DISTURBING ELEMENTS

Evening Post, Volume CXX, Issue 127, 25 November 1935, Page 14

DISTURBING ELEMENTS

INYESTMMT MAKKET

CLOUDS OVER EUROPE

(By Telegraph.—Press Assn.—Copyright.) ' '(Received November 25, 9 a.m.)

LONDON, November 23,

The London Stock Exchange has had a;somewhat disappointing week. The return of the National Government.induced high hopes that there would be a burst of activity from the investing pubjic, but this has not materialised, lor, Various adverse factors have arisen to render caution necessary. First came the decision of coal miners in, favour of a strilfe, which if carried'out will mean.a serious dislocation of the country's trade. Then the imposition of the first sanctions against Italy was followed by. Signor Mussolini's threat of reprisals. Additional Unfavourable incidents were the development of fresh friction between Japan and China, and disturbances in Egypt, and last, but not least, the financial troubles of France. In- the face of these disturbing elements it is not surprising that the stock markets became subdued,- with lew buyers operating. ' Values generally show a shrinkage, the falls in. British funds. during the week varying from one-eighth to three-quarters. One satisfactory feature, however, is the .strength, of the Dominion stocks, especially of Australian Governments, all of which have fully maintained iheir. positions and some have even advanced. ■-..-. STABLE PRICES. : Ttie current issue of the Westminster Bank's, economic review contrasts the stability of prices in Great Britain during the past four years with the fluctuations in other leading countries. The range of movements of wholesale, prices in the Board of Trade's index,, since 1931, when Great Britain left'the gold standard, has not exceeded 8 per cent.; whereas over the same period the comparable index of prices in the United States shows a range of 29 per cent.,..and France of 32 per cent. An -important result of the relative stability of the British cost of living has been the freedom from serious labour disputes. ;■■•., DEMAND EXPANDS. The review concludes: "Conditions today are fundamentally' different from those.of 1931. Then prices of most commodities were weak; now the tone is much stronger, stocks having been reduced, and demand haying expanded., VSp far, the appreciation of cpmmodrty values has had little to do with the ■Government policy, but the maintenance: of ample - supplies of cheap money has resulted in substantial expansion of deposits in the commercial banks. Bases of very considerable expansions in credit .have thus been created, and if commercial confidence can rid itself of the economic and political'fears which still cramp it, so that*.more use may be made of the credit'available, then prices are likely to be materially affected, hence any disturbance of the relatiye stability of prices which we have enjoyed now for four, years is much more likely to be in "the nature of a rise than of a fall."