Citi says positioning gap between US, Europe stocks narrowing

Investing.com -- The positioning gap between US and European equities has narrowed as bullish bets on S&P 500 futures ease, Citigroup (NYSE:C ) strategists said in a Monday note.

“S&P positioning is now only moderately bullish and in the past week investors added around $5bn in new shorts as well as unwound existing long positions,” strategists led by Chris Montagu noted.

Nasdaq futures also saw a pullback from high bullish levels last week, though it continues to hold the strongest long positions among the indexes Citi tracks, according to Citi.

Exchange-traded fund (ETF) flows for the S&P and Nasdaq remained strong through the end of the year, reflecting growing bullish sentiment in both markets.

The strategists said that Euro Stoxx futures still reflect moderate bearish sentiment, but exposure to the DAX has become increasingly bullish compared to the broader European index since mid-2024.

This trend has developed over the past six months and continues following a week of mostly short unwinding. Still, positioning levels suggest limited conviction, and flows have shown significant volatility.

Despite the narrowing gap, there is still “a clear divergence in investor sentiment that is bullish US and bearish Eurostoxx,” strategists emphasized.

Elsewhere, positioning on the Hang Seng and China A50 remains slightly net long, according to Citi’s report. However, these long positions are currently at a loss, with average losses on China A50 longs reaching 3.4%.

The Nikkei has experienced a steady rise in net positioning over the past month, though the increases have been gradual, keeping overall positioning at a moderately bullish level.

In contrast, positioning for both the ASX and KOSPI has shifted to bearish over the past month.

Source: Investing.com