Daily Report 150116 2016-01-15
Macro Economy
Yesterday US stock market boosted and the market price rallied from three month low point, energy and healthcare sector rose in a leadership. S&P 500 index increased 31.56 point or 1.67% to 1921.84 point, conformed to yesterday expectation. Currently the possibility on US stock continued dropping was small, S&P 500 index might fluctuated below 2000 point in a short term. On data perspective, US last week initial jobless claim unexpected raised 7000 to 284,000, the second high level since July. Though weekly initial jobless claim unexpected increase, US employment market continued steady condition, enterprises continued hiring employees. St. Louis Fed president James Bullard indicated, the market and FOMC hasn’t considered about take actions on January and, he would like to gain more information before decision made at FOMC in March. He as well indicated recent slumped oil price might cause extension on the time of inflation back to Fed’s 2% target; foreign exchange market has digested the situation on deviated policies all over the world, US dollar would not soar in the future. Overall, Bullard’s standpoint, which all along hawkish seems softens. Recent market expectation on future inflation in long term starts to weaken, whether crude oil price stabilizes is the crucial factor on economy stable revive trend. January Fed meeting will pay more attention on the energy price and inflation level. In addition, Chinese credit data will be released intraday, market expectation shows December RMB loan is expected to increase RMB 700 billion, in November is RMB 708.9 billion. Social financing scale expects to increase RMB 1.15 trillion, is higher than the RMB 1.02 trillion in last month. These data need to be focused.
Thursday copper market came into rally trend, revived crude oil price enhanced the upward momentum on copper price. Goldman Sachs which used to shorten started to long the crude oil on Thursday; Buffett continued increasing holdings on crude oil shares; the warming crude oil market undoubtedly relieved the largest hammer over market. Recent global stock market performance tended to stabilizing, exchange market as well calmed, the macro risk was basically released. On copper spots market, LME spots discount narrowed $8.25 and turned to premium $4; inventory continued decreasing 2125 tons. Shanghai copper spots discount narrowed RMB 55 at discount RMB 80 to premium RMB 30, supply and demand on spots side was improving. On demand side news, this month COMEX trading premium rose from last month $5.5 cent/pound to $5.75 cent/pound.
On domestic side, the Thirteenth Five Year started in 2016, State Grid Corporation of China, China southern power grid successively set own blueprint, the Thirteenth Five Year plan from power grid in each areas as well successively released. China distribution network projects were finalized recently and this will relieve the insufficient cable demand. Technically, LME copper price will continue challenge prior high point $4443, if this price has been risen above, copper price upward scope will open. Domestic copper price is strong, we recommend holding long position on operation.

Yesterday PP futures opened low and went high, opened at 5575 and ended at 5677; trading volume increased 128,000 lots to 1.601 million lots; holding increased 44130 lots to 637,000 lots. On spots side, yesterday domestic PP market price weakly adjusted. Spots market petrifaction East China sharply dropped which exacerbated market observation momentum. Futures rallied in the mid market and promoted the low priced goods trading; plants purchased appropriately; intraday trading and investing was passably.
Current main quoted prices for wires of north, east and south markets are RMB 5950-6100/ton, RMB 6050-6400/ton and RMB 6350-6600/ton, respectively.
As for operation, current moving average system twisted and lack of direction but, recent macro environment was poor, price was estimated continued weakly volatile.
                                                               Dong LV (Investment Certificate NO. TZ008452)