Daily Report 150316 2016-03-15
Macro Economy
US stock market yesterday performance was mixed with up and down; benchmark index ended flat with this year high point, trading in the mid market was thin; investors were waiting for the result of multinational central bank policy meeting included Bank of Japan and Fed. Dow-Jones Average index and Nasdaq index rallied at market close; S&P 500 index dropped 2.55 point or 0.13% to 2019.64 point. From news side, US New York Fed February survey showed the expectation on inflation of US consumers revived from years low since the gasoline price was estimated to rally faster. And prior CPI and PCE data showed US overall inflation had sharply revived along with the rebounded oil price, core CPI rose through 2%. Rallied mid-term inflation expectation is one of the necessary conditions of Fed second interest rate hike. Current Fed fund rate futures showed probability of rate hike in March is still 0% and, in April, June, September, December is 26.6%、41.5%、42.1%、38.6%, respectively, which showed plainly revive compare to prior period, market is looking forward to Fed change tunes and, is on track to the expectation on interest rate hike. As for this week Fed meeting, we regard US economy and employment market might show hawkish signal but, is expected to hold “observe attitude” on interest rate policy side; rate will not be hiked immediately, Fed indicates the strong expectation still exists but not fully price-in, US dollar might revive.
From domestic side, China's central bank saw its yuan funds outstanding for foreign exchange drop 227.9 billion yuan to 23.98 trillion yuan at the end of February, which set the lowest level since the end of 2012 but, the fall narrowed from the drop in January. This is basically the same as prior released foreign exchange reserve data, under the impact of prior weakened US and, stronger RMB exchange rate, reduction on hot money capital outflows is legitimate. But from latter period perspective, probability on US dollar rate hike has increased again, recent RMB exchange rate will be hammered; pay attention on the intervention from central bank.
Stock Index
Yesterday stock index overall soared and dropped at the end of market; computer sector raised 4.8; ChiNext raised 88 point and, recovered 2000 point; only banking sector dropped. One bank and three commissions answered to reporters' request at weekend which boosted market, registration system prolonged, market reacted positively and, ChiNext rapidly revived. But overall economy tendency was sluggish, industrial added value set new low again; bad bank loans might over 2 trillion which restricted the upward trend on market. From macro data, mainly since the real estate investors revived, the economy only drove the real estate market at present; February credit data failed to meet expectation, expectation on fiscal incentive and, easing credit was repeatedly. Index is hard to repeatedly revive and, we recommend operating in lot point fluctuation.
Monday copper market still dropped back after soaring, market buying momentum was insufficient. From copper market side, LME inventory continued decreasing 1800 tons to 174,000 tons; spots premium sharply increased $9 to $25.5, in contrast, domestic inventory set record high to 350,000 tons. As a matter of fact, divergence on domestic and overseas inventory has showed several times in history but, eventually copper price would be lower, which has impacted from recent domestic stagnated copper price. Technically, copper price is fluctuating above $4900, we waiting for the good opportunity on short.
DCE soybean is in divergence trend, soybean No.1 contract volatile and, grease drops which firms the meal; oil against meal ratio drops after setting record high. Soybean price at Heilongjiang, Inner Mongolia, Jilin and other areas all dropped, though basic surplus grain at Inner Mongolia and Jilin was insufficient which bolstered price, under the influence of continuously dropping Heilongjiang soybean, price at both areas would follow to weaker.
From soybean meal side, partial areas of spots slightly rallied, oil plants at coastal quotation at RMB 2450-2520/ton; domestic oil plant operation ratio was high, import soybean supply was sufficient. Since recent national commercial inspection, it might affect the port soybean export price or, it might boost the price but, strength is expected to relatively limit. As for operation: we recommend soybean meal entering cautiously; arbitrage between oil and meal staying in observation temporally.
Yesterday PP futures opened low and volatile went lower; opened at 6940 and ended 6878; trading volume increased 40912 lots to 2.034 million lots; holding decreased 11220 lots to 416,000 lots. From spots side, yesterday domestic PP market showed narrowly consolidation. Producer price of petrochemical regions is stabilizing which certain bolsters the market. PP futures operate in low, slightly strike market sentiment. Merchants’ ships followed tendency, partial merchants slightly surrender profits for promoting trading. Plants in downstream initiatively receiving demand reduce, market is mainly in observation; market trading and investing is thin.
Intraday main quoted prices for wires of north, east and south markets are RMB 6900-7000/ton, RMB 6900-7050/ton and RMB 7100-7150/ton, respectively.
As for operation, current moving average system turned and, MACD red column shortened; tendency might retrace recently.
                                              Dong LV (Investment Certificate NO. TZ008452)