THE STOCK MARKET PICTURE
In face of these uncertainties the market has begun to formulate some kind of estimate of investment possibilities, and its first thoughts already find expression in the move- ment of prices. Very broadly, shares of companies in the unessential trades (from the war standpoint), such as high- class stores, motor manufacturers and cinemas, have fallen. So, too, have tobaccos, on fears of dearer leaf resulting from the depreciation of sterling, and even shares such as Wool- worths and Marks and Spencers on fears of higher costs and moderately reduced sales. On the other hand, there has been a keen demand for shipping shares, which, it seems clear, must benefit from a rise in freights, for Argentine rails and a wide range of commodity shares covering rubbers, coppers, tin and lead-zinc issues. Higher commodity prices, accompanied by substantially enlarged production quotas, already provide a logical basis for this movement.
Another group which was bound to benefit from war conditions was American shares, which have risen quite spectacularly, much to the dismay of London "bears," and to the satisfaction of the " bull " speculators and the in- vestment holders on this side. So sharply have prices risen, partly, of course, as a reflection of the fall in sterling, that there has been a considerable selling movement by British holders. This selling has been remarkably well absorbed on Wall Street, and the dollar proceeds are, of course, being made over to the Bank of England, which, under the new regulations, buys them at the official rate of exchange. The higher Wall Street prices go, the larger the mobilisable fund of dollars at the Bank of England's disposal. So far, no active steps have been taken to induce British holders of foreign securities to sell, and many will doubtless wish to hold for further appreciation. At the same time, those who wish to sell now can obtain official permission to do so.
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