British share prices bounced back on Tuesday (20 August) after falling to a 15-year low point on Monday (19 August).
MV TILT DOWN EXTERIOR Stock Exchange building and entrance (2 shots)
SV Floor of Stock Exchange
CU Stockbroker interviewed with cutaways to floor activity
BROKER: The market is recovering from the shock of the fall and it's going better. They're still selling and there has been no stop. There's quite a bit of buying going on, I think by the institutions, at the moment."
REPORTER: "Has it risen above the two hundred level where it was down to?"
BROKER: "Yes, it's just gone up. It's two point four up so it's two hundred and two point one. We expect to finish a bit better today. I should think five or six points."
REPORTER: "Do you see this as the beginning of a recovery -- a complete recovery?"
BROKER: "I think it's a bit early to say, but, nevertheless, I hope that if we can keep around about this level I think confidence will come back. If the Prime Minister announces a general election shortly, this will bring buyers back into the market.
REPORTER: "What do you see as the cause of the collapse of share prices?"
BROKER: "Well I think it's really a lack of confidence. Politicians are all away on holiday and they all seem to be saying different things. Quite frankly what we need here is a decent prices and incomes policy, particularly as we've seen a wages explosion, inflation, everything. I mean it's made extras unattractive."
REPORTER: "But you see the market rising now?"
BROKER: "I see the market, you know, after the spell we've been through, settling down around this level, consolidating and, I think, going better. I wouldn't sell anything at this moment, anyway."
Initials BB/1737 RW/JW/BB/1755
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Background: British share prices bounced back on Tuesday (20 August) after falling to a 15-year low point on Monday (19 August).
The Financial Times Index of 30 leading shares fell below the 200-point barrier on Monday night, the first time since 3 October, 1958.
By noon on Tuesday the index had risen by 12.3 points. However it eased slightly in the afternoon but closed still 12 points up on the day at 211.9. Two and an half years ago the index hit a high point of 543 and so far this year has dropped 42 per cent after standing at 344 at the end of December.
Confidence has been eaten away by a combination of economic factors. The cash position of most companies has been squeezed by continuing high inflation accompanied by price controls and stiff Government taxes on profits.
General fears of inflation and possible recession have been reinforced by high interest rates, the impact of higher oil prices, a massive balance of payments deficit and wariness of the Labour Government's plans for future nationalisation of British industry.
A stockbroker who spoke to Visnews reporter Jonathan Wallace as the Index began its recovery today, was hopeful it was the beginning of a consolidation period for the Stock Exchange.