Although global financial markets have been rocky this week, the economic underpinnings are healthy says BCA Research.

“A solid macroeconomic background indicates the current correction in global equity prices will not develop into a bear market,” BCA insists in a research note.

“Global equity markets and high-yielding corporate credit were slammed yesterday and will remain vulnerable in the near term given the sharp run-up in prices in recent months. But a healthy global economy provides a firm foundation under asset prices: economic growth is broad-based, corporate balance sheets are robust and inflation and interest rates are low,” it says.

“Moreover, the rally yesterday in bond prices is reassuring, as lower yields will help stabilize the global economy and the U.S. housing sector,” it adds. “Concerns about U.S. growth and the mortgage loan market will linger in the near run, but we think the odds of a hard-landing in the U.S. are slim.”

“While near-term turbulence could persist, global equity prices should end the year higher and the rise in high-yield credit spreads will be moderate,” BCA concludes.