LONDON MARKETS

Otago Daily Times, Issue 22832, 17 March 1936, Page 9

LONDON MARKETS

NO TRACE OF PANIC DOMINION ISSUES FIRM WOOL INDUSTRY BRIGHTER (United Press Association) (By Electric Telegraph—Copyright) LONDON, March 14. The pro-Germanism of many city business men in the present crisis is the natural result of Britain’ investment policy before Hitlerim. Millions of British capital are at present locked up in Germany owing to the Nazi Government’s exchange and other restrictions. Investors, while realising that their hopes of again seeing their money are slender, are naturally opposed to any policy which might destroy them altogether. Britain’s financial stakes in France cannot similarly be considered. The recent £40,000,000 loan to France was secured on the Bank of France’s undertaking to maintain for the duration of the credit balances in sterling and gold in London equal to the outstanding amount of the loan. The city is also influenced towards Germany by the Bank of England’s notorious admiration or Dr Sehacht’s financial abilities. It remains to be seen whether Dr Schacht’s reported estrangement from Herr Hitler will influence the Bank of England’s attitude. Lloyd’s premium for war risk for any of the nine principal European Powers for three months is five guineas per cent., but the rates are expected to rise, not because the risk is considered becoming worse, but because the market in such speculative insurances is most limited. The rate of half a crown per cent., accepted to cover a large amount of merchandise to Strasbourg against war perils, is more representative of the market's feeling. The Economist declares that the behaviour of the markets afforded reassuring evidence that London continues to possess qualities appropriate to the international financial centre in a time of crisis.

Though considerable selling developed late in the week-end there was no trace of panic. Gilt-edged foreign bonds declined appreciably, but dominion issues were firm. The heaviest falls were recorded in industrials, many of which lost two months’ gains. The future course of the markets cannot be predicted, but it is generally agreed that if the international situation clarifies the strong undertone evident last week will lead to rapid recovery. Commodity markets natural!” swung the opposite way on the Stock Exchange, but the sober determination to await events prevented spectacular developments. The downward movement in foodstuffs continued. Butter is especially irregular, Australian choicest salted being quoted as low as 83s during the week. This weakness is- due to continued lack of support from the general trade, which seems to lack confidence generally. Tooley street merchant, consider that buyers will at least in die immediate future operate on a hand-to-mouth basis, ns the result of which there is no prospect of appreciation. Supplies of meat at Smithficld continue in excess of requirements, and prices have cased. The opening of the wool sales justified expectations. A well-known broker, commenting on the growing shortage of supplies, declared that the sheep was nearer the machine than ever. The Financial Times reports an enormous demand for woollen manufactures, especially cheaper qua’ities, wh'ch are regaining their popularity at the expense of rayon. Unemployment in the wool trade was halved during (ho year. The Associated Press Association understands that the pace of the London sales was set by the Continent, especially Russia, which is taking all qualities at good prices. Bradford is buying considerable weights of crossbreds, but little merino, presumably because topmakers feel it impossible to make higher prices. The trade is speculating how far the international situation is responsible for the present activity, but it is agreed that merinos are unlikely to weaken for some time. The majority of buyers appear not to be influenced by politics, but guided simply by the healthy statistical situation.