CUSTOS
Market report
The nasty little break in Wall Street prices this 'week (pushing the Dow Jones index down 26 points to 926) has affected London senti- _Mint. Our own equivalent, the Financial Times ordinary share index, has lost 7 points to 501.4 in the same two days' trading.
Wall Street prices went down under the prig- - sure of New Year views and comments to the effect that inflation is Rely to be much less in 1969 than in 1968 (the consumer price index to grow at 3 per cent to 31 per cent rather. than nearly 6 per cent) and that corporate profits are likely to sag in the first half of the new year and possibly stay down for the whole of 1969. _Then on top of this came an unexpected rise in American bank prime lending rates (overdraft rates for best customers), the First National City raising its price from 61 per cent to 7 per cent and the rest following. Wall Street is get- qing very windy about what it calls the coming credit crunch. I expect, therefore, to see the Dow Jones dip lower over the next few weeks.
Rises in American bank prime rates in- variably affect the gilt-edged market in London quite severely—as indeed they should because they often presage a rise in the Federal Reserve discount rate (the equivalent to our Bank rate) which in turn kicks interest rates upwards.
There is much hopeful anticipation in Lon- don that clearing bank results will be good. They certainly should be because Bank rate, which averaged 7.47 per cent last year, has never been higher for a full twelve months and interest rates are the main determinant of bank profitability, But as it looks as if Bank rate will stay high for many months longer, invest- ment attention is bound to stay with the clear- ing banks for some time to come.
There is an interesting situation developing among the pump manufacturers with Worthing- ton-Simpson at the centre of the stage. First its American associate, Studebaker-Worthington, put in a 50s a share bid, which the Worthing- ton-Simpson board had raised to 56s a share and agreed to recommend the terms to share- , holders. Then Weir Group decided to put in a counter-offer, but before it could do so the rac persuaded the two rivals to combine and to accept that if they could not agree between themselves then the JRC should decide which company should bid for Worthington-Simpson —and the price was fixed at 58s a share (leaving shareholders with a fait accompli). However, late . on Tuesday night, Mather and Platt announced that it_was considering a bid for• „Worthington-Simpson. So the battle goes on.
Previous page
