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Fasdal: What's behind this equity rally

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Equity markets have been rallying over the last 48 hours with Japan's Nikkei Index up around 8% and European equities opening up between two and three percent.

So what's behind the rally? Saxo's Simon Fasdal says firstly, Japan's prime minister Shinzo Abe has pledged tax cuts for corporates. This amounts to a kind of quantitative easing, he says. Secondly, the fear of China is diminishing and thirdly core bonds are selling off which means that negative correlation between bonds and equity markets has returned.

Fasdal believes this is also delayed reaction to the bullish European Central Bank meeting last week. Simon also discusses next week's Federal Reserve meeting and why a dovish statement is what's needed.