Global stock markets have started this week with a bounce, as hopes that the coronavirus pandemic may be peaking drove investors back into risk assets following a historic downturn.
However, Citi strategists have suggested that the rally is nothing more than an "aftershock" and is not underpinned by volume or any guarantees of an end to the outbreak.
Jimmy Conway, head of EMEA equity trading strategy at Citigroup Global Markets, told CNBC Tuesday that there would likely be some "some pretty horrific" cash flow numbers in the next wave of corporate earnings that the market is not pricing in.
Speaking on "Street Signs Europe," Conway said he would want to see upward earnings revisions coming through before committing to a "full blown rally."
The Dow Jones Industrial Average jumped more than 1,600 points on Monday to post its third-largest daily gain in history, but Conway argued that when 7% moves become normalized, investors should be looking under the hood at what's driving each one.
"Is what is driving it certain and was there a lot of volume behind it to vindicate that move, i.e. to show that there is real conviction and real commitment to it? I don't think we saw that and I don't think we are seeing it," Conway said.
Just over 600 million trades were made on the Dow Monday, compared with a 30-day average of around 700 million, and single-day highs of more than 900 million since the market correction began in February.
"I think we are just seeing an aftershock of people trying to manage risk, work out exactly the depths of this recession, and indeed whether the quantum of support is sufficient," Conway added.
Governments and central banks around the world have turned on the fiscal and monetary stimulus faucets on a colossal scale in a bid to shore up the global economy against the fallout from the pandemic, which has also offered markets some momentum and reduced volatility.
However, Conway suggested that corporate earnings and science — for example, a coronavirus treatment or vaccine — would be the key drivers of any sustained recovery after one of the worst quarters in history for global markets.
"I think we are going to see some pretty horrific cash flow numbers. Investors are going to be very focused on what is the survival plan for corporates over the next two to three quarters," he said.
Conway added that although there were some promising signs of potential vaccines and treatments, the "pharmacological timeline isn't quite short enough yet."
"The quantum, as such, isn't quite big enough as we stand, so our view is that yes, the market is going to go lower," he said.