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A perfect bear market rally may have just concluded. Equities should head lower, in the opinion of analysts at Nordea.

Key quotes

“A perfect bear market rally may have just concluded. It was set up by oversold conditions and underpinned by a plethora of policy measures from central banks and authorities and by rebalancing of pooled portfolios needing to buy equities to revamp the allocation.” 

“Smart money likely sold equities into the final hours of the quarter-end and to us it looks like another leg lower in equities could be coming now.”

“It is by the way not unusual to see these kinds of rallies during a bear market. We had similar rallies post dotcom and Lehman and for some reason the larger the rebound, the deeper the subsequent setback on average.”

“The equity market will have to look for clues on how long a curfew/recession the world economy will be faced with. Saying that Q2 will be historically poor is just so old news by now. Smart thoughts on Q3 and Q4 are much scarcer.”