MONEY MARKET

Dominion, Volume 14, Issue 281, 22 August 1921, Page 5

MONEY MARKET

LONDON STOCK EXCHANGE DEPRESSED BETTER OUTLOOK FOR THE AUTUMN TRADE RECOVERY PREDICTED By Telegranh—Press Association —Copyright (Rec. August 21., 5.5 p.m.) London, August 20. Ihe Stock Exchange has had a severe fit of depression the last few days. The gilt-edged market is suffering from the unsatisfactory position of tho national finances and the indefinite outlook pf Irish affairs, and declines are apparent in most securities. Ona bright spot is the colonial corporation market, where a fair demand is apparent at late prices. Industrial shares have been influenced by the fact that many companies have either passed or reduced their dividends, consequently many shares have been marked down. A distinct weakness has developed wherever selling pressure is Oils have been particularly bad; at one timo a panic appeared likely, owing to the avalanche of selling. There has been a sharp rebound from the lowest, but the market remains extremely nervous. The exchange position, so far as Australasia is concerned, shows little change. There seems to bo no probability of a realisation of the fears entertained in many quarters that the autumn would see e. recurrence of the serious stringency which marked the autumn of 1920. The banks certainly are not offering anything like the old-time facilities. Indeed, they are doing alt possible to discourage exports, except of necessities, but this policy is working well. The position is improving steadily, and confidence is returning. This has been greatly helped by shipments of wheat, wool, and butter, which are all realising good prices. If these are maintained it seems that there will bo no difficulty in weathering the awkward autumn period, which caused so much anxiety last year. Australia’s Holding of Bullion. In connection with the exchange question, it is interesting to note the “Financial Times” criticism of Mr. Hughes’s address to bankers. Mr. Hughes referred to Australia as holding gold bullion amounting to over 7G per cent, of the outstanding notes. The _ “Financial Times” considers this backing far beyond what is necessary. Mr. Hughes dwelt on the value of Australia as a consumer of British exports. 'lhe "Financial Times” asks: “Why, then, did Mr. Hughes refuse to release some of this superfluous gold a year ago when British shipments to Australia were held up by a deadlock in connection with exchange ?” Trade Conditions. Although tho present trade conditions, except with. Germany and other countries which are.specially favoured by the exchange position, afford little ground for optimism, many financial authorities believe that recovery from the depression is not far distant. Ihe newspaper “Statist” says: “The following unmistakable indications—the universal absence of financial stringency after one of tho severest periods of financial strain ever witnessed, the decline in money rates, tho improved speculative sentiment in Japan and tho United States, and the reaction in commodity prices—strengthen the belief that business conditions are on tho evo of recovery from the recent depression, and the coming months are likely to bring moro hopeful prospects. German Industries Booming. The trade boom in Germany continues, and the condition of all industries except the chemicals', machine, and shipbuilding branches are extremely good. The iron and steel trades, particularly bar iron and wire, are very busy. The textile branches are enjoying the sudden and quickly increasing prosperity. Tho clothing, tailoring, millinery, and underwear industries have more' work than they can execute, and many will be unable to fulfil orders owing to materials not being available. Scandinavia and Holland have sent large orders for woollens to America. Yorkshire newspapers state that German manufacturers are actually selling to wholesale export houses in England both men’s and women’s wear fabrics at less than they can be made at Bradford today. Thev are even offering many months’ open credit to induce business. Reduction in Freights. The reduction in the cost of bunker coals from about 41s. to 265. for Tyne and 30s. for South Wales has, caused a weakening in wheat freights., Some owners are sending, and are willing to send, steamers in ballast, hoping for further reductions in bunker coal to enable them bo run profitably, so rates have declined from 755. to 705., at which there wore several fixtures, after 735. 9d. and 725. fid had been paid. Charterers have now filled requirements, and will not consider anything over 65s.—Aus.-N.Z. Cable Assn.