STOCK MARKET

Hokitika Guardian, 8 November 1929, Page 5

STOCK MARKET

EFFECT ON BUSINESS

(United Press Association—By Electric Telegraph.—Copyright.)

(Received this day at LI a.m., NEW YORK, November 7

While the panic at the deflation of the American stock markets throughout the past fortnight, unquestionably left speculative factions prostrate, comfort was drawn from the fact that business generally was sound and apparently not seriously affected. There is insistence, moreover, that the eradication of the speculative “ lunatic frenzy ” was probably good for the country generally. It is admitted the wiping off of so many billions of paper profits undoubtedly would limit luxury consumption, and the nation’s luxury trades would show the effects, but fundamental commodities would be uninjured. However, jt is now clearly discernible that there is distinctly less optimism on this head. It is now frankly admitted the nation’s business is suffering and will possibly suffer very seriously.

A RECOVERY STAGED. (Received this day.at 12.2/3. p.m.‘ ~ - ~pw. YORK, Nov. 7. ... The iparket staged a recovery that iperaift millions of dollars to hard pressed v. traders throughout United States, and, which .was of a more sweeping.. nature than yesterday’s decline. Prices Wjere up one to six. points above ; the previous dose, which was more remarkable because during the first . hour ..the, trading .market continued yesterday’s decline, .dropping one to fifteen points However,, all along the jJijst early losses either were overcome and, a,. gain ,recorded or at least wiped out. Trading was at tremendous rate due to heavy selling in the first hour and tremendous buying in the last'two hours of the short session.

Despite the final advance accounts were destroyed in early trading. and many who a week ago thought they could weather the storm, with adequate .margins were sold out. Some brokers therafter declared that the greater part of necessitous selling had now been accomplished and the mar.is.vin a better technical position .'to respond to good news. % .31 any other .authorities, however; ejcpcess.iiO opinipni yet regarding the markets future. It is no longer a question ..only...of*, fate of the. speculative element, if it remmbered that the daily declines since “Black Thursday” have in many important stocks been greater than on that day, and that many consequential corporations' have nearly lost a market for their shares It can at once. be . seen that the situation really invites no optimism. •

A more specific idea, of what is meant can.be gained if, one. particular instance..is cited, : Ono of the largest and.most important cigar. manufacturing firms, in America, whose stock sold at 130 dropped to four and yesterday a large, block of the same was sold at auction to reiterate the, situation which is- now avowedly recognised as serious. The,cause of the collapse is of course as little known to-day as .it was a fortnight ago aside from recognised psychological .factors that always play a part in the pricking boom of any kind, but what is now more important is an attempt to understand the effect of the collapse.

, Best , financial observers, notedly Robert Babson,' who more than'any one else predicted accurately the stock crash, warn that it is yet too early to understand the full influence on business. ' They take comfort that, unlike 1920, panic business is now not suffering' from inventory inflation but it is also pointed out that good inventories that' may to-day seem, like hand to'mouth buying, may to-morrow, if consumption decreases, appear woefully over-large There is a definite element of uncertainty throughout the body of economic America, and something of that feeling is graphically illustrated in the cry in the financial 'district, “Why should the United States Steel Corporation, the very backbone of American industry be continuing to decline or fluctuating so wildly?” . ‘