FINANCE AND INVESTMENT
By CUSTOS I AM not quite sure whether these are war or peace markets— perhaps they are short war markets—but they are surpris- ingly good. Political news admittedly very difficult to assess, has not been particularly bright, so that one must look for an explanation rather in underlying sentiment and the abundance of investable funds. Most investors, it is well to remember, are no longer in selling mood. Such selling as was still necessitated for purposes of liquidity after the out- break of war has been completed, and stock is now very largely in the hands of people who have decided to see things through. As jobbers' shelves are also bare of float- ing stock this means that any demand encounters such meagre supply that prices are forced up. That is what is happening just now in most sections of the Stock Exchange.
The most remarkable change has taken place in the gilt- edged market, where the process of thawing out has gathered real momentum. Virtually every stock has broken away from its official minimum and War Loan, frozen hard at 881 less than a fortnight ago, is now leading the advance with a rise to 911. This movement has, of course, attracted a specula- tive following which implies that we must be on the look- out for technical reactions when profit-taking sets in, but the rise has a pretty solid foundation. Lombard Street is so overflowing with money that short-term interest rates have fallen below 2 per cent., and there is evidence of pressure of money awaiting investment in a longer-term sense. All that was needed to start a buying movement was a revival of confidence in the Treasury's determination and ability to get gilt-edged prices on to a higher plane. This week we have seen such a revival on the grand scale, with the usual result that as soon as the rise was seen to be on, selling hmits, of which there were plenty, have been taken off. Hence the swiftness of the advance.
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