Daily Report 060215 2015-02-06
Macro Economy
The U.S. stock market ascended yesterday, the benchmark offset the loss from early this year, energy production shares rose along with oil prices and eventually triggered S&P 500 went up by 1.03 percent at 2,062.52. On the economic data front, U.S. trading deficit of December expanded by 17.1 percent at $ 46.6 billion—the highest level since November 2012; initial claims for state unemployment benefits increased 11,000 to 278,000. The European Commission predicted the GDP of this and next year would be 1.3 percent and 1.9 percent, respectively, higher than the expectation in November, whole the yearly consumption price would fell by 0.1 percent—a sign of deflation. This has brought the market an anticipation of economic growth, and further contributed to the appreciation of euro against U.S. dollar. Simultaneously the ECB would allow, according to the speech of its official, Bank of Greece to fund 59.5 billion euro for the banking corporations. But Greek Prime Minister Tsipras declared to split from the negotiation and to end up “troika” and the related policies, dragged the bank shares plunged by 10 percent. Still, Greek Debt Crisis Negotiation is jogging on. Besides, the U.S. non-farm payroll data is going to be announced at 21.30 tonight, we recommend investors to pay high concentration on it.
Domestic AU1506 contracts dropped and then rose during the night session, pressured at 20-day moving average of 256.6 yuan in a short term, treat in bearish view.
On the operation hand, there are signs showing that the tendency rebound of gold prices to end up recently, but no need to substantially bear if not break below 254.5 yuan. Risk aversion investors focus on operation opportunities breaking through 259.5-254.5 yuan areas. U.S. non-farm payroll data of January will come soon today—the first Friday of February, the market expectation of the unemployment rate remains at 5.6 percent, and predicted the non-farm payroll to increase 230,000. And simultaneously the monthly average earnings per hour would rise by 0.3 percent, plus the announced private sector’s employment data of January and initial jobless claims, indicated the continuous improvement of the labor market. the primary concern now is the growth of earnings.
On the asset prices hand, the pennant of gold prices is going to choose a direction, beware of significant plunge if the non-farm data superior to expected. While on the other hand, the situation of Greece is strongly uncertain, capitals did not lower their investment interests towards gold, plus, positions of Gold ETF rose for two days, and increased 5.38 tons overnight, indicating funds’ bullish view towards gold prices.
Synthetically, the uncertainty of Greece status quo would support golf markets. Whereas, U.S. dollar index continued to surge driven by improving U.S. economy data and the likelihood of interest rate would pressure gold prices in the mid-term.
Domestic AG1506 contracts dipped and then rose as well during the night session, got support at 30-day moving average of 3,640 yuan, but without enough rebound momentum. Prepare defense at 3,700 yuan for short positions established at 3,800 yuan, risk aversion investors observe operation opportunities after break through 3,700-3,600 yuan area.
Overall, silver prices move along with gold prices, but showing stronger volatility and weak financial attribute.
Overseas silver prices bounced back to $18.5 and then dipped under pressure. Recent rebound pattern seems to end up, but there is no significant bearish sign. And rebound corrections might appear after significant plunge. The overall pattern is projected to decline associated with fluctuations.
Stock Index
Stock index opened high and then went lower yesterday. Inspired by the reserve cut, A shares significantly opened high, created opportunities to sell on the rally. Since there is not enough increment capitals to carry on, indexes closed down sharply. New margin trading accounts for January became the lowest of 5 months, indicating the regulatory policies being effective, less increment capitals entered the market. Although reserve cut suppose to be positive for the market, the effectiveness of policy have not shown up yet, plus the previous stage have reflected the easing cycle moving forward, accordingly, under the game with stocked capitals, indexes are weak.
LME copper market got support near 10-day moving average of $5,570, and closed up by $10.5. LME copper inventory surged 32,500 tons to 285,000 tons intraday—the high of the year, forced the price to fall. However, the exchange rate of U.S. dollar dipped, and crude oil prices significantly bounced back. Taken together, copper prices appeared the toughness, offset all intraday drops. Given, bearish elements are slaking gradually, the SRB copper purchasing and smelters brewing output cut, Chinese government continuously launching growth-stabilizing measures, such bullish news flourished copper markets to be stronger in a short term.
