As always, the Stock Market never provides a relentless upwards increase.

Since March of this year, however, cynical observers of share price movements have turned financial warnings around, by saying that shares can go up instead of down, but the last two weeks of September evidenced a significant fall in the market. July to mid-October saw the market increase by nearly nine per cent, only for profit-taking, caused by poorer than anticipated US economic figures, to knock the market back by five per cent. Simple mathematics still points to an increase of four per cent.

Sharp falls allow bullish investors to re-enter the market at attractive stock levels, with the message being that timing of investment is more crucial than ever before. September has historically been a poor month for investment, with increases having been witnessed only rarely in the past 25 years.

During the past half century, September has become an excellent contrary indicator, as far as the fourth quarter of the year is concerned.

There have been 20 occasions since 1959 when shares fell by at least one per cent in September. In 18 of those 20 years, the UK Stock Market advanced in the fourth quarter. Let us hope we see this trend continue.

Since 1965, of the 29 sectors within the market, 19 saw share price falls in September, with only nine showing share price increases in September.

There is no obvious reason for this, but equally this allows October to statistically be a good month for the market. Last week saw the month get off to a good start, helped by large gains across all global markets.

Keeping with the theme of lies, damn lies and statistics. From the low point in the market of March 12 this year, to the end of September, some extraordinary gains were seen, especially in the FTSE 250 - the Nationwide Division 1 of the Stock Market. Photo-Me International, the photographic imaging equipment maker, increased by 321 per cent to top the performance table. Last Minute.com was another good performer, increasing by 239 per cent. Looking closer to home, Corus Group ironically gained 236 per cent. WS Atkins is a major employer in the area. Staff at the company with share ownership will have been delighted to see the share price rally by 229 per cent in the same period.

With the US dollar struggling to regain any strength and speculative currency traders exacerbating the situation, attention has been drawn to the recovery in the Japanese market. The economy of Japan is still the second largest in the world and, therefore, the Japanese Stock Market cannot be ignored. The problems during the past couple of years have arisen through deflation and bad debts. Reflating the economy has been a tough challenge for the Japanese Government and the Bank of Japan, but progress would appear to be in place.

In fact, the weakness of the US dollar makes the case for investing in US funds and UK companies with significant dollar earnings more compelling.

The next few weeks will see about 75 per cent of all US companies reporting results. These will be critical if an end of year rally is to be witnessed.

For investment advice contact Anthony Platts on 01642 608855.

Published: 07/10/2003