Daily Report 310815 2015-08-31
Macro Economy
US stock market price was inconspicuous varied in Friday closing market; S&P 500 index created the highest month down range since May 2012. S&P 500 index ended at 1988.87 point, slightly increased 1.21 point or 0.06%. Friday data revealed that, US July personal consumption expenditures increased 0.3% on ring growth and, flat with June increase range; July personal income continuously increased 0.4% for the fourth month on ring growth, salary increased range created a high level within this year; July merchandise trade deficit initial value shrunk to $59.1 billion, June deficit was $62.6 billion; August University of Michigan confidence data final value fell to 91.9, created a three month low point. Fed vice chairman Fischer and Cleveland fed President Mester both stated in the Jackson hole conference that, the US inflation would rally and, interest rate raise shall not wait until inflation aim accomplished; in another hand, Atlanta Fed President Lockhart stated that, Fed interest rate raise timing was closing and, when to raise was still pending; St Louis Fed President Bullard stated, fundamental side from US economy was good and situation in second half year would be optimism; Minneapolis Fed President Kocherlakota regarded, unless data from present to September had significant variation, it would be inappropriate to raise interest rate within this year. Overall, divergence on interest rate raise timing within current Fed had enhanced; statement from partial officers that interest rate would raise before inflation reached the target would certain impact the market. But data was weak before September, raise probability was relatively lower. In addition, as for European side, after former Greek Prime Minister Tsipras resigned, Vassiliki Thanou, Supreme Court Justice will assume the office of the interim government President until the election in 20 September, but this had no negative effects on Greek debt repayment.
As for domestic side, China's Premier Li Keqiang indicated on the state council workshops in 28 August that would continue implementing positive fiscal policy and prudent monetary policy; use more precise directional and discretionary policy to balance the hammer from hedge economic downturn. We regarded that after polices as interest and reserve reduction issued in prophase, there would be possibility on further easing and scope for another economy sharply diving within this year.
Copper price further rallying in last week and, fluctuated at high point in the weekend. Chinese stock market continued rally had released concern on Chinese economy, global stock market had stabilized in consequence and, risk in macro side relieved for the moment. The latest news is NDRC indicated that, generated energy and nationwide rail freight situation in nationwide had improved, revealed a more positive variation on economic operation; whether Chinese economy would rally from bottom had become the crucial factor of copper price in the end of year. On fundamental side, LME spots premium decreased to $12; inventories in global three largest exchanges increased 196,000 tons in last week which mainly increased in LME at 17,000 tons; SHFE decreased 797 tons. China import volume increased and, industry sources showed, import window opened made August import growth maintain strong and smoothly sales. As for supply side, since power supply problem from Zambia, Zambia Company from Glencore are due to layoffs within this week. In addition, free port announced to cut down 29% capital expenditure and, would impact on copper annual output about 68,000 tons from 2016 to 2017. Recent copper price rallied, yet only when price raise through $5340, rally scope can be opened. There is possibility for price fluctuating in low point for a short period. LME will be closed on Monday.
Last week PP futures rise after inhibition. In upstream, up to Friday night, FOB Korea propylene average price was $695.5/ton. As for device side, current operation rate was 85% and was lower than last week. On spots side, domestic PP price went down in last week. Crude oil broke though $40, confidence from practitioners were hammered, which lead to a weaken trend of PP market. Meanwhile, demand from downstream was slow, hammer on dealer sales planner was huge, shipped in low price. PP futures rallied in weekend and, market circulate supply of goods decreased, trading and investing slightly revive; market stopped losses temporarily.
For instance of wires, main quoted prices of north, east and south markets are RMB 7700-7800/ton, RMB 7950-8100/ton and RMB 7800-8000/ton, respectively.
As for operation side, five-day moving average system turned up; MACD green column shorten and about to form golden cross, MACD and price formed bottom divergences as rally trend; in addition, cured oil strong rallied, it was possibly in rally trend recently.
                                                                       Dong LV (Investment Certificate NO. TZ008452)