COMMERCIAL SUMMARY

Wanganui Chronicle, Volume 74, Issue 115, 18 May 1931, Page 7

COMMERCIAL SUMMARY

BRITISH TRADE REVIEW THE REDUCED BANK RATE AN IMPROVEMENT EXPECTED [By Telegraph—Press Association—Copyright] Received Alay 17, 5.5 p.m. LONDON, Alay 16. The financial event of he we ; lias been the reduction of the bank rate to the lowest level since J 909. This was generally expected when vbe New York rate was reduced to 1$ per cent last week, but came rather sooner than was anticipatd. Following the New York reduction, tho action of the Bunk et England is regarded as an indication of the cooperation of international bankers to help the world trade recovery by cheaper money. It is not expected that the reduction will have much immediate effect, as money rates in our open market are still well above those of New York, i’aris, Amsterdam and Brussels, but it is welcomed as a sign of better times ahead.

The Stock Exchange account just concluded, is described as one of the worst for a long time. The only bright spot has been the giltedged market, which remained steady while all others were depressed, and moved upwards on Thursday when the bank rate was reduced. But all other sections have been in the slough of despond, with persistent heavy liquidations and falling prices. The weakness of industrials is due to the low value of commodities and poor returns by numerous companies, and reduced dividends. An especially weak section has been the home ilways, which relapsed to new loan -ccords on heavy selling from all quartcis. Foreign sccurties have also been considerably affected. As an illustration of the nervousness of the markets, one financial writer says: “A dealer in a certain line of Dominion stocks found the price go against him two points in an hour because it was believed he wanted to sell. On the other hand, a broker buying £5OOO worth of foreign bonds, put. the price up three points. In ordinary times such a transaction would not have moved the price.” The Morning Post’s financial editor, says: “It is impossible not to be impressed with the excellent manner in which the banking community in Australia has comported itself throughout the crisis from the commencement. The Commonwealth Bank, outside the banking institutions, has not spared pains to show readiness to co-operate with the Government in meeting the difficulties of the situation, and only when the financial policy of the Govenment has been manifestly in direct conflict with sound principles has he Commonwealth Bank been obliged to fulfil its duty in uttering necessary protests and warnings. Even these warnings, though sufficiently impressive, appear to have been uttered with a scrupulous regard for the necessity of the banks keeping clear of anything like party politics.” The Wool Position Discussing the wool position, Afcssrs 11. Dawson and Sons write: “The periods till the July sales will be awaited with intense anxiety apd also strong hopes for better support from the piece goods end of the trade, which for the past hr’f-year has shown a poor return for worsteds, although the dress goods trade, particularly the woollen section, has not done so badly. The woollen trade generally has given good support during the past scries, especially for Alerino, lambs and short wools, also clothing slipes. The latest figures indicate that the machinery of activity continues good, and employ ment is improving. Wood offerings will largely bo focussed on London for the next four or five months. We arc well ahead of absorption in Alerino wools compared with recent years. Consump tion of finer grades does net she.* any sign of diminution. The thicker counts uf worsted yarns are partially respou sible for this, and values are still rea sonable, being about 12J per cent bo low the average value of 1913-14. It is difficult to estimate the prospects of the coming cloth season, owing to the uncertain, if not the parlous position of the export trade. but all reports agree that stocks of clot., arc abnor mally low and the shelves are more empty than for years past. The main causes for anxiety seems to centre on f i unsatisfactory credit position, thu many buying markets, the varying ex change rates ..nd the difficulties of the export trade. While komc unemploy ment has seriously reduced the spend ing power, the 2i per cent rate will slowly and surely have a beneficial in fluence. Consumers generally are lightly stocked and consequent in the finer grades the position is healthy. We are steadily emerginb from the niorass.”