Standard Life remains confident that equity markets will enjoy a rally towards year end. In its latest investment note, the fund managers say world stock markets remain resolutely focused on the US, with signs that rising energy costs, the slump in the euro and concerns about a slowdown in the US economy are already affecting earnings.

Standard Life says it is now reasonably sanguine about third-quarter earnings, which should be more favourable. "Companies cannot disappoint twice; having already manoeuvred down profit expectations, many companies will now beat their reduced estimates and please the market. Secondly, as investors are focused on the future, they will increasingly turn their attentions to the fourth quarter, which should show some improvement quarter-on-quarter, provided the oil price doesn't spike up again, nor the euro career down."

It suggests that, barring unforeseen shocks, the economic, profit and interest rate outlook remain benign and the usual yearend rally is still a reasonable prospect.