Nasdaq positioning returns to neutral ahead of tariffs announcements: Citi

Published 01/04/2025, 09:22
© Reuters

Investing.com -- Short flows into U.S. equities have brought net positioning in the Nasdaq back to neutral, matching the S&P 500 levels as markets brace for upcoming tariff announcements, according to Citi strategists.

In contrast, small-cap stocks have maintained a firmly bearish position, with losses in long positions escalating.

“The consensus positioning on US large caps equities is now neutral, whereas small caps (RTY) has seen a marginal rise in net positioning levels, but overall equity positioning is still bearish here,” strategists led by Chris Montagu said in a note.

Losses continue to mount for open long positions on both the S&P and Nasdaq. While these positions are exerting some downward pressure on the market, the impact of potential unwinds is expected to be muted due to the smaller size of these positions and the fact that significant risk has already been mitigated.

Meanwhile, positioning in European markets has been volatile over the past week, especially after the announcement of new U.S. tariffs.

The EuroStoxx and DAX experienced increased bearish flows, while the FTSE and European Banks saw an influx of new long positions.

But despite the volatility, positioning remains decidedly bullish across European indexes. “Positioning risks are small but growing from EuroStoxx and DAX longs which are currently all out of the money,” strategists added.

In Asia, both the Hang Seng and China A50 indices have witnessed a decline in bullish sentiment over the past week, with the Hang Seng experiencing a more significant drop due to new short flows. While net positioning remains bullish, it has receded from the high levels seen earlier in the year.

The Nikkei has also seen an increase in bearish positioning, though the changes have been relatively minor.

The KOSPI and S&P/ASX 200 have defied the regional trend, continuing to attract net positive flows despite ongoing concerns over tariffs.

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