BRITISH MARKETS

Dominion, Volume 29, Issue 134, 2 March 1936, Page 9

BRITISH MARKETS

Japanese Outrages Find Them Vulnerable UNDERLYING OPTIMISM By Telegraph.—Press Assn.—Copyright. (Received March 1, 6.30 p.m.) # London, February 29. The Japanese outrages found the markets already vulnerable and a wave of profit-taking had weakened most securities before the news from Tokio arrived to make investors still more cautious about increasing commitments. Japanese bonds declined up to three points. Chinese issues were also affected owing to the uninviting prospects in Mongolia and elsewhere. Mr. Baldwin’s hint that he would not permit excessive profits in armament and aircraft shares ended an orgy of speculation in these stocks, and industrials generally were affected. Courtaulds’ disappointing report as to reduction of profits in a major industry which had achieved a handsome increase in production proved a shock to the city.

Nevertheless, there is a strong undercurrent of optimism on long-term prospects of industry. Board of Trade indices of industrial activity showed notable increases, especially in respect of manufacturing, the index for 1935 rising to 116.9, compared with 108.5 in the previous year, the highest production recorded since the index was first compiled in 1927. Similarly, the index for the December quarter of 1935 represents the greatest production for any quarter about which information is available.

The “Economist” records a decline in imports of raw materials, largely due to hectic restocking at the end of 1935. It adds that most countries have experienced a measure of recovery which is reflected in the index of world industrial production, which had risen to 113.2 in November, 1935, compared with 95.4 in November, 1934. Business activity, however, continues to deteriorate in Germany, contrasting with France,. Scandinavia and the majority of Central European countries. There are no signs of improvement in Belgium and Holland. Sir Josiah Sramp, at the annual meeting of the London, Midland and Scottish Railway, described the prospects of maintaining and even improving British industry as hopeful, provided building activity was continued. Shipping Problems. Sir Vernon Thomson, in his presidential address to the Chamber of Shipping, emphasised the importance of Britain and the Dominions maintaining (In efficient mercantile marine, stressing the fact that Britain normally had only eight weeks’ food supplies. Sums allocated for the maintenance of the mercantile marine were a trifling price to prevent disintegration. Effective, tonnag" was only 14.000,000 tons gross, compared with 16,000,000 in 1914. The share foreign vessels have taken in United Kingdom trade has risen steadily from 34.5 per cent, in 1929 to 41.8 per cent. last year. The Associated Press understands that when the Pacific position is considered in London, only Government representatives will attend the conferences. Shipping interests, however, will supply all information required. Meanwhile they are reluctant to make public statements. The commodity markets are devoid of interest. Business in Australian wheat is desultory, and requirements seem satisfied. The damage to the New Zealand crop opens the possibility of a better demand for Australian, but the quantity required is unlikely materially to affect the international position, which is slightly improved on further adverse European and American crop reports. Butter Market Puzzling.

The butter market remains puzzling. The extreme discrepancy between prices of Australian and New Zealand and Continental descriptions is unreasonable. The North of England, how’ever, still insists on Danish, which is at present in short supply, although Australian and New Zealand is steadily gaining a stronger foothold. Traders are hopeful that the present high price of Danish will help to destroy a widespread prejudice. The statistical position of the market remains sound. Although stocks in cold stores slightly increased in January, they should be considerably reduced by the end of March with Dominion arrivals in the next few weeks below current requirements.