MONEY AND MARKETS

Evening Star, Issue 22383, 6 July 1936, Page 7

MONEY AND MARKETS

LONDON’S COMMERCIAL REVIEW BUDGET DEFICIT STARTLES CITY WOOL PRICES EXPECTED TO BE DOWN Press Association—By Telegraph—Copyright. LONDON, July 4. The Chancellor of the Exchequer’s announcement on the Budget deficit startled the City. There is no precedent for such an announcement so early in the financial year. Contemplated inatpased expenditure, believed to be atlfeast £5,000,000, which will have to be met from borrowings, brings sharply home to the public the tremendous cost of rearmament, arid lends special significance to Mr Baldwin’s denunciation of the “ mad folly ” of driving Europe to such ruinous expenditure on war material. NEW ZEALAND LOANS. Mr Neville Chamberlain’s statement was too late to influence the gilt-edged market, which was indirectly affected by the tactics of Mr Savage, whose latest criticism of the financial Press raised uneasy memories of Mr Lang. Many City business men are so touchy on the subject of the sanctity of contractual obligations that any suggestion that they should be varied will always raise a storm of criticism. New Zealand’s excellent standing and record, however, ensure that Mr Nash will be sympathetically received provided there are no attempts to force conversion upon the bondholders. The ‘ Economist ’ points out that the increased cost of New Zealand’s debt service is largely due to the deliberate depreciation of the exchange. Both parties entered upon a loan contract on money terms. A revision in favour of the debtor presupposes the right of similar revision in favour of creditors if the value of interest and principal in terms of commodities fell. The ‘ Financial News ’ hopes that Mr Savage will not risk the closure of the London market to New Zealand for the sake of a small debt saving. He naturally asks for relief, which the bondholders will naturally refuse, and there everyone hopes the matter will end. COMMODITY MARKET, The commodity market enjoyed tho most • active week for some time, notably in respect of the spectacular rise in wheat, due to most unfavourable reports from tho United States. The world has now, for the first time since 1928, huge surplus stocks to draw on should the harvest be a partial failure. There is a danger, however, that the rise may be overdone. The United States crop is estimated at 140,000,000 bushels, and it should be sufficient for domestic requirements, though it may require Canadian at the end of tho year. Heports from Canada are unfavourable, but the crop should be larger than that of last year. The decline in tin has continued despite favourable statistics, the market being absorbed in the progress of negotiations in connection with the new restriction scheme. The Siamese Foreign Minister ‘ has demanded a quota of from 18,000 to 20,000 tons, which is most excessive. BUTTER AND FRUIT. There is little doing in butter, and fluctuations around present values are likely to continue. Arrivals of apples have markedly declined, but offerings are still in excess of the market requirements, receivers retaining parcels of Sturmers and other hard vax-ieties, when condition is suitable. Offerings will consequently be lessened, with prices, though still unsatisfactory, slightly incf eased. Heavy rains affected the gathering in of the cherry and strawberry crops in England, lessening the competition. Most of the apples offered are of a very ordinary quality. There is little business in pears, supplies of which are light. WOOL. Wool traders are reluctant to forecast tfie course of the wool sales terminating on .July 17, four days earlier than last year. The volume and direction of the demand are problematical. If anything happened to create a better demand and higher prices offerings would be quickly augmented from stocks held in London, though such stocks are not substantial. France is expected to operate considerably, but Italian and German buying is improbable. Leading traders expect the best merinos to open at par to 5 per cent, lower, and average meriqps 5 to 74 per cent, lower. Fine cross-breds may be 5 per cent, down, with lower sorts probably unchanged as the demand has been encouraging for some time.