Market notes
CUSTOS
At long last the gilt-edged market has suffered.a correction. The cut in Bank rate to 5+ per cent persuaded speculators that there was nothing more to go for. The 'bull' position in the long- dated and medium stocks was quite consider- able and prices fell sharply on heavy selling. Even the 'shorts' came back. This is a healthy correction and when the speculators are out the market should resume its gradual upward trend. The long tap' FUNDING 61 per cent 1985/87 has come back to 981 to yield £6 12s. 4d. to redemption. This now appears cheap. As I write it is already moving up.
Equity shares again showed no response to the Common Market offensive. Steel shares were
bought by institutions seeking franked income. Private holders should now sell their steel shares which are a shilling or more above the take- over prices. Tobacco shares have eased on the fear that the• Tobacco Research Council's re- view of thecancer problem will bring in fresh selling. If -so investors might resume buying of IMPERIAL TOBACCO which have already fallen to 66s. 9d. from a high level of 71s. lid. to yield 6.4 per cent. Oil shares encountered some selling on the statement by the SHELL TRANSPORT chair- man that if a satisfactory price for natural gas is not conceded by the Government the oil companies will be forced to withdraw from the North Sea search. This would be disappointing for the Minister of Power, but shareholders will take comfort that SHELL'S first quarter earnings advanced by 5.7 per cent because operating costs had been satisfactorily trimmed. SHELL at 40s. 3d. yield 5.1 per cent on a price/earnings ratio of under 12.
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