The main Q4 topics for equities include the US presidential election, a potential rate hike in December and the discussion on bonds versus equities says Peter Garnry, head of equity strategy at Saxo Bank.

Equities are not expensive compared to the bond market and investors should be cautious of the 'bubble-like' scenario in the government bond market, Garnry explains.

The bull market continues to go higher despite challenging events, he says, and there is no fear for a rate hike from an equity perspective. Operating profits peaked around the financial crisis and the leverage ratio is now at its lowest level since '95. A rate hike in December will not derail the equity market.

The current earnings recession has been driven by a strong dollar and oil prices. Analysts expect a 35% jump in global earnings over the next 12 months. There are a lot of expectations built into the equity market and companies need to deliver in Q4, Garnry says.