Market Notes
By CUSTOS ON Monday equity shares had their worst day for five months. The steep rise in Govern- ment spending was a shock to the market which began to imagine that corporation tax would have to be increased from 40 to 45 per cent coupled even with a rise in SET. The outlook for company profits is still worsening. Profitability last year was at its lowest level since 1945 and if wages are to rise after the period of restraint in July company prol''ability may be even worse in 1967. The disappoin.ing report of ICI was no help. These shares have Ilk w fallen to 35s. to yield 7.3 per cent indicating that the market expects a cut in the dividend. 1 here seems to be a talking campaign against WI and its management, which indicates an active 'bear' position in the shares. But ICI is by no means the sole 'bear' market. The V111,11 A chairman's dismal remarks about the future for the man-made fibres has upset - the textile market while a continuing fall in HoovEa's profits has brought falls in consumer durable shares. However, there was some recovery later in the week.
The gilt-edged market has also been under a cloud. The long-dated stocks have come on offer and there is a general impression that the gilt- edged market has gone as far as it can before the Budget. The short-dated end of the market un- donbtedlti. looks the cheaper. Yields of over 61 per cent to gross redemption are obtainable.
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