MONEY AND MARKETS

Otago Daily Times, Issue 21018, 6 May 1930, Page 9

MONEY AND MARKETS

; INDUSTRIAL STOCKS DULL. LESS DEMAND Ft)R BUTTER. iWOOL PROSPECTS FAVOURABLE. [!• (United Press Association.) * ')• (By Electric Telegraph—Uopyrlght.) LONDON, May 3. The reduction in the bank rate came fts.a surprise; for the position of the sterling-, exchange did not justify a move, all the recent exchange movements having been. against.. sterling; consequently there is some divergence of. opinion con- ■ corning the cause which induced the batikto lower the rate. In some quarters, it is suggested that the reduction, coming as- it did practically' simultaneously with similar movements in New York and ■ Paris; was the result of the Central Bank operations and pointed to the preparation the ground - for the impending reparation bond,-issue. Another theory propounded. is that, .the. reduction was made to facilitate; a big conversion loan here. The latter does not seem a very probable'suggestion. The'Morning Post’s financial editor writes :- “ Wg do not believe' for. a. .moment 1 that 'the present Occasion .could be described;as a suitable, or even a possible one for a large conversion operation, for the Budget has made far'too profound ah impression for 1 bat event to - be- -possible -pn lines profitable to. .'the . Exchequer, though, of, course, there is always the possibility of smalt conversion operation's arid of the Governmerit’s dealing with' the 4 per cent.- tqx . compounded- loan-, which can now be repaid' at any.'time on' a few months’ notice.” The immediate effect of the reduction in rhte On the Stock Exchange was a spectacular advance of almost* all gilt-edged securities, the reduction being regarded as an indication of the-proa- , pect of a long period of cheap money, irid it brought a number of buyers of high-elasa securities into the market; and dealers in these were apparently' caught short. Unfortunately dominion stocks were not in favour, for they show little improvement. So far activity has been ■confined to British' funds,' and 'moat of the 'other markets are still depressed, industrial stocks’ being especially dull. .The .reduction iri the bank rate <caine too late to affect .cash applications. for the Queensland loan, the list for which clOsed on April 30, but it is, expected to help the conversion loan, which closes ou May 6, and a successful result-. O- thd issue is generally/ anticipated; ‘The New Zealand new 5 -per cent/-loan ; Of £5,600,000 at 99, which .will* jW/adVer-' tised to-morrow, will no .doubt benefit from-the,reduction, and it is likely to igo well. It is repayable in 1949; arid fields' the investor IQls 8d per cent/ The existing New Zealand 6 per cent, loan redeem-, able in 1946 is quoted at just pver .102,, but this price includes four months’, interest, ‘ V, ‘ , V. /■' .This demand for butter has-not been maintained, the advance iri’prices having cheeked operations'. ‘ According to/the Grocer, the advance was, brought about by.speculators, some of whom were averaging down the cost of high-priced stock, and others who had been caught on short B£il,es. The Grocer adds: A review (of. the. situation is again necessary in order to inspire confidence. This can be done only by sellers meeting the buyers in. a friendlier way, for . with large European Supplies now in sight - it would not 'be wise ' to foster extravagant prices.” ' , CANADA’S BUDGET. The Canadian Finance Minister’s Budget statement announcing increased preferences to British: goods has been received., with satisfaction Jjpje, byt it Jt likely ;to meet w^h^i''different .reception in Australia and New Zealand, for the Minister’ announced an increase in all tariff / rates on" butter, especially ..'mentioning ari increase in duty bn New .Zealand butter from 1 cent to 4 cents per lb. Interviewed on this matter, Mr W/; A. Ibrris (chairman of the New Zealand 'Dairy Produce Board) stated that the increase must'have a, serious effect "on the rapidly-growing, interchange of cpmriiodities between Canada and New Zealand. Re was strongly of the opinion that it . would lead to a corresponding increase of duties on Canadian goods entering New Zealand. He added that with tariff barriers arising in many countries against New Zealand ? s primary, products any retaliatory steps the New,' Zealand Government might take would-have, the backing of -the whole . community in the Dominion/ - ; ; • I - . The prospect of the next wool-sales, which open on May. 13, is . generally regarded favourably. The Economist: says: “It is expected that values will firm, ■with a possible slight , advance in certain classes. There is no doubt whatever that . but for labour troubles -a substantial improvement iri trade would have been seen during the interval compared with the previous -months. Even now "there ai-e indications of a very encouraging character, and as soon as the dispute is .settled ari effort will be made to regain the lost ground. Unfortunately the best time of the year for the execution of summer repeat orders is passing without any opportunity being provided for home export orders to be dealt with.”