EFFECT ON STOCK MARKETS
New York Rallies After Fall (Rec. 11.45 p.m.) NEW YORK, Apl. 8. The New York stock market, which has been under heavy selling pressure for several days as the result of the communist peace gestures around the world, rallied yesterday. Offerings diminished, prices turned firmer, and sales dropped to 2,500,000 shares from 3,050,000 on Monday. The market on Monday suffered its hardest fall since the week the Korean war began in June, 1950. Yesterday resistance to the decline soon became apparent after early selling, and railways, steel, motors, coppers and oils were higher. In Toronto, stock market prices v/eakened as investors adjusted their holdings to the possibilities of peace in Korea. Industrials recovered slightly from a mid-afternoon low, but showed a loss of more than three and a half points on the exchange index. The losses were the sharpest in about a year. London More Phlegmatic The “Daily Telegraph” and the “Financial Times” say the latest moves towards peace in Korea, which have already been reflected in a sharp fall in Wall Street prices, are the predominant influence in London stock markets. But, following the traditional pattern, London’s behaviour is much more phlegmatic than New York’s. The “Financial Times” says the markets are still in the initial stages of adjustment to peace prospects. Commodity shares continue to follow free commodity prices down. Industrials, dull and gilt-edged, are still being viewed as a -haven for safetyfirst buyers. At this early stage, when the prospects of peace are still difficult .to assess, markets are hesitant. First price adjustments have taken place with only a small volume of share changing hands. In the last week spot rubber has fallen by a penny per lb, tin by £95 a ton, lead by 102 s 6d and zinc by 67s 6d. The “Financial Times” says: “Prices are on the move everywhere for precisely the same kind of reasons as operated in 1950. Then, certainty that rearmament would come, saw commodity and equity prices rise and Government securities fall. Now the assumption that rearmament will be slowed down is causing a corresponding anticipatory recession. Commodity and equity prices are falling and Government securities—and Russian bonds —are rising. Rearmament May Continue “In 1950 the logic of the markets turned out to be not exactly faulty, but wrong in degree. The logic on which the markets are basing themselves now may turn out to be equally approximate. Peace in Korea has proved out of reach so many times that no-one can be sure till the last shot has been flred. Even if peace is signed, it does not necessarily follow that the Western alliance will take that alone as a sign that rearmament can or should be slowed down. It may be concluded, on the contrary, that it is Western strength that is producing results.”
The London “Daily Mirror” says: “Up go hopes of peace in Korea and down go the shares on Wall Street. The markets in London and Europe are sensitive too. It is a reminder of the sad fact that industry in America is heavily dependent on defence production. A slump there would have world-wide effects. But industrialists on both sides of the Atlantic predict that Korea apart, the main defence programme will go on for a very long time.
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Press, Volume LXXXIX, Issue 27010, 9 April 1953, Page 9
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549EFFECT ON STOCK MARKETS Press, Volume LXXXIX, Issue 27010, 9 April 1953, Page 9
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