Daily macro update: Retail sales rounding off poor week for US, Japan diving into recession

Nick Batsford, CEO of Tip TV, was alongside Richard Hunter, Head of Equities at Hargreaves Lansdown, when he opened the Tip TV Finance Show to discuss the effects of the Paris terror attacks on the financial market, as well as focus on mining companies and the Japanese and US economies.

The market reacts to Paris

Hunter outlined that people have had 2 days over the weekend to react to the terror attacks before the markets have re-opened this week, and thus this extra time has softened the impact on financial markets. Nevertheless, he concluded that anything tourist related will be hit hard and also USD and Gold plays have increased as defensive bets.

Alarm bells for mining companies

Batsford highlighted that the Bloomberg Commodity Index was set up 15 years ago and the reading stood circa 100. Just prior to the financial crisis hit top gear in September 2008 it stood at 238.7. Today the Index stands at an all-time low of 82.07. That sends unprofitable and uncomfortable alarm bells for mining companies ringing. Breakeven has to surely be around circa 120! Is there worse to come? Hunter added that you would expect mining stocks to start to bottom but it is hard to judge as we still have unclear demand from China and India.

US and Japan economies

Hunter noted that prior to Friday evening in Paris, US retail sales were quite weak, and this reflected the end to a poor weak for data coming out of the US. In terms of Japan, he commented that the BoJ polices haven’t had the desired effect, and the weakness in China has resulted in further problems for the Japanese economy.

Tags: Paris, financial markets, USD, Gold, mining companies, Bloomberg Commodity Index, financial crisis 2008, China, India, US, Japan, US retail sales, BoJ