Short-term market sentiment is bearish, and copper prices have limited room to rebound

Abroad, the recent sharp decline in U.
S.
stocks due to the rise in U.
S.
Treasury interest rates has been bearish for commodity markets, with the Dow and S&P 500 falling more than 4% in two days, and the market has fallen into a state of "extreme fear", and the colored sector has also been dragged
down.
J.
P.
Morgan expects institutional investors to short-sell volatility while under-hedging, high leverage positions for retail investors, and a slowdown in share buybacks, U.
S.
equities still have some vulnerability, and the failure of short-term U.
S.
stocks to stabilize still has a bearish impact
on commodity markets.
As the sharp decline in U.
S.
stocks reflects that the U.
S.
economy is not as strong as the market expects, the Fed may slow the pace of
interest rate hikes.
According to Bloomberg, Fed Vice Chairman Randal Quarles recently said that the Fed's interest rate hike policy should be as predictable, gradual and transparent
as possible.
Overall, further attention needs to be paid to U.
S.
stocks in the short term, and uncertainty over interest rate hikes has also cast a shadow
over the copper market.

Domestically, the downward pressure on the domestic manufacturing industry increased, and the manufacturing purchasing managers' index (PMI) in September was 50.
8%, down 0.
5 percentage points from the previous month, and the growth rate of the manufacturing industry slowed down
.
In addition, the Caixin manufacturing PMI data in September was 50%, a 16-month low, the fourth consecutive month of decline, and the downward trend accelerated
significantly.
The growth rate of fixed investment showed a decline, and fixed asset investment from January to August increased by 5.
3% year-on-year, lower than the expected 5.
6% and the previous value of 5.
5%.

As uncertainty in Sino-US trade negotiations remains, domestic officials continue to release stimulus policies to stabilize the domestic economy, in which infrastructure construction may continue to increase
.
Recently, the National Development and Reform Commission and relevant authorities have established a coordination mechanism to coordinate and solve major problems
in the work of making up for shortcomings.
At the same time, monetary policy has also continued to increase, and People's Bank of China decided to reduce the RMB deposit reserve ratio of large commercial banks, joint-stock commercial banks, urban commercial banks, non-county rural commercial banks, and foreign banks by 1 percentage point from October 15, 2018, and the medium-term lending facility (MLF) due on the same day will not be renewed
.
In general, the market's expectations for domestic infrastructure increase, monetary policy easing and corporate burden reduction still exist, and it is necessary to pay attention to changes in domestic policies in the later stage
.

In terms of inventories, global copper inventories showed a downward trend
.
LME copper stocks fell by 20,200 tonnes to 166,600 tonnes
as of Oct.
12 from a year earlier, Wind data showed.
Domestic copper stocks increased by 13,705 tonnes to 125,700 tonnes
.
From the liter discount data, LME copper spot premium expanded
.
As of October 12, LME spot copper was trading $17/mt to three-month copper, up $23/mt
from the same period the previous week.
Domestically, the Shanghai copper spot market has maintained a slight discount recently, and domestic inventories have remained low, reflecting a certain tightening trend in the supply of goods
.
In general, the current low level of global copper inventories has formed a certain positive support
for copper prices.

In summary, short-term market sentiment is a drag on copper futures prices, coupled with the uncertainty of the global macro situation will limit the rebound space of copper prices, operationally, industrial customers can consider selling high prices around 51,000-52,000 yuan / ton to lock in sales profits
.