On the fundamental front, LME spot premium edged down $5.5 to $23.5. The inventory has increased by 110,000 tons, fundamentals surplus has became a truth, but we tend to believe that it has been reflected within the price. Viewing large positions of LME, the 20-29 percent bull of February’s long positions disappeared on 2nd February, replaced by a 30-39 percent bigger bull, this may due to the action of SRB’s copper buying. Domestic spot premium leveled off between 20 yuan discount and 30 yuan premium. The market is prudent, copper import sources emerged, the demand from downstream is rigid.
News form Bloomberg said that the U.S. copper premium ascended from 6.125 cents/pound two months earlier to 6.75 cents/pound, indicating the bullish status quo copper demand.
Technically, copper prices performed strong, the rebound of LME copper can go further provided that it can regain the 5 daily moving average line of $5,723. Concern the effectiveness of residence around 42,000 yuan for domestic 4-month contracts.
LME 3-month Aluminum contracts surged on Thursday, closed up by 0.27 percent at $1,880/ton. The U.S. trading deficit of 2014 is $505 billion, and the non-farm payroll data is going to be announced.
The central inspection group notified some problems, PBOC cut the reserve rate to release liquidity, and conducted 30 trillion yuan of 28-day reverse repo yesterday. on the industry front, the National Development Reform Commission (NDRC) raised 1 cent RMB per kilometer for railway fright.
The quoted price of aluminum premium in middle-western America was $6.75 cents/pound. SHFE aluminum remains the upward trend.
Overnight U.S. soybean closed up, Malaysian palm oil surged and triggered U.S. soybean oil prices and soybean prices rebounded. Moreover, the rise of crude oil and the drop of U.S. dollar supported the soybean price. But at the same time, soymeal prices edged down. Weekly export data matched the expectation, the net sales of soybean of that week was 490,000 tons, locating at the upper edge of the estimated interval. Short-term fundamentals are relatively flat, the market is waiting for the monthly supply and demand report of USDA on next Tuesday, short-term price resistance is locating at $10, as for the support, we suggest focusing on the line at 950 cents. Recent rainfalls in South America are close to the normal level, no bad signs in a short term.
DCE soyeabn rebounded coping with overseas markets during the night session, but the performance of grease was inferior comparing with that in overseas markets; soymeal slightly rebounded, Soybean No.1 waved at 4,400 yuan. Theoretically, the warrant cost of soybean No.1 is above 4,500 yuan/ton, thus short opportunities are bare in a short term. the spot price of soymeal corrected in many areas, a part of oil plants are under the pressure of inventory, plus the demand of fodder is going to go through a downturn, dragged the price in a certain extent. Short-term resistances of U.S. soybean and domestic markets are at $10 and 2,800 yuan, respectively.
Remain the thought of short-on-the-rebound when trading soymeal, and seek short opportunities above 4,500 yuan for soybean No.1.
PP futures opened low and fluctuated yesterday, opened at 7,600 yuan and closed at 7,620 yuan, the trading volume was 432,000 lots as 291,000 lots of positions. On the upstream hand, FOB Korea propylene fell $5, and averaged at $780.5/ton. On the device hand, the operation rate remained the same. On the spot hand, the gravity of prices of today’s domestic PP in most markets except several in Southern China shifted down. That is mainly on account of the oversell of the ex-factory prices in Sinopec Southern China, lack of circulating sources in the market, and the over-pricing of dealers. Dealers in the remaining regions were dominated by selling, slightly discounted to initiate trading. Downstream factories covered a lot previously, thus are less willingly to receive goods.
Take wires as an example, today, the main quoted prices in Northern China, Eastern China and Southern China are 8,000-8,350 yuan/ton, 8,050-8,400 yuan/ton and 8,250-8,650 yuan/ton, respectively.
The fundamentals are week still. Viewing the market as whole, MACD exposure carries on to diffuse upward, support at 7,500 yuan is obvious. Crude oil was stable last night, and the fluctuation interval is likely to remain at 7,500-8,000 yuan.
                                                                                 Dong LV (Investment Certificate NO. TZ008452)