Daily Report 030215 2015-02-03
Macro Economy
The U.S. stock markets surged yesterday. S&P 500 index extended its gain in last 30 minutes. Crude prices ascended to the highs of the month, drove energy stock rising. Until the market closed, S&P 500 increased by 1.3 percent to 2,020.85—returning back to the 2,000 mark, among that, energy index rose by 3 percent.
Statistically, the U.S. consumption in December decreased by 0.3 percent, while personal income increased by 0.3 percent, and the ISM manufacturing index fell from December’s 55.1 to 53.5, indicating the slowest acceleration over the year, which due to the undermined growth of orders; PCE price index was up 0.7 percent year-on-year, and core PCE went up by 1.3 percent, both lower than the former period. That is to say, the U.S. economy, still, is struggling in deflation. The president Obama proposed to the Congress about to allocate 4 trillion into budget in 2016 fiscal year, and to raise the tax of enterprises and the richest class, infrastructure and housing investment rather than eliminating the annual budget deficit. Besides, crude oil, carrying on the growth of last Friday, surged again yesterday. It is reported that U.S. oil refinery workers mounted strikes last weekend. This will influence the crude output. Nevertheless, current crude fundamentals are unchanged, without obvious improvement. Thus, it is unlikely to show significant rebound.
Domestic AU1506 rose and then declined during the night session, tested the effectiveness of the support at 5-day moving average of 258.5 yuan.
Operation advice: take profit of previous short positions established at 258 yuan, and focus on opportunities of the interval corrections at 259.5-254.5 yuan.
The negotiation between Greece and the EU has eased off, undermining risk aversion in a certain extent. Besides, the economy of euro zone picked up a bit, that, the manufacturing value of January is 51—the highest level of 6 months, Euro edged up and pressured US dollar. As the U.S., both January’s ISM manufacturing data and December’s personal consumption expenditure were lower than the expectation, and the market is quiet, wait for the performance of nonfarm data this week.
On the capitals hand, Gold ETF continued to increase by 8.36 tons to 766.73 tons overnight. Funds are dominated by buying stepping into 2015, indicating their bullish attitude towards gold prices.
Domestic AG1506 edged up during the night session, got support at 30-day moving average of 3,620 yuan.
Operation advice: take some profit of short positions established weakly breaking down 3,800 yuan at 3,600 yuan, prepare defense at 3,700 yuan intraday. Overall, silver prices move along with gold prices, performing as weak financial feature and stronger volatility.
Overseas silver prices bounced back to $18.5 and then fell under pressure, the rebound pattern seems to end up recently, but without significant bearish signs, rebound correction might appear after huge plunges, is generally projected to decline associated with fluctuations.
On the capitals hand, Silver ETF remained for 10 days, indicating funds’ wait-and-see attitudes.
Stock Index
Given the regulation towards margin trading leverage intensified, and 24 companies passed the IPO progress and are going to be listed, capital stress has been reinforced. Indexes appeared significant pullbacks yesterday. The HSBC manufacturing PMI data of January is 49.7—released yesterday, still lower than 50 percent and the market expectation, plus the official January PMI hit the record low of 28 months, indicating the persistent weakness of Chinese economy, policies like infrastructure are needed for the sake of economic growth. Indexes are close to previous lows, likely to technically rebound in short term, yet might show a reversal pattern if cannot further break through.
LME copper market fluctuated between the 5-day moving average line and 10-day moving average line ($5,460-5,550) on Monday, closed down by $7 at $5,487. Intraday LME positions increased by 8,927 lots to 331,000 lots, indicating copper prices encountered new bearish pressure when rebounding. Domestic copper prices fluctuated above 10-day moving average line od 40,100 yuan, and closed up by 370 yuan at 40,200 yuan. The recent market focus is on Greece. Spot news, Greece stopped asking for debt write-down, and proposed to replace current bonds to new liabilities that relative to economic growth, thus worries about Greece exiting euro zone have been relieved.
