REACTION IN STOCK MARKETS

Timaru Herald, Volume CXLII, Issue 20493, 11 August 1936, Page 7

REACTION IN STOCK MARKETS

NERVOUSNESS IN EUROPE COMMENT ON LABOUR’S EXPERIMENTS United Press Association—By Electric Telegraph—Copyright (Received August 10, 5.5 p.m.) LONDON, August 9. The city, which was first inclined to ignore the Spanish situation is now becoming apprehensive of possible international complications. The presence of German warships and Mussolini’s chilly attitude to the French note are considered ominous. Heavy sales of francs and a marking down of German bonds reflected the nervousness which spread ti most home securities. The Bank of England note issue reached a nevz record of £454,400,000, making an increase of £42,500,000 on the year. Only a small proportion therof is attributed to improvement in industry. The bank return also throws light on the authorities’ determination to continue cheap money, although recent gold purchases have fully offset the deflationary effects of the huge note efflux. The authorities are continuing-to reduce security holdings, indicating that they are resolved to maintain credit on an even keel. New Zealand Affairs The “Economist” comments on Mr Savage’s experiments, stating: “It is one of the advantages of democracy to be able to indulge in the luxury of a reformist Government during prosperity and to return to the discipline of conservatism during a depression. M!r Savage’s Government is engaged in the distribution o. the fruits of the recovery which the conservative National Government secured. The budget is an orthodox recovery one, enlivened with a dash of distributive taxation. Provided recovery continues, as seems probable, the modest increase in direct taxation should be bearable. Guaranteed prices for butter and cheese were evidently fixed with great caution. The success of the Government’s policy wholly depends upon the maintenance of the price of New Zealand exports, and as long as world recovery maintains these prices New Zealand’s reformist experiment will continue under the most favourable conditions. Commodity Markets Wheat enjoyed an active week, exceptionally large trade being done in futures, but buyers were quick to take profits. There was little interest in other commodities with the exception of zinc, which slumped heavily on reports that cartel negotiations had broken down. The Spanish trouble has probably influenced the breakdown. There is no hope of an immediate resumption of negotiations, and the next step presumably will be for British producers to request a higher tariff. There is little doing in apples. Butter Slightly Firmer Butter is slightly firmer after a quiet and dragging holiday market, rhe Continental market will probably have a strong bearing on the future course of values, as America, with a big shortage of production, is taking an interest in Dutch, Polish and other descriptions, and may shortly be a heavy buyer. Britain’s notice to terminate the Argentine meat agreement does not imply that negotiations have reached a deadlock. The Argentine is considering the British proposals and has devised an agreement including a levy of 2d per pound on Argentine beef, with a guaranteed quota for imports for three years.