Market notes
CUSTOS
The budget had as much effect on the stock markets as any weekend speech by any minister of Cabinet rank. In fact, the effect was wearing off after the first hour. The gilt-edged market was, of course, the most responsive. There had been fears that Mr Callaghan would interfere with the tax-free zones or stop surtax payers relieving themselves of tax by borrowing for speculative purchases in the gilt-edged market. As these fears proved groundless there was a quick mark-up of the tax-free zone stocks—by .1. to tag in the 'shorts' and by or 1 in the 'mediums.' The most favoured stock was Fund- ing 51 per cent—tax-free from 90.9—which jumped from 921 to 931. War Loan rose by las to 56 to yield 6.35 per cent. The Chan- cellor's speech gave support to the 'bulls' who have been tipping this stock for well over 60 by the end of the year. As the stock now has 1.3 of accrued interest (it goes ex-dividend on 25 April) it should attract a lot of buying when ex-dividend from those convinced that the long- term rate of interest will fall to 51 per cent.
The equity share markets were firmer but not so responsive as government bonds. There was a 2s rise in BSA, the chief beneficiary of riding with Labour on a motor-bike, but at 28s to yield 4.6 per cent the market seems to be dis- counting already the 'moderate' rise in dividends allowable under the new rules. Tobacco shares recovered, for this market had been restrained by irrational fears of a further rise in tobacco taxation. Some investors are hopeful that the increase in wages which will follow after July will bring support to the neglected market ir, stores shares and retail trading. GUS and EM- PIRE STORES have promised slightly higher divi- dends; these shares went higher after the budget. The unit trust managers were on the whole pleased with the non-budget. It did nothing to hurt their movement and the fact that the Trustee Savings Bank have been allowed to set up their own unit trust made them feel that the Chancellor was not against them. They had feared that he might stop the single premium endowment life, bonds which several unit trust houses are now issuing to the satisfaction of surtax payers.
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