Daily Report 150115 2015-01-15
Macro Economy
U.S. stock market closed down yesterday, S&P500 Index fell 4 times. Declined U.S. retail selling and copper collapse worsened worries about global economic slowdown. At the end of session, S&P500 Index dropped by 0.6% to 2,011.27, intraday decrease peaked at 1.7%. Nearby WTI crude oil contract bounced back from the bottom of over 5 years, accomplished the biggest surge for recent 6 weeks of 5.6%.
Keqiang Li, the prime minister of People’s Republic China (PRC), held State Council executive meeting yesterday. The State Council decided to0 establish a RMB 400 billion fund as national emerging industry entrepreneurship venture funds investment leading fund to assist innovation and industry upgrade. The Commerce Department announced at its website that the actual import and export growth and export growth of China were 6.1% and 8.7%, respectively, removing the influence of cardinality. The growth rate of entries slowed down in 2014, and thus directly affected trading extension. Besides, today is the last day the People’s Bank of China (PBC) announcing expected data of money supply and social financing for December, pay intense attention.
Domestic AU1506 contract topped down in the night session, short-term swing expanded, while current system of moving average with a long.
Operation advice: half long orders established at RMB 247 breakthrough at RMB 249, and then hold the rest back against 5-day moving average, but pressured at 250-day moving average when rebounded at RMB 251, and hard to break through. Beware of intraday correction, defense at RMB 247.5. Impacted by oil price failure, monthly U.S. retail selling rate of December is far less than expected, so that investment banks lowered the estimation of the growth in Q4. Thus, U.S. stock market slumped for 4 days, funds prefer the bond market and the gold market. However, Fed’s newest Beige Book proved economies in most regions were moderately increasing. Overall, oil price failure has limited irritations for consumption, while U.S. economy recovered in a good way. Midterm U.S. dollar index is expected to remain increase, whereas gold price would decline under the pressure.
For funds aspect, overnight gold-backed ETF slightly cut 0.23 tons of positions after 2.99 tons increase on last Saturday, indicating that funds are selling along with rebounds, keep an eye on the continuity of funds outflow.
Domestic AG1506 contract topped down as well during the night session, test the effectiveness of supports at RMB 3,600 in short-term.
Operation advice: half long orders established at RMB 3,600 breakthrough at RMB 3,650, and then hold the rest back against 5-day moving average, but resistance at RMB 3,700 is kind of significant. Beware of intraday correction risks, wait and see short-term trends, existing long orders can stop loss at RMB 3,570.
Overall, silver prices wave along with gold prices but weaker than gold. Funds shows that position taking of silver-backed ETF is sell on the rally, this can be backed since December 2014, indicating bearish view for the silver price though it already rebounded.
Stock Index
Stock index corrected yesterday, trading volume kept low. Yesterday is the day with most significant frozen capital s for new share subscription, funds was under the pressure. Besides, periodic heavyweights slowed down the repair, and need corrections. But from mid-long-term perspective, expectations for risk-free rate decline remains unchanged, and the market has no significant bad news, stock index is hoping to be supported in the underneath. Short-term index fluctuation is inevitable, with a possibly lowered gravity against last week.
LME three-month aluminum bottomed up and closed down by 0.55% at $1,775.25/ton. European Central Bank (ECB) easing warmed up, that is, eliminated legal procedures for debt buying. European and U.S. stock market fell, while crude oil surged.
The State Council of PRC established $400 billion emerging industry entrepreneurship venture funds, and expanded the plan of “One Belt and One Road”. Rumors about People’s Bank of China’s (PBC) sequel of medium-term lending facilities (MLF) expired capitals is full of the market. In relation to the industry aspect, the State Council published Advice for Pursuing a Third Party to Control Environmental Pollution, emphasized on charging polluters, market operation and government guidance, and to promote third party governance. This, as a whole, indicates that the panic would pass and drives significant SHFE aluminum buying.
Overnight U.S. soybean promoted by strong export demand and buy-on-the-dips, and bottomed up. U.S. soybean got support at $1,000, no breakthrough for short-term fluctuation interval, commodities were generally weak, and metals kept falling and led bearish circumstance in the short-term market. Overall, recent information about domestic and overseas agricultural products is poor, offset the bearish influence of monthly demand and supply report, no obvious bad influence from South America regions in short-term.
Information: 1. Argentina accomplished 96% soybean sowing, Rosario Grain Exchange’s (RGE) slightly corrected expected output, followed up by sown acreage. 2. Expected weekly export volume 600,000-900,000 tons, down from last week’s 910,000 tons. Remain concentration on the performance of critical support at $1,000.
DCE soybean No.1 continued correction, domestic soybean spot price flatted, 1501 contracts are closing to final delivery. The rebound of DCE soybean 1505 and 1509 contracts would encounter the pressure of later delivery selling. Soymeal spot price corrected with futures price, spot prices in part of the regions fell below RMB 3,000/ton, adding that there is a large amount of import soybean arrivals in January. Hence, short-term bearish elements gathered in the market, and the weakness is going to remain.
Operation advice: since no breakthroughs have been generated yet, take short positions for DCE soymeal, no recommend for continuous short positions. Short soybean No.1 once rebound.
PP futures shocked yesterday, closed at RMB 7,250 and closed at RMB 7,199, trading volume decreased 34,984 lots to 732,000 lots, while positions increased 270 lots to 360,000 lots. On the upstream hand, crude oil bounced back, WTI crude oil surged $2.59, averaged at $48.48/barrel; Brent crude oil rose $2.1, averaged at $48.69/barrel; and propylene price flatted. On the device hand, operation rate is normal, no signs of scale maintenance. On the spot hand, domestic PP market prices partially went down. Chinese Oil lowered the listing price in the north, overnight crude oil closed down, pressured investors sentiment; yet most regions sell in very low prices. Downstream manufacturers purchased when needed. But part of the regions is unbalance at resource proportion. Spot prices edged up by approximately RMB50/ton and closed the deal.
Take wires as an example, the north regions quoted at RMB 7,950-8,000/ton, the east regions quoted at RMB 8,100-8,400/ton, and the south quoted at RMB 8,450-8,650/ton. Fundamentals remained weakness. In relation to the market, current moving average system renders short orders, the downhill trend remained the same. However, there might be some corrections recently due to previous significant decline. There is a high possibility of the price lying between RMB 7,000-7,500 in short-term, recommend to take band operations.
                                                                              Dong LV (Investment Certificate NO. TZ008452)