Daily Report 160316 2016-03-16
Macro Economy
US stock market slightly varied but was mixed with up and down; S&P 500 index and Nasdaq index dropped and, Dow-Jones Average index rallied. It showed investors held divergence on market and, was estimating capacity from each central bank on boosting global economy, especially paying attention on result and opinion on rate hike expectation from Fed new round regular meeting. S&P 500 index dropped for the second straight day at the first time of this month, dropped 3.71 point or 0.18% and ended at 2015.93 point. From news side, US February retail sales dropped 0.1% month-on-month was better than expected 0.2%; January retail sales data sharply dropped from 0.2% to -0.4%. February PPI leveled off year-on-year and, dropped 0.2% month-on-month. This is the first time PPI stopped dropping year-on-year since January 2015. Core PPI excluding food and energy prices increased 1.2% year-on-year which accorded with expectation; month-on-month data leveled off. Prior consumption data sharply down revised which exceeded market expectation, media concerned about it might drive pessimism cognition from market to US economy outlook; we regard it should not be pessimism in the future, under the continuously improving employment and increasing salary level, US consumption condition might continuously increasing in the future. Fed FOMC meeting will release rate decision at 2 o’clock on the morning of 17 March, Beijing time; it is expected to keep benchmark interest rate at 0.5% but, might show hawkish signal on US economy and labor market. There is no doubt that rate will not hike at this meeting, what's more is estimation from market to future Fed rate hike path; we recommend paying attention on the words of Fed statement and, the speech from Yellen at press conference. Bitmap expects rate will hike three times in this year and, it is lower than four times in last December.
Stock Index
Yesterday afternoon bank sector boomed and drove the index to upward trend. Bank sector big swung before the closure of two sessions which certain bolstered the market. From policy side, the thirteenth five year plan removes strategic emerging sector which causes suspicion; there is no official explanation yet. If it will not be released in the future, it might limit the list speed on new type company which bulls the ChiNext and, CSI 500. A certain bullish released during the two sessions: firstly, fiscal incentive; increase deficit; tax reduction. Secondly, Saturday newly-appointed CSRC president mentioned registration system might be prolonged and, it should not one-sided develop. It is too early to talk about exiting on CSF. Thirdly, SASAC director cleared and definite direction and idea on state-owned enterprises reform, which all increased market optimistic sentiment. But recent released economy data showed economy hasn’t improved: Firstly, industrial added value is 5.4% as the new low since March 2009; secondly, the expected consumption growth is 10.2 which is lower than expectation; thirdly, February credit data fails to meet expectation. From sector side, basically there is no leadership and, no continuously hotspot, no main line and, performance on cyclical stocks is short-lived; shall not put over expectation on fiscal stimulating bull market. From asset side, trading volume is shrinking. We recommend operating in overall fluctuation.
Tuesday copper market trading is thin; copper price narrowly volatile near the bolster line. From copper side, LME spots premium decreased $9 to premium $16.5; inventory continued decreased 4100 tons. Domestic is under month changing, we recommend paying attention on Wednesday spots premium variation. On supply side, Antofagasta copper output in 2015 decreases 10.6% at 630,000 tons and, expects output in 2016 is 710,000 – 740,000 tons; in consideration of there is 50,000 tons output is purchased from Barrick acquired Zaldívar copper mine, its acquiring output acquiring is at 30,000-40,000 tons which is mainly from output from the mid 2016 of Antucoya. Technically, copper price is still above the crucial bolster level, LME is $4900 and domestic is RMB 37000; we recommend waiting for further clarified copper price.
DCE soybean is divergent in the night session, strong oil and week meal pattern continues. Recent spots price still in the weak keynote, including Heilongjiang soybean price plainly dropped. Along with temperature increasing, sentiment from peasant household anxious to sell grains further appeared. Hammer increased on the sufficient supply market, current each grain spots purchase cleaned grain price was at RMB 3600-3700/ton.
From soybean meal side, spots quotation is overall stabilizing, partial area mixes with up and down, adjust range is at RMB 10-20/ton; spots and basis trading is flat. Oil plants at coastal is at RMB 2450-2500/ton; domestic oil plants operation rate is high; import soybean supply is sufficient. As for operation: cautiously entering soybean sector, arbitrage between oil and meal staying in observation.
Natural Rubber
Shanghai rubber was under hammer out of fluctuation yesterday; US dollar spots quotation edged down, domestic spots price 1190-1210 (-10); domestic cargo price 1190-1210 (-20); US dollar RSS spots price 1370-1400 (-10); US dollar RSS cargo price 1380-1400 (-20); RMB compounded rubber price 9400-9500 (-200). From news side: up to mid of March, 2016, Qingdao bonded zone rubber inventory decreased 2.1% to 265,800 tons. From specific inventory category, dropped inventory is mainly because of inventory on synthetic rubber and compounded rubber decreases. In addition, compounded rubber, SBR, BR inventory as well drops in varying degrees; RSS inventory has no variation. From financial feature side, domestic macro sentiment is weak, overseas market focuses on intraday night Fed declaration. Overall: market volatile in high point and, short term trading investors might mainly in observation.
Yesterday PP futures fluctuated in low; opened at 6876 and ended 6870; trading volume decreased 177,000 lots to 1.856 million lots; holding decreased 7142 lots to 409,000 lots. From spots side, yesterday domestic PP market price looses out of stabilization, futures volatile in the mid market, trading momentum is flat. Partial merchants take the lead in surrendering profits for reduce inventory and, shipping actively. Practitioners observe in cautious, plants mainly purchase as own need; trading volume hasn’t risen.
Intraday main quoted prices for wires of north, east and south markets are RMB 6850-6950/ton, RMB 6850-6950/ton and RMB 7000-7150/ton, respectively.
As for operation, current moving average system turns to downward; MACD dead cross forms; recent tendency is expected to continue retracement.
                                             Dong LV (Investment Certificate NO. TZ008452)