Market report
CUSTOS
News of the $2,000 million standby credit gave British Government stocks their first encourage- ment for a painfully long time. They had been picking up for a few days before the announce- ment, but this was no more than technical; a market sorting itself out after weeks of heavy selling. On Monday and Tuesday, though, ster- ling improved, gold-mining shares and other currency hedges fell back as did bullion prices; and buyers returned to gilt-edged. They met a significant tactical move from the Government broker, who lowered the price of his 'tap' stock, and in general seems to live made plenty of stock available to the market.
A reading of these omens suggests that the authorities are in no hurry to see the prices of gilt-edged recover all the ground they have lost. Priority, no doubt, goes to selling some of the stock which has been fairly stuffed into the Bank of England in the weeks when the market was receiving official support. But there may be a more general reason. The standby credit is intended to counter any threat to the pound coming from holders of the sterling balances. That is not where the real and imme- diate threat to sterling comes from—important as the standby credit is. At least two good sets of trade figures are needed before sterling and gilt-edged can go very far; and without those figures the authorities have little to gain from pushing the market up. On the foreign ex- clhenges, indeed, the Bank's favourite tactic is to let the pound drift in advance of good news, and then make the ensuing squeeze on the bears as painful as may be.
The equity market remains firm, with the Financial Times index above 480. Martins Bank is attracting speculative interest, in the hope that if the three-way merger is blocked, there may be competing takeover bids from Barclays, Lloyds, or possibly the Midland. This hope would be dashed if the Bank of England again insists that Martins should be sold in an orderly (i.e. un- competitive) manner.
Whitbread is another brewery to have turned in disappointing figures: like Watney Mann, it had a bad time in the first three months of the year; but April will have been better.
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