Daily Report 061115 2015-11-06
Macro Economy
US October non-agriculture employed population change would released at 21:30 intraday; prior value was increase 142,000 pieces, expected this month was increase 182,000 pieces. From other economy data, the released October economy data, including ISM and PMI index performance was good; ADP new employments as well reached 182,000 pieces which exceeded the expectation. From historical circumstance, new non-agriculture employment contained certain seasonal cycle, in the fourth quarter especially October and November would relatively at the high point. From recent condition, data continued too low was deviation from the average and, according to current US economy reviving trend, the possibility of non-agriculture employment continued dropping was small. Overall, October new non-agriculture employment was predicted to soar to or exceeded expected 182,000 pieces; September data might as well up revised which further close to Yellen mentioned “data support”. In addition, from the beginning of FOMC meeting in October, Fed had already shown hawkish; first was the statement on eliminate impact from overseas economy to domestic speech and, added the statement on discussing interest rate hike in December; whereafter lots of officers including president Yellen as well indicated the possibility on interest rate hike in the end of year. Based on which, we regarded after this non-agriculture data, expectation from market on interest rate hike in December would be further affirmed. US dollar index might have another upward trend; gold and crude oil may be hammered.
 
 
Stock Index
Yesterday stock index continued increasing; brokerage sector still soaring. From market perspective: switched between large and small caps; weight sectors as non-banking financing, architectural ornament, steel, bank, mining sectors all rallied in leadership; media, agriculture & farming, medical biotechnology, light-manufacturing sectors all fell in the leading role. On concept stock side, Fujian Free Trade Zone, large state-owned enterprise reorganization, online travel, Shanghai stock 50, one belt and road index all in good performance; network security, artificial intelligence, wisdom agriculture, food safety, industry 4.0 index all slightly retraced. Rally on sector perspective was in a mess, prior hot concept as industry 4.0 was slowed down.
The main reason: these days soaring was cause on after Thirteenth Five Year Plan released, the reform determination from central government was exceeded market expectation and, stabilizing growth was more firm in the state council meeting. Capital market, RMB exchange rate, free trade zone, tax reduction, urbanization reform would not stagnate by the sluggish economy and stock market crash; supportive documents on state-owned enterprise reform released; operating company on capital control would establish and, would gradually moving forward.
Do not to be over optimistic: recent soar was just the revise from prior pessimism expectation; the economy condition was still hard, do not over optimistic; there would be more locked chips above current price, hammer was growing and, without money earning effect it was hard to attract new capital. Current reviving which lead by securities belong to technicality, short term expectation was in revisal and took the chance in intraday.
 

Copper
Thursday LME copper got selling momentum, ended down 2.38% to $5008. On fundamental side, LME spots premium continued dropped to $9.75; inventory turned to increase 6400 tons. Domestic spots were discount RMB 80 – RMB 30; demand was still weak. Technically, copper price was closing to crucial psychological $5000 barrier; copper price might down under $5000, domestic copper might down to RMB 37800. Focus on the support line effectiveness in a short-term.
 
 
Soybean
Domestic soybean market was in weakening, analyze from short to long term market, it was hard to have revive chance in each market. Yet contract 1605 show the sign on rally, hence, prior profit closed positions; focus on the bolster at 3800.
Soybean meal spots slightly decrease RMB 10-20/ton in most areas, import soybean port arrival amount was huge and import cost was decreasing; domestic soybean meal supply was sufficient, demand from forage breeding was low and, grease was in strong trend; oil against meal ratio was 2.22:1, still in the uptrend. As for operation, soybean No.1 contract short holdings stopped profit and closed positions; arbitrage between long oil and short meal.
 
 
PP
Yesterday PP futures opened low and went lower, opened at 6750 and ended at 6641; trading volume increased 34930 lots to 1.131 million lots; holding increased 23858 lots to 440,000 lots. On spots side, yesterday domestic PP market price fell in volatile. Overnight crude oil slumped, PP futures opened low and went lower and hammered the market sentiment. Partial plants from petrifaction reduced EXW which weakened the market cost bolster. Merchant shipped initiatively, sell in surrendering part profit to decrease own inventory. Plants in downstream purchase as demand, receiving requirement was low; market mainly trading as rigid demand.
Current main quoted prices for wires of north, east and south markets are RMB 6700-6850/ton, RMB 6850-7250/ton and RMB 7100-7300/ton, respectively.
As for operation side, current moving average system arranged in short, MACD exposure downward extended as downturn; recent price was estimated to continue weaken trend.
 
 
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