WHATEVER the second half of 2009 holds for equity markets, it can only be better than the last six months of last year. But market analysts are not expecting the FTSE 100 to rally strongly through the third and fourth quarters, despite the blue-chip index’s strong rally since the depths of 3,500 back in March.<br /><br />Although the recent sub-30 lows in the Volatility Index will only serve to improve investor sentiment and appetite for risk, questions remain about the strength and sustainability of the economic recovery that has been touted and what that will mean for corporate profitability and share prices. <br /><br />“Some of the recent data has poured cold water over the optimism. The second quarter earnings season is really going to be the key – it could either set us on our way again or could dampen spirits further,” said Joshua Raymond, market strategist at City Index.<br /><br />Charles Stanley analysts expect equities to build on the rally, which started in the second quarter, in the second half of 2009. “We are anticipating that mild economic recovery in the second half and into 2010 will translate into corporate earnings growth,” they say.<br /><br />But with concerns of a double-dip recession and rising unemployment constraining consumer spending, some market strategists are expecting further falls in the FTSE 100 in the autumn as the oversold commodity rally runs out of steam. BP and Shell’s weighting in the FTSE 100 means that the index is highly correlated with movements in the price of crude oil and with oil failing to break through the $70 (£43) a barrel resistance level, upside to the FTSE 100 will remain, at least partially, capped.<br /><br />A slip back in the autumn could spell further downside for the FTSE, before a Santa rally gives it a much-needed boost in the run-up to the New Year.