LONDON - Following a 35 percent rally since the beginning of March, Swedish stocks is headed for a final slump in the coming months as the market focuses on earnings news and with investors eyeing cyclicals such as SKF, Atlas Copco and Sandvik, London analysts said.

“We still have one more very negative wave down ahead of us and it’s likely to speed up to the autumn. So the next couple of months are looking particularly difficult for stock markets,” says Philippe Gijsels, European market strategist at Fortis in Brussels, to The Swedish Wire. “We are looking at the continuation of the bear market because of four things: a disappointing economy, disappointing earnings, more defaults and more rating downgrades,” the strategist adds.

In particular cyclical stocks are set to grab the spotlight with SKF, Alfa Laval, Atlas Copco and Sandvik all due to report second quarter earnings in July.

“We have further cut our forecasts pre-Q2 and expect consensus to slide in the short term,” says Deutsche Bank in a sector note.

Ball bearing maker SKF will be the first to enter the limelight as it rings in earnings season among industrials on July 15th. Deutsche Bank expects the company to report a slump in EBIT by some 61 percent year-on-year but only anticipates a slight drop in sales compared to the first quarter. The broker has a “Buy” rating on shares in SKF and Atlas Copco, a “Hold” stance on Assa Abloy and Alfa Laval and maintains a “Sell” rating on shares in Sandvik.

Another highlight, manufacturer Electrolux will also be releasing second quarter figures on July 16th. Citigroup raised its target price on the stock from 120 to 150 crowns in anticipation of the results and in a recent note to clients says that the market is currently underestimating the company’s “ability to deliver in a tough market”. The broker has a “Buy” recommendation on the share.

Next to industrials, banks remain in focus as Swedbank, Handelsbanken and SEB are scheduled to publish earnings. Although uncertainty remains over the situation in the Baltics, Morgan Stanley says investors should take a more selective view on the sector. Despite its exposure to the Baltics, SEB is one of the broker’s top picks.

“SEB could withstand a currency depreciation in the Baltics without being forced to carry out another rights issue”, Morgan Stanley said.