Daily Report 170315 2015-03-17
Macro Economy
U.S. stock market S&P500 accomplished the biggest surge since 3rd Feb., mergers and acquisitions eased economic worries caused by strong U.S. dollar, with the addition of European stock market prosperity, both the former factors pulled U.S. stock market to boost. Until the end of the trading day, S&P500 increased by 1.35 percent to 2,081.19 points. Statistically, the U.S. Feb. industrial output rose by 0.1 percent, lower than 0.2 of the expectation; Jan. China’s U.S. debt holding scale reduced $5.2 billion on the month, which was the fifth declining month, while Japan expanded their loans, nearly became the biggest U.S. debt holder. The Fed meets on policies on 17th-18th this month (starts today) and analysts expect it will eliminate the saying of “be patient” according to previous strong employment data.
On the Europe front, the ECB declared of having bought 9.75 billion euro public sector debt until 13th March. Draghi said, while oil prices are falling, economic incentive is carrying out, and economic reform is being taken, the prospect of euro zone can be look forward. We consider that economic reforms would become the momentum of euro zone recovery under the influence of stimulus.
On the domestic front, Feb. total electricity consumption declined by 6.3 percent year on year; fiscal income slid gain from the first single-digit-acceleration since 1991 of last year. Electricity data reveals the economic stress. On the other hand, fiscal income acceleration slowed down further, the enlarged expenditure indicated a continuous application of stabilization measures. And monetary policies are projected to be enhanced to ease the deflation.
Domestic AU1506 narrowly adjusted during the night session, bearing pressure at 5-day moving average of 237.5 yuan. Take short positions according to current tendency. Short-term downturn has eased off in a certain extent, adjusted among 239-235 yuan. Defense back against 5-day moving average for short positions established previously at 254.5 yuan; mainly wait and see intraday.
The Fed meets on policies on 17th-18th this month (starts today), trade poorly, wait for the Fed’s expression about interest raise; on the asset price hand, U.S. dollar was inhibited at $100 and adjusted at this satus, and gold prices are waiting for the guide of the Fed. On the funds front, Gold ETF positions remained the same for three days, but the biggest position cut since March implied the bearish view of funds against the afternoon session.
Domestic AG1505 narrowly adjusted at 5-day moving average of 3,450 yuan during the night session, short-term drop slowed down and showed the lack of rebound momentum. The trading interval is at 3,400-3,500 yuan, risk-aversion investors take wait and see attitude. Take short positions according to current tendency, defense at 5-day moving average of 3,450 yuan for short positions established previously at 3,800 yuan.
Stock Index
Stock index significantly surged yesterday, each sector went up, and computer communication sector led the market. The speech of Premier Li during the Two Sessions in the weekend inspired the market. Current support for market boom is: the core of stimulus is simplifying administration, empowerment, innovation and entrepreneurship, which equals to release productivity, and initiate new growth and business points; monetary policy is expected to be loose in order to lower costs of enterprises. Although the registration system is a bearish news, it can be a measure of inspiring financing channels and stimulating the market. Taken together, publishing and conducting those measures would induce market enthusiasm. We suggest investors to buy at lows, while be cautious at rallies.
Overseas and domestic gopper markets fluctuated at highs yesterday, LME copper closed at $5,858, and basically closed flat. Current spotlight is still the Fed’s meeting, the data was lower than expected, which may implies that the Fed would not raise the interest as fast as expected. U.S. dollar adjusted at $100, giving a second for copper prices to catch a breath. The U.S. Feb. industrial productivity rose by 0.1 percent, lower than the expectation of 0.2 percent. March NAHB/Wells Fargo Housing Market index fell to 53 from 55 the month before, while the expectation was 56.
Chinese policies are one of the focal points, the market has a flourish anticipation for following policies after Premier Li’s bullish speech.
On the fundamentals hand, LME premiums dipped $4 to $18, and inventories expanded 4,000 tons to 338,000 tons. Domestic spot started to change the month, thus trading has been improved. The prospection of March and April’s consumptions—better than the year-beginning is a support of the market.
On the supply hand, several copper mines encountered strikes and suspends, Codelco and Antofagasta cut their expenses, those, as a whole, supported copper prices. Besides, Chile mining officer declared that Chuquicamata copper mine (costs $3.3 billion) has progressed for 20 percent, and this project would enable Codelco gaining 320,000 tons of output from 2019. Technically, copper prices levels off at $5,800, and we believe that the mid-term rebound is still existing, remainder long positions can be held.
Overnight U.S. soybean extended previous weakness due to spot decline and U.S. soybean sown area expectation rise. Current U.S. soybean retreated near the lower limit of recent waving interval, and the market is focusing on the adjustment of sown area data at the month-end. Brazilian production area is bearish as before, the accelerated reaping and undermined U.S. export demand pressured the U.S. soybean to correct lower in the short-term. The later biggest variable is Argentinean output adjustment. pay attention to the support at 960 cents of U.S. soybean.
On the domestic front, rapeseed meal and soymeal slowed down their uptrend, soymeal spot fell 20-50 yuan/ton in many areas, was 2,980-3,020 yuan/ton in coastal area. Oil plants’ operation rate was ordinary, the inventory was small while unexecuted contracts were large, restricting spot price waving.
Overseas markets retreated repeatedly, testing soymeal support at 2,800, was dominated by short-term changes. Soybean No.1 spot went weak after the vacation, fell 20-80 yuan/ton in many markets, even dropped below 4,000 yuan/ton for perchasing prices in several markets, and the main purchasing prices were 3,980-4,200 yuan/ton. Since the sales process has carried on for only 35 percent in Heilongjiang and Inner Monglia, later spot contains depreciation risks due to centralized selling.
Operation strategy: Soybean No.1, affected by discounted warrants’ cost, is assumed to remain weak and volatile, take short-term operations or just wait and see.
PP futures opened low and went higher yesterday, opened at 8,260 yuan and closed at 8,400 yuan yuan; trading volume rose 330,000 lots to 1,280,000 lots, and positions gained 38,480 lots to 260,000 lots. On the upstream hand, propylene prices leveled off yesterday. On the device hand, current operation rate was the same as last week. On the spot hand, majority of domestic PP markets remained stable and correcting, only minority markets edged up. although oil prices plunged, polypropylene futures opened low and went high, and cheered up investors in a certain extent. In addition, some varieties of gasoline of Sinopec South China and PetroChina South China went up, most merchants shipped along with that.
Quoted prices of wires in north, east and south markets were 8,100 yuan/ton, 8,300-8,500 yuan/ton and 8,400-8,550 yuan/ton.
View the market as a whole, although crude oil prices significantly plunged, polypropelene markets were strong, and current MA and MACD were bullish. However, the bearish influence of crude oil is severe, we suggest investors to operate under the consideration of a volatile market, and the volatile interval is 7,800-8,700 yuan.
                                                                             Dong LV (Investment Certificate NO. TZ008452)