12
Macro Economy
The U.S. stock market plunged last Friday. Previously, S&P 500 Index surged for two days; investors further worried about the European Central Bank (ECB)’s lack of stimulation policies; and the released data before corporate earnings season showed earnings decline. S&P 500 Index closed down 0.8% at 2044.81. Figures on Friday night indicated that the U.S. nonfarm jobs grew by 252,000, 240,000 higher than expected; and the unemployment rate fell to 5.6%, the lowest level since June 2008. While in contrary, average hourly wage slumped by 0.2% compared with last month, the biggest drop over 8 years, also lowered on year-on-year basis, but, still, is located at increasing interval. The accident slide of compensation level promoted the possibility for the Fed to delay interest raise, and caused the U.S. dollar index volatility. However, it is hard to tell whether this trend will keep going, more data is needed to conclude the ultimate influence of it against interest raise.
As for the domestic market, the People’s Bank of China (PBC) announced in the Work Conference of 2015 last Friday that would continue to adapt steady monetary policy, maintain rational and sufficient liquidity among the banking system, and stimulate monetary credit and social financing develop in a proper and steady way. Simultaneously, PBC emphasized “keep composure and act actively”, laterally indicating traditional regulations, yet, is the main control methods. Besides, data released on Friday reveals that the domestic CPI of December increased 1.5% on year-on-year basis, while PPI decreased 3.3% on year-on-year basis. Deflation risks have not been resolved or reversed influenced by sluggish domestic demand, seasonal impacts and energy prices. PBC will release the data of social financing and credit, which should be highly concerned.
LME copper market glided downward last week, plunged $19 on Friday, and closed at $6,104.5. in a macro view, China’s CPI of December is 1.5—a low status, though with certain rebounds. Worries of insufficient domestic demand took up the upper hand in the market, and crude oil prices depreciation pressured the copper market. data of last Friday showed that U.S. nonfarm jobs of December was 252,000, 240,000 higher than expected, but still a bit slump compared with previous volume of 252,000. U.S. unemployment rate of December is 5.6% — lowest level since June 2008, much better than expected value of 5.7% and previous 5.8%. Generally, there is certain resilience in U.S. labor market.
For fundamentals aspect, LME spot premium further increased by $4 at $76.5, inventory surged by 8,250 tons to 187,000 tons. Specifically, the total inventory of the three big futures exchanges expanded by 12,700 lots to 3,260,000 lots—the fourth week for inventory increase since December. Data of CFTC showed that non-commercial short positions surged by 7,602 lots, to 41,000 lots of net short positions till last Tuesday, which accomplished a record high.
For the supply aspect, Lumwana copper mine of Barrick Gold Corp emphasized again that it would suspend if the Zambian government insist to raise mining tax. This mine went into operation in 2008, the average yearly output of the first 6 years was 169,000 tons. Technically, copper prices is during adjustment in lows, concern the effectiveness of the resistance at $6,180.
U.S. soybean edged up last Friday. The market is volatile before the report announced tonight. From the estimation of the report, U.S. soybean output is hoping to keep surging, and the export might continue to grow as well; global soybean ending stocks are predicted to reduce; the report, as a whole, has driven the bullish expectation for the market.
South America regions had few rainfalls in some areas, implies the problem of drought. The resistance of U.S. soybean is temporarily lying on 1,060 cents, pay attention to the adjustment tonight’s report against the data. DCE soybean No.1 contract performed flat, the market is keeping eyes on the ultimate delivery volume of 1501 contract.
Domestic soybean spot price remained on RMB 4,240-4,320/ton. 1505 and 1509 contracts would encounter the stress of later delivery selling, associated with the accomplishment of 1501 contract delivery. Soymeal futures prices surged and then dipped last week, and the spot fell in a certain degree comparing to last week. Short-term prices growth is under the pressure of the 7,000,000 tons of predicted importing soybean arrivals in January.
Operation advices: according to the bullish expectation, mainly short the short positions of DCE soymeal, wait and see soybean No.1 contract’s later performance.
                                                                                         Dong LV (Investment Certificate NO. TZ008452)