September 2007 will be remembered as the month of the bounce. After using the word "volatility" in previous comments, we have seen it manifest firmly in the results of financial markets worldwide. The bounce came at a very appropriate time, boosting quarter-end performance figures.

The bounce was sparked off by the US Fed cutting their interest rates by 50 basis points to ease the current liquidity squeeze caused by the subprime housing crisis. Investor confidence returned and the MSCI World Index increased by 4.6% in dollar terms in September, with the Dow Jones 4.0%, the FTSE100 2.6%, the Dax 2.9%, the Nikkei 1.3% and the Hang Seng a whopping 13.2% up.

Our local market cashed in as well with the FTSE/JSE All Share Index ending the month up by 5%. The mining sector was the main contributor to the overall return with the Mining Index up by 14.0%, the Gold Mining Index up by 17.6%. The dollar price of gold bullion surged as the US dollar plunged and inflation fears reared its head with Brent crude closing at $81.09. This fed through to higher demand for resource stocks. Financials beat a hasty retreat as monetary policy continued to tighten and ended the month 2.4% down. Industrials were flat for the month.