Source: CITIC Construction Investments Author: CITIC Construction Investments Futures
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1. Market overview
US inflation data exceeded expectations and market risk appetite declined. Copper prices rose to the downside this week.Shanghai copperIt works in the 63,500-61,900 yuan / ton range and London copper works in the 7,650-8,150 US dollars / ton range. August domestic economic data released on Friday improved and US retail sales data for August was also better than expected and market sentiment picked up slightly: Shanghai copper rose 1.29% in Friday night trading and London’s copper rose more than 1%.
2. Market analysis
At the macro level,US inflation data for August released earlier in the week surpassed expectations and market-forecast inflation peaked and failed, indicating that the Fed has a long way to go to fight inflation in future. Following the release of the data, the US dollar index rose, macroeconomic sentiment weakened, and expectations for a rate hike by the Federal Reserve by 75 basis points increased and the possibility of a rate hike by 100 basis points was not even excluded. With the exception of the US, high inflation in major economies such as the euro zone will undoubtedly hurt the economic outlook.
In terms of employment,The number of Americans filing for unemployment benefits last week was 213,000, less than the expected 226,000, and the previous figure was also revised to 218,000 from 222,000. Improved employment data further reinforced the likelihood of a sharp rate hike in September.
Basically,LME stocks have fluctuated at a low level and Shanghai Futures Exchange shares have risen sharply for two consecutive days. The depletion of Shanghai Futures Exchange shares may come to an end and support for copper prices may weaken. As for the supply, the Peruvian Mining Association said on Friday that the protests would jeopardize 30% of copper production. On the demand side, under the slowing trend in world economic growth, downstream demand will also be somewhat contained.
From the point of view of the market trend,Early on, the market anticipated that inflation might have peaked, but after the inflation data was released this week, expectations were lower and copper prices fell under pressure as a result. Judging by the inflation data, the Fed still has a long way to go to fight inflation and copper prices will remain under pressure from monetary policy tightening.
3. Point of view strategy
In summary,The macro level is generally bearish and fundamental support may also weaken. Copper prices may continue to be under pressure before the Federal Reserve announces its interest rate decision next week.
Operational strategy:The price of copper is expected to fluctuate weakly and it is recommended to place empty orders on rallies.
risk warning:Supply is lower than expected, downstream demand is higher than expected and monetary policy is tightened less than expected
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