On the economy hand, the U.S. ISM data glided, construction expenditure monthly growth was lower than expected, and the PMI of euro zone was up to 51, the record high of 6 months.
On the fundamentals hand, LME spot premium fell back by $21 at $25, inventory increased by 1,900 tons to 250,000 tons. Copper inventory surged for 15 trading days, and hit the record high since April 2014.
On the supply hand, from the five mining firms that we followed, the output growth of Chile and Peru are lower than expected, and that is mainly due to undermined qualities and the strike. Indonesia Grasberg Copper Mine is not running in its whole capacity after the export resumed. The processing charges have reduced by $10 at $105, sales of scrap copper are basically suspended.
China has stepped into the atmosphere of the Spring Festival, thus, current fluctuations are projected to continue. Technically, copper prices are fluctuating at lows in short term. The volatile interval of LME is $5,400-5,700, for domestic 4-month copper is 39,000-42,000 yuan. take contrarian strategy in trading.
Overnight LME aluminum continued to rebound, edged up by 0.7 percent at $1,873. Domestic SHFE aluminum active contracts followed the wind and closed at 12,995 yuan/ton. the U.S. January ISM manufacturing index fell from December’s 55.1 to 53.5, shows the lowest growth for the year due to slowed order growth. New York crude futures prices closed up by 2.76 percent at $49.57/barrel.
On the spot hand, SHFE main transaction prices were 12,690-12,700 yuan/ton, discount 40-50 yuan/ton. Downstream willingness of purchasing is low. The significant crude prices rebound drove aluminum prices to edge up. Low domestic demand limited the rebound. Accordingly, SHFE aluminum may persist to fluctuate in 15 percent range at lows.
Overnight U.S. soybean persisted the downward trend, dragged by the high yield expectation and technical selling. The short-term price correction is hard to end up. Yet, the weekly export inspection data is better than expected, and limited the downtrend. The northern Brazil started to reap, the yield is ideal, plus the rainfall in eastern Brazil, the draught has been relieved. The northwestern Argentina is hot, further concern whether it can become the reason of output shrink. Current U.S. soybean is weak, the pullback pattern has lasted for 3 and a half weeks, thus may become oversold in short term, the support line is located at 950 cents.
DCE soybean went back to the line at 4,400 yuan, but rebounds are persistent doe to low spot markets. Since the trading prices have been obviously lower than warrant cost, hence to not overlook the downward space. Soymeal spot cut 20-50 yuan/ton, stock-up before holidays accomplished, fodder demand would encounter a sluggish period for approximately 1 month. Short-term markets are bearish. The First Document of the Central Government was released, detailed the “Sannong”—agriculture, rural areas and farmers from diverse aspects, but still has limited impacts on boosting soybean.
On the operation hand, hold few previous short positions of DCE soymeal; continue the thought of short-on-the-rebound towards soybean No.1.
PP futures opened high and fluctuated yesterday. Opened at 7,340 yuan and closed at 7,362 yuan, the trading volume was 456,000 lots, and the position volume was 378,000 lots. Trade was not active. On the upstream hand, FOB Korea propylene fell by $30, and averaged at $770.5/ton. On the device hand, the operation rate is stable. On the spot hand, today’s domestic PP markets are stable, associated with downtrends, prices in some areas edged up by 50-100 yuan/ton. Crude oil closed up with a surge last Friday, the futures opened high and went higher, inspired investor confidence, plus the market circulation is tight, merchants tried to quote by high prices and to observe the reaction from downstream.
Petrochemical ex-factory prices are mix, cannot distinguish tendency guidelines. Downstream factories were exclusionary against price rise, firm orders were mainly closed via negotiation. Take wires as an example, the main quoted price of northern China is 7,800-7,900 yuan/ton, 7,900-8,100 yuan/ton of eastern China, and 8,000-8,350 yuan /ton of south China. Viewing the market as a whole, current prices are waving between 7,000-7,500 yuan, crude oil will become the main support feature in short term, the performance at 7,500 yuan is critical.
                                                                          Dong LV (Investment Certificate NO. TZ008452)