Turmoil on Wall Street

Press, 29 March 1980, Page 18

Turmoil on Wall Street

NZPA New York United States stock prices plunged on Wall St on Thursday after a devastating drop in the price of silver, but then rallied in late trading. “What we have is a classic panic in Wall Street,’’ said Newton Zinder, a veteran broker for E. F. Hutton, before the rally began. "People are just dumping stocks at any- price,’’ he said.

The turmoil prompted the United States Securities and Exchange Commission to suspend trading in securities of Bache Group Inc., for 10 days, because of developments affecting the brokerage firm’s commodities futures trading accounts. Bache said some of its customers had been unable to meet margin calls on silver futures. Nelson Bunker Hunt, and four wealthy Arab investors had announced plans to issue bonds, backed by more than S2OOM ounces of silver bullion. The move was seen byj some observers as evidence; that Hunt, who apparently was the largest buyer of silver as the metal soared from

; S6 an ounce 15 months ago,; Ineeded money, and might' [have to sell some of the sil-; •ver if the bond issue could) not be arranged. The price of silver on commodities exchanges fell. $5 an ounce to $lO.BO in New York. The slide in si!-, ■ver, which was selling for; more than $5O an ounce ini January, was accelerated' after the announcement by; Hunt. | Analysts said speculators' feared that Hunt’s selling; large parts of his silver! could depress the price further, and the dropping- silver prices could force investors to sell securities to meet margin calls. In wild afternoon trading, the Dow Jones average of 30 industrials, down 6.15 points at 2 p.m., plunged and was down 25.43 points by 3.30 p.m., but a late rally narrowed the loss.

Losses outnumbered gains by more than 11 to 1 on the New York stock exchange. .Volume totalled 63.68 M [shares, against 37.37 M on [Wednesday, making it [the seventh-largest volume lin exchange history. i The United States dollar rose in value and the price of gold fell close to its lowest level of the year on world markets on Thursday. High United States interest rates continued to make the dollar an attractive investment and it traded in Frankfurt at 1.9200 West German marks, up from 1.8900 on Wednesday night. Gold slipped below $5OO an ounce in Hong Kong. It closed there at $494, and this led to selling when bullion markets opened in Zurich, and London.

The price fell at one point in London to about $470 an ounce, only $lO up on the 1980 low,-which it reached on March 17 when President Carter’s anti-inflation package buoyed the dollar, but it recovered a little later arid was trading at $485.50. On the foreign exchange markets, the dollar’s strength carried it to its highest. against the mark since June. In Zurich it went above 1.8000 Swiss francs for the first time since July,' 1978.

The British pound was worth $2.1700, down from 2.1900. Dealers detected no- immediate impact on the dollar at the news that Iran was raising its oil prices, but they said the oil news was an important factor spurring the afternoon recovery of the gold price. The United States , dollar

rose to a four-month' high of 249.90 yen on the Tokyo foreign exchange market, despite efforts by the Government, and the Bank of Japan, to boost the Japanese currency. The Central Bank sold an estimated S3SOM on the. market today to support the yen, which’ helped the rate to close at 249.60, which was still up from the open-) ing level of 249.20. A demand for dollars in-:

creased as the day wore on following renewed fears among importers that the yen will continue io weaken, because most European currencies have slumped recently against the dollar. During the past six weeks, the Bank of Japan has increased its official discount, rale twice to a record-equal-: ling nine per cent in an effort to curb inflation by. tightening credit, and boost! the yen’s value.