Market Notes
By CUSTOS
HE rise in the Treasury bill rate last Friday I came as a shock to the gilt-edged market and when the South African minister of transport gave a strong warning that if Mr Wilson applies to the United Nations for mandatory sanctions against Rhodesia the British export trade to South Africa would be 'fatally' affected heavy selling followed in the medium- and long-dated bonds. The falls ranged to over 15s. Any sugges- tion of a fresh balance of payments crisis is always likely to upset this sensitive market. If the Bank of England had not given support worse falls would have been seen.
The equity market, however, held firm—en- couraged perhaps by Mr Crossman's remarks that the Government must be ready to reflate the economy quickly when the time comes. There was increased interest in the aircraft shares on the Government's statement that the airframe interests of BRITISH AIRCRAFT CORPORATION and HAWKER SIDDELEY are to be merged into one large company with the Government holding a `substantial minority interest.' Hawker Siddeley improved on the news and also VICKERS which has a 40 per cent holding in British Aircraft Corporation. As Vickers will be receiving cash both for its aircraft interest and for its holding in English Steel it will be in a favourable position to exploit the reflation when it comes. Rhodesian copper shares were naturally affected by the South African minister's warning. The leaders fell to new low levels with ZAMBIAN ANGLO- AMERICAN at 37s. 6d. yielding a potential 261 per cent. This seems to be almost discounting nationalisation. Dollar stocks were adversely affected by the news that GENERAL MOTORS, which has already reduced its 1966 dividend, is to cut its factory output by 3.7 per cent next month and by a further 4.4 per cent in January. The third quarter's earnings of the big three—General Motors, Ford and Chrysler—have all fallen sub- stantially while American Motors has actually reported a loss. In spite of all this the investment dollar premium remains at 19 per cent.
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