Daily Report 190416 2016-04-19
Macro Economy
US stock market rose to near the highest point in history; investors placed hopes on enterprises financial statements which will be released this week. Oil price narrowed decline range. Dow Jones index first time ended above 18,000 since last July. S&P 500 index increased 13.62 point or 0.65% to 2094.35, near 2100 important pass. From news side, New York Fed president Dudley claims that US economy news is mainly positive, and employment has improved; monetary policy adjustment will be gradual and cautious. Minneapolis Fed president Kashkari claims that the Fed monetary policy structure has a good effect. Chicago Fed claims that low oil price may boost US consumer increase exoenditure. The three officials mainly keep their former attitude with no change, and dovish view is still dominant. With the improvement of global especially China economy, restriction of next Fed interest hike is fading away, but the possibility of April interest hike is still low.
ECB claims that with the implement of quantitative easing policy of Euro Zone central banks, more central banks are predicted to buy alternative assets. Bank of France president Villeroy claimes that Europe economy recovery trend hasn’t changed, and Euro Zone price will pick up uptrend this year. But from current situation, we consider whether Europe economy will continue recovery still uncertain; easing again is just a time problem. IMF president Lagarde claims the uncertainty caused by UK leaves Euro Zone will shock the UK and Europe economy. But from market performance, its influence won’t perform in the short term.
Domestically, On April 18th, the PBoC carried out Medium-term Lending Facility, the total volume of which amounted to 162.5 billion RMB, including 3 months 83.5 billion and 6 months 79 billion; interests were 2.75% and 2.85%, same with last time. In addition, data released yesterday showed that March first-tier cities house price month-on-month increase rate had created the newly highest point; lower-tier cities house price increased significantly. Macroscopic surface is good enough; it is expected that this improvement will continue to the end of second-quarter, and June will be window period of tendency change.

Monday copper still fluctuated near the high point, and compared to powerful performance of neighbouring markets, copper market is still weak. Overnight crude oil decreased after freeze production conference, but strike in Kuwait supported for crude oil; we should follow the crude oil price. In addition, US dollar still under pressure before Fed conference next week, whether US dollar will bottom is the main factor of copper market. Back to copper market, LME spots premium edged up $2.25 to $23; inventory decreased 700 tons. Domestic spots discount were discount RMB 120-60; imported copper supply is sufficient, downstream and middleman still under observation. From supply side, Codelco claimed their copper mine might resume production this Thursday, which had suspended because of heavy rain last Saturday. Codelco claimed a loss of 1500 tons daily, and total loss was expected to be 7500 tons. In addition, their copper mine Andina’s operation rate is 65%. But as operation won’t be influenced for a long time, a significant influence won’t happen to copper price. Technically, copper price resistance is $4855, and in domestic is RMB 37300; we wait for copper price to be clear.

Domestically, DCE soybean rallied following overseas market; oil against meal ratio is 2.466:1. Northeast China area soybean price continued increase, and Heilongjiang area increased mostly; prices of north area Heihe, south-central Suihua and Haerbin generally increased. Current major production area after filtered grain purchase price increased from RMB 3500-3560/ton to 3560-3600/ton. Influenced by current hot sale beans, middleman centralized replenishment and US market boosting, currently soybean price of northeast China and along Huaihe river increases, in which north China increases the most; price tendency is expected to be strong in the short term.
From soybean meal side, spots quotation increased RMB 20-30/ton, but spots trading was still flat; oil plants quotation was at RMB 2480-2550/ton, but market transaction volume didn’t increase at the high point. Terminal market doesn’t accept source of goods with high price. Most of the market is under observation and replenish cautiously. As for operation: we recommend soybean meal long holdings at low point paying attention to stop profit at 2500 mark; we recommend short arbitrage between oil and meal stopping profit and closing out, or trying to operate in long.

Last week PP futures continued fluctuation at low point, opened at 6730 and ended at 6788, trading volume increased 61356 lots to 2.104 million lots and; holding decreased 6156 lots to 605,000 lots.
From spots side, yesterday domestic PP market showed fluctuated and dropped. Part of producer price of petrochemical decreased, and bolster for the market costs weakened. PP futures opened low, rallied then dropped, it discourages downstream customers to accept the goods to an extent. Trader sell actively,hence profit is slightly surrendered to boost a deal; downstream enterprises are under observation, and receipt willingness is low; market trade atmosphere is low. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6900-7050/ton, RMB 7050-7100/ton and RMB7100-7300/ton, respectively. As for operation, current moving average system twisted; MACD exposure downward extended as weak pattern, and recommend price fluctuation and downward trend.

                                                                                 Dong LV (Investment Certificate NO. TZ008452)