Whilst third quarter company earnings may have been receiving the majority of headlines over the course of the last fortnight, a couple of other incredibly important third quarter figures have been released. Both the UK and the US have released their latest GDP growth figures and it’s official: in both countries GDP growth is better than expected, with the US posting its fastest growth rate since the last time the Federal Reserve raised the base rate of interest (do I see a little foreshadowing here?) and the UK managing to avoid a recession that was widely touted after the EU referendum result.

The UK GDP figure was announced at 0.5% yesterday, higher than the 0.2% consensus, whilst US figures announced today saw the forecast of 2.5% topped, coming in at 2.9%.

So what does this mean for financial markets? Well, for the most part it shows that the state of the global economy may be in a better shape than was previously thought; even with the UK on the receiving end of a currency devaluation not seen for decades by a major economy, we might finally see the breaking of the ultra-low interest rate environment seen from New York to Tokyo in the next few years.

As a result, markets might initially react with muted discontent at the prospect of cheap money disappearing after almost a decade, however the long term positive effect of growth (alongside cost cutting operations from almost every sector) should see companies once more looking to expand and prosper rather than cost cut just to survive.

Even for the UK Banks (see my colleague George’s piece below), some of the companies that were (arguably justifiably) hardest hit in 2008, the outlook may be much brighter than it did only a few months ago. With the UK Index remaining within touching distance of all-time highs, who’s to say that in a year’s  time the index won’t be well on its way towards 8000 points?

The possibility of a recovery in commodity markets, most importantly in crude oil prices, is rising despite the US Dollar looking ominously strong. An agreement made at the end of September, whilst a little light on details, marks a surprising move by one of the most notoriously argument prone economic groups to reach an accord to return to better times. Next month sees their official rendezvous in Vienna take place, can the (previously) unthinkable happen and producers put their differences aside to solve the global supply glut?

Call me a glass-half-full kind of guy but I certainly believe that good times might be just around the corner.

Want to see if I’m right? Subscribe to Accendo Market’s research and find out how markets fare in the final few months of the year, as well as seeing if the US, UK and Japanese Central banks decide to change monetary policy next week.

Henry Croft, Research Analyst, 28 October