RECOVERY ON EXCHANGE

Taranaki Daily News, 7 October 1929, Page 9

RECOVERY ON EXCHANGE

TROUBLOUS PERIOD PAST DEPRESSION IN WOOL TRADE BUTTER POSITION STRONG By Telegraph—Press Assn.—Copyright. Australian Press Association. Received Oct. 6, 5.5 p.m. London, Oct. 5. Under the combined influence of the Hatry group collapse and the advance of the bank pate the Stock Exchange has been passing through a period of anxiety and depression, but towards the middle of this week the clouds showed signs of lifting, and just before the close yesterday afternoon remarkable strength suddenly developed in the gilt-edged market, with a sharp recovery, war loan and the funding loan taking the lead. The improvement is attributed to several causes—partly to Mr. Philip Snowden’s sound, reassuring speech at the Labour conference, the recovery of French and American exchanges and the absence of any further withdrawals of gold from the Bank of England, while the announcement that the bank has received one million sovereigns from Australia has assisted sentiment considerably. The arrival of this Australian gold is very welcome, for it has converted a net loss for the week into a net gain of £981,405 and has reduced the net efflux for the current year to £23,815,545. The money position, in fact, seems to be definitely improving. It appears likely that the Bank of England will receive the bulk of the shipments arriving from South Africa, amounting to £1,800,000 in the next two weeks. There are also 350,000 sovereigns en route from New Zealand and 200,000, possibly more, are coming from Buenos Ayres. Consequently the people are beginning to think that a further rise in the bank rate may be obviated, but while the gilt-edged position is improving other sections of the Stock Exchange, notably industrials’, are still overshadowed by the Hatry crash, and fears of further trouble have caused much liquidation, due partly to pressure by the banks on the brokers who had lent over-generously on the Stock Exchange collateral. SEVERE FALLS IN STOCKS. Severe falls occurred in several groups, notably the Rothermere group of newspapers, in what is known as the Horne group, including the Cannalite Trust, and in the Berry group. An elaborate statement by Lord Rothermere, widely advertised in the newspapers throughout the country, caused a sharp rally, but this was not fully maintained. Shipping shares were also affected, especially the Royal Mail Steam Packet and allied companies. A decline commenced in July when differences arose between the chairman, Lord Kylsant, and his brother, Viscount St. Davids. Rumours of possible reconstruction have been denied, but uneasiness still exists. Commenting on the wool position H. Dawson and Sons write: "Seldom in recent years has there been a more cautious and less confident spirit.” Merino wool is at a reasonable basis but trade is slow and old stocks are still burdening some topmakers and merchants. Business is still being seriously retarded by this general lack of confidence. It is strange that cheap wool, instead of encouraging the demand, seems to be having the opposite effect. Keenness to keep the machinery employed, however, led to such drastic and continuous reductions in quotations for tops and yarns that, instead of encouraging new business, they frightened off the buyer, who finds his cheap retail purchase of one week dear next week because of the lower offers. Consequently, dismal hand to mouth business and utter loss of confidence are the main features of the market. It is surprising how strongly Continental buyers, particularly. Alsace and Germany, have operated in Merinos, while the home trade has been extremely reserved. Moreover, as usual, Bradford quotations for Merino tops have been below the London parity. Consequently, while Continental buyers apparently have more faith in the position the basis in the Home markets appears doubtful and prices for tops and yarns erratic. Any hopes that survive are based on the fact that the actual consumer has been working on very light stocks for come time, and with any improvement in the demand healthy, legitimate trading should quickly develop. The butter position continues favourable and holders are taking an optimistic view. A drought on the Continent has so seriously curtailed production that reserve stocks are being depleted. Early shipments of butter from New Zealand are being diverted to Canada, while in Australia the season appears to be somewhat backward. In these conditions prices are expected to harden further. It remains, however, to be seen whether the consumers will pay the higher retail price the advance will necessitate.