TRADE AND FINANCE

New Zealand Times, Volume XLVII, Issue 10961, 25 July 1921, Page 5

TRADE AND FINANCE

REDUCED BANK RATE NO MARKED EFFECT ON MONEY MARKET. FURTHER FALL HOPED FOR. Bv Telegraph—Tress Assn. —Copyright Australian and -N.i,.Cubic AssoclaUuU. (Received July 24, 0.0 p.ui.) LONDON, July 23. The reduction of the bank rate oaused a more cheerful tone on the Stocs. Exchange, with improved quotations for gilt-edged securities, but those who anticipated an increase in business have ■ been seriously disappointed, for all sections remain dull, especially industrials, to which cheaper money might have been expected to givo a stimulus. Optimists are looking forward to a further reduction to 5 per cent, before the autumn demand for money commences. If a reduction occurs we may see a recovery of activity, but meantime there is no indication that investors are departing from their recent attitude of locking up money in fixed interest securities rather than speculative investments. A feature of the Stock Exchange is the firmness of the recent gilt-edged issues, many of which were at a discount, but are now quoted at substantial premiums owing to the Treasury’s embargo on new trustee issues while Government new bonds are under offer. Interest in' the foreign exchange market centres round the dollar. The recent slump in American exchange is attributable mostly to speculative buying in dollars here and selling in sterling at New York. This is likely to increase the dollar supply in the autumn, when the trade demands will be strongest. STRONG RUTTER MARKET ANTICIPATED. The prospects for the forthcoming Australian and New Zealand butter season appear very favourable. Traders anticipate a strong market till March. Owing to the drought, the English output has ceased exceptionally early, compelling Devonshire, Somerset, and other dairying centres to buy Government butter instead of marketing their own. Similar conditions have caused a shortage of American supplies, and if the exchange position remains as at present America is likely to buy large quantities in the near future. The drought in Europe has forced France, Germany, Switzerland, Norway, and Sweden to buy Danish butter. Even Austria and Jugo-Slavia are finding money to purchase Danish butter. Some Continental buyers are also - taking Australian and New Zealand butter from Bri-j tieb Government Btocks. Several hundred tons have already gone to the Continent. It is estimated that the Government stocks are now about 35.000 tons, which, are likely to ibe exhausted by the middle of October. After that we must be almost entirely dependent on sunplies from Australia and New Zealand. CHEESE OUTLOOK GOOD. The outlook for cheese is equally satisfactory. The recent set-back is largely attributable to the heated condition of one or two recent arrivals from New Zealand and Canada, which were offered at low prices, but the effects of the drought here are permanent. No matter how much rain falls now production must be far below requirements, especially as the heat caused a largely-increased consumption of cheese in preference to meat. WOOL MANUFACTURE. Yorkshire wool manufacturing trades are not showing much sign of a revival, though a few mills are full time, principally to work off arrears. No general increase in activity is possible till the new orders arrive on a much larger scale, but some improvement may be expected from the lower cost of production, due to the revised combing tariff and the reduction in wages, as some wool has been held up pending the adjustment of combing charges. Germany is a serious competitor in this branch of the industry. Most of the German combing factories are busy, and are fully booked up for half a year. French mills are also active, while a large number of Bradford plants are idle. Germany is also buying largely tops and noils from France and Belgium. Messrs Kreglinger, of Antwerp, report that Germany has been the dominating factor of the top market, and is able to quote comparatively low prices for dress goods. '