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Citi: Positioning 'increasingly bullish in Europe' versus US

Published 26/03/2024, 11:18
© Reuters.

Citigroup strategists noted a growing preference for European stocks over U.S. ones, with a notable surge in risk appetite for Europe contrasting with increased market uncertainty in the U.S. last week.

“Investor positioning appears to be turning increasingly bullish in Europe relative to the US,” the strategists said in the note.

“Euro Banks, DAX and EuroStoxx are all extended long and almost exclusively one-sided. Extended levels of positioning and profits leave increased profit taking risks against DAX and Euro Banks,” they added.

Yet, the strategists' outlook on European stocks has become notably more bullish, fueled by an improving GDP forecast, signaling a stronger economic outlook for the region.

Meanwhile, the S&P saw a predominance of new short positions.

Elsewhere, Australian equities are currently seen as the most bullish, amid continued challenges in Chinese markets and the Hang Seng.

“There has been no letup in bullish momentum for the S&P/ASX 200. Positioning is one-sided and levels are currently the most extended seen in the past 3 years. Similar to Nikkei, the combinations or large, long and profitable positioning leaves an on-going risk of profit taking,” the team of analysts said.

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