Daily Report 260215 2015-02-26
Macro Economy
Prime Minister Li Keqiang hosted the executive meeting of the State Council on 25th this month, pointed out that the economy was walking downhill, to maintain the stability, proactive fiscal policies should be promoted. In addition, said Li Keqiang, the government would further reduce taxation and charges for small-and-micro enterprises and entrepreneurs. The preliminary HSBC PMI, and output and new orders of February released yesterday went back above 50 percent, indicating a slight recovery of the economy. Yet, whether this kind of situation would last long is a problem. Further policies such as interest cut and reserve cut might be lauched.
Domestic AU1506 fell associated with fluctuations during the night session, being pressured at 60-day moving average of 247.5 yuan in the short term.
Operation strategy: gold is likely to drop associated with fluctuations, hold previous short positions established at 254.5 yuan, and pay attention to the effectiveness of the support at 243 yuan and 240 yuan. Wait and see short-term trends intraday. Greece and euro zon have made an agreement of a succor project for 4 months, risk aversion cooled down and dragged gold prices.
On the other hand, the speech of Fed Chairman Yellen was ambiguous, was prudent and optimistic about interest raise overall. Thus, the international gold price gained strong support at $1,200. The U.S. durable goods orders data and inflation would be announced today, and since oil prices held on the downtrend, the Fed might raise interest provided that the inflation warming up.
Domestic AG1506 narrowly corrected during the night session, gained support at 60-day moving average of 3,580 yuan in the short term.
Operation strategy: hold short positions established previously at 3,800 yuan, pay attention to the short-term performance at 3,580 yuan intraday.
Overall, silver prices move along with gold prices. Overseas silver prices reversed to $18.5 and then dipped under pressure. And, recent rally seems to end up, but without significant bearish signs, and rebound correction might appear after significant plunge. The overall trend is projected to be volatile and to decline.
Stock Index
The stock index significantly fell after rose yesterday, which due to the explosion of bearish sentiments after a long period of rebound. The State Council declared to release 40 billion yuan to reduce the deficit as one of the proactive fiscal policies as promised. Previous rebound was based on the expectation of future easy monetary and fiscal policies. Such expectation is remaining, that is to say, the market cannot sustain significant falls. The upper side is subject to the restructure, thus, is narrow. Although there are 535 companies reported bullish performances, that have been reflected in the bull market of last year. The overall trend is projected to be volatile.
Domestic spot discount has shrunken for 40 yuan (comparing with the data before the vacation) to 180-100 yuan. Most downstream businesses are during the vacation, there are spaces to force down copper prices, trading are thin. News from a Singapore trader said that the copper premium in bonded area rose $85 to $90-95, and is predicted to $100 in a short time, indicating a recovery of import demand. Technically, domestic 5-month copper resistance is around 60-day moving average of 43,000 yuan.
LME 3-month aluminum edged down on Wednesday, closed at $1,800/ton (dipped 0.55 percent). Greece proposal about extending the succor has been proved, and the problem of Ukraine is easing up.
The Chinese government is promoting proactive fiscal policies, the State Council lowered the unemployment insurance from 3 percent to 2 percent. The 13th Five Year Plan is under consideration.
Domestic soymeal remained strong, Soybean No.1 plunged in the afternoon session yesterday, indicating the weak tendency. Domestic-made soybean spot remained the posture of before-the-vacation, spot trading would resume after 15th lunar January. The trading volume of Soybean No.1 is small, merchants are unwilling to access with regard to current situation. Soymeal spots rose 20-50 yuan/ton along with the market, and quoted prices in many areas increased to 2,950-3,000 yuan/ton, and the futures is stable at 2,800 yuan.
Operation strategy: take long positions of soymeal at 2,800 yuan, and take wait-and-see attitude towards Soybean No.1.
PP futures opened low and went high yesterday, opened at 8,060 and closed at 8,227, trading volume rose 29,588 lots to 359,000 lots, and positions ascended 890 lots to 219,000 lots. On the upstream hand, FOB Korea propylene surged $10, and averaged at $865.5/ton. On the spot hand, domestic PP was overall stable associated with slight movements, with the quoted prices remaining of before-the-vacation. Supported by most petrochemicals’ steady prices, investors are relatively calm. Moreover, newsflow is thin, a part of merchants have not resume to work. The initiative of access is low, minority of downstream enterprises was consuming the stock, less transactions have been done.
Main quoted prices of wires in north, east and south markets yesterday were 8,100-8,700yuan/ton, 8,300-8,400 yuan/ton and 8,600-8,700 yuan/ton.
Current prices is likely to remain former uptrend, and the support line is at 8,000 yuan.
                                                                                     Dong LV (Investment Certificate NO. TZ008452)