LONDON — Stocks are heading for a bumper week, but there are many reasons to be wary, one strategist warned on Friday.
"In short, we don't believe this rally," Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, told CNBC's "Squawk Box Europe."
"We had a tough later part of summer, there was focus on tightening of financial conditions, what was coming from the key central banks."
"Nothing has changed in a fundamental manner. So we still think that we are going to see more problems ahead as this higher for longer rates profile beds in and starts to impinge on the real economy," Ahmed said.
The pan-European Stoxx 600 index is on course for its best weekly performance since late March, according to LSEG data. That comes off the back of a dire October, which was its worst month of the year, and losses in August and September.
Stateside, the Dow Jones Industrial Average notched its best day since June on Thursday.
Along with equities, U.S. and European government bonds have also rallied this week as investors interpreted the Federal Reserve's rate hold and surrounding commentary as a sign that rates have peaked and cuts are within view. That was despite Fed Chair Jerome Powell's insistence that further hikes were not off the table — in line with central bank heads in the U.K. and European Union.
"If you look at Chair Powell's speech, it had a hawkish bias to it," Ahmed said.
Markets are focusing on the sharp increase in long rates, which is helping the Fed tighten financial conditions — but a hot jobs print on Friday and another sticky print on inflation could well force it to implement another hike, Ahmed added.