Daily Report 270315 2015-03-27
Macro Economy
The U.S. stock market has fallen for the fourth day, accomplished the longest downtrend since January, drops of consumption and transportation shares overrode the rebound of technology stock, and the turbulence in Yemen was a another force dragging down the stock market. S&P 500 closed down by 0.2 percent at 2,056.15 points. On the data hand, the initial claims for state unemployment benefits fell to the 5-week lows last week, even lower than the expectation, that may due to the improved weather. The U.S. preliminary March service-sector data was 58.6, polled by the Markit, the stronger-than-expected data indicated a reviving U.S. economy since Q4. Atlantic Fed president Dennis Lockhart tended to adopt the rate hiking in the middle of the year. But he considered that the increasing strong U.S. dollar could be an intensive resistance for the economy, that the U.S. economy had cheered up a lot, and could stand an interest rate higher than zero. And Fed’s balance sheet would be lower associated with a normalized monetary policy, rather than sharply contract. On the Europe hand, the short-term euro zone prospect is bull, and QE is playing a vital role in resisting the extremely low inflation, said the ECB president Draghi, and he believed that the QE project could achieve the goal in the first month.
Besides, on the crude oil front, since Saudi Arab and its allies are bombing the anti-government organization in Yemen, WTI Crude futures surged by 4.5 percent, and Brent Crude rose 4.8 percent, both created the 3-week record high. Simultaneously, both gold and U.S. dollar soared, risk aversion warmed up, investors should stay focusing on the military action.
Domestic AU1506 fluctuated and corrected during the night session, short-term moving averages bully arranged, but had strong resistance at 244.5 yuan. The Middle East geopolitics intensified, risk aversion significantly heated up, pushing international gold prices breaking through the resistance line at $1,200. However, the U.S. market sparked by the weekly initial jobless claims of last week, and the rebounded U.S. dollar pressured gold prices. On the funds hand, Gold ETF funds’ positions cut 5.97 tons overnight, had 15.53 tons of cut since 20th March, and are 737.24 tons now, indicating funds’ bearish view against gold though it reversed.
Synthetically, international gold prices appeared bounce pattern recently, have surged for 8 days, beware of callback risks in the short term.
Operation strategy: the long-term trend is still bearish, yet is rebounding in the short term. hold long positions built in at 237.5 yuan, defense at 5-day moving average of 242 yuan, appropriately take profit at 244.5 yuan, and hold the remaining, the key upper resistance is at 247.5 yuan.
Domestic AG1506 fluctuated and weakly adjusted during the night session, short term moving averages bully arranged, but had a lot of resistances for rebound, the upper key resistance interval is at 3,700-3,750 yuan.
Operation strategy: silver prices are projected to rebound recently, take a few profit at 3,700 yuan from long positions built in at 3,530 yuan last week, and hold the remaining, defense at 5-day moving average of 3,660 yuan, adjust at 3,710-3,630 yuan in the short term, beware of callback riskes after profit-taking of long positions due to the adjustment.
Domestic and overseas copper markets rushed high and fell back Thursday, LME copper prices created a record high at $6,294.5 since the rebound, closed at $6,152.5, having risen $15.5. Domestic June contracts closed at 43,970 yuan. Overnight U.S. dollar reversed after continuous adjustments, pressured copper prices in a certain extent. The initial claims for state unemployment benefits data of last week fell to a 5-week low, indicating the stabilizing U.S. labor market. On the other hand, Codelco’s north mine field were resuming production gradually, restrained short-term copper price increase. View spot news, Salvador (subordinate of Codelco) mine halted production, Antofagasta’s Centinela, Michilla and Antocoya mine fields are going to suspend, approximately 20,000 tons monthly productivity are suspending. We keep focusing on Chile’s supply disturbance.
On the fundamentals hand, LME backwardation was narrowly waved near $20, as $21.5 polled on Thursday, the inventory lass 3,000 tons to 339,600 tons. We are concerning whether the inventory reduction would persist. Domestic spot discount expanded 20 yuan to 270-200 yuan, the vitality of the market had declined. Domestic consumption kept recovering, especially for air-condition industry, the market is expecting the peak season consumption.
Technically, copper prices rushed high and dropped back, are likely to keep adjusting recently. Pay attention to the support at $6,000 of whether it is effective. As for domestic market, pay attention to the effectiveness of the support at 43,200 yuan.
The U.S. soybean extended to edge down, affected by strong U.S. dollar, and bearish expectation of month-end sown area report. The U.S. focus is on the report, so to speak, the guide of future prices’ movements. Analysts predicted that the U.S. 2015 soybean sown area was 85,920,000 acres from 83,700,000 acres of 2014. The institution raised Brazilian soybean output to 95,800,000 tons.
On the domestic hand, soymeal physicals prices edged down 10-20 yuan, soybean inventories in oil factories dropped month-on-month, while soymeal inventory rose month-on-month. Some oil plants suspended or facing suspension due to overwhelmed inventory.
The weakness of actuals dragged futures down, thus, Soybean No.1 rrmained volatile and weak, pay attention to the sown area alternation of the new season.
PP futures opened high and fluctuated yesterday, opened at 8,300 yuan, and closed at 8,260 yuan, trading volume rose 234,000 lots to 851 lots, positions soared 29,546 lots to 394,000 lots. On the upstream hand, FOB Korea Propylene surged $5 and averaged at $945.5/ton. On the devices hand, current operation rate is the same as former, no significant changes. On the spot hand, Sinopec Northeast and East China and PetroChina South China raised ex-factory prices, strongly support the market cost. Merchants are less willing to sell by discount. On the downstream hand, factories purchased according to demand, thus, trading volume is hard to surge.
Main quoted wires prices of north, east and south markets are 8,400-8,700 yuan/ton, 8,650-8,850 yuan/ton and 8,650-8,800 yuan/ton, respectively.
Operation strategy: current moving average system and MACD are bullish, take band long positions.
                                                                                  Dong LV (Investment Certificate NO. TZ008452)