GLOOMY MARKETS

Evening Star, Issue 22347, 25 May 1936, Page 9

GLOOMY MARKETS

STOCK EXCHANGE DULL RESULT OF CHANCELLOR’S WARNING BUTTER PRICES RISE Press Association—By Telegraph—Copy right LONDON, May 23. Gloom appears to have settled on the markets, accentuated by Mr Neville Chamberlain’s warning that public expenditure is likely to continue on the increase. Gilt-edged securities have not the stamina to resist the depressing speeches from the Treasury bench, consequently they have shown fractional declines. The persistent slipping of corporation stocks and the chilly reception accorded recent loans are duo to an undercurrent of belief that the cheap money period is ending for investors. The * News-Chronicle ’ urges the Treasury and the Bank of England to check the tendency to higher interest rates and points out that the supply of bank money has not increased in 18 months to keep pace with increased production and the rise in the price level.

The general dullness has spread to industrials. The traffic index of Cable and Wireless shows a decline as compared with last year, offsetting the favourable impression made on accounts previously cabled. Some selling followed Mr J. C. Denison-Pender’s intimation that there was no present prospect of a capital rearrangement, including provision for preference arrears. There is little business in other industrials, many of which have been slightly marked down. Investors are keeping out of the markets, preferring to wait and see how the cat jumps. Nervousness of the franc persists, and little business is transpiring.

The ‘ Economist ’ expects that the drain on funds from France will recommence after the present French holidays, the authorities leaning more in the direction of exchange restrictions, in which the Bank of England is unofficially co-operating, but it is becoming more difficult than ever to predict the short-term future of the gold bloc. BUTTER. Better news for Australia and New Zealand is the sustained activity in butter, the most favourable feature of which is the strong forward position. The rapid decline in Australian and New Zealand gradings is the principal reason for bullishness. Another factor is the backward production throughout Europe on account of the cold spring. Most buyers have been running on light stocks. The rise in prices resulted in a scramble for supplies, which are inadequate to meet the demand. Some Tooley street dealers, however, are wondering whether the appreciation is not too steep and sudden. If the retail price rises above a shilling a pound consumption is likely to suffer. Cold store stocks are beginning to increase, and the May, June, and July total arrivals are likely to exceed the consumption—approximately 1,000 tons a week. It is doubtful whether the trade can absorb the surplus except at a price yielding a good margin of profit if retailed at Is. CHEESE. Cheese continues firm, though it is overshadowed by butter. A further appreciation is expected in the near future. Canadian production is backward, and there is little offering. METALS. Spot tin fell below £2OO a ton for the first time in three years. Other base metals have declined. The International Tin Committee will meet on May 26 to decide the quota for the third quarter. Despite Bolivia’s desire to remain unchanged, it is expected that it will be slightly increased. Copper is lower, despite the improved statistical position owing to the impression that consumption has recently fallen. FRUIT. Although fruit prices are still low in consequence of heavy arrivals, the market is tending to a firmer tone.