22 DECEMBER 1939, Page 28



IF the stock markets lack anything worthy of the name of general trend they at least contrive to tick over on highly selective lines. In war conditions, which make investment analysis and forecasting a more tentative business than ever it was, who can reasonably look for more? We should all be thankful that values, taken as a whole, are holding up so well and that the market machinery is working so smoothly. In the last week there has been a noticeable quieting down in the gilt-edged section but the fact that prices have kept so steady—they are well above the official minima—is sufficient evidence of the basic strength of the position. Taxes have to be paid next month and there is a Government loan in the offing, so that we do not need to look far to discover why fresh buying is restrained.

This week's activity in the speculative groups has been concentrated on textile and base metal shares. I think the buying of textile shares has the more logical foundation. Everybody knows that war has brought a long overdue prosperity to the cotton and wool trades. Most firms in Lancashire and Yorkshire are workinr to capacity and although the rise in raw cotton has disturbed new business arrangements it at least ensures that those carrying stocks feel more comfortable. How far Excess Profits Tax is going to cut into earnings has still to be seen but it is not being over-optimistic to assume that after taxation has been met many companies will be able to give shareholders a more generous deal than has been possible for many years.

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