Investing.com -- US equity positioning remained steady despite the market volatility experienced early last week, Citigroup (NYSE:C) strategists revealed in a report.
The S&P and Nasdaq continue to exhibit bullish positioning, although levels have declined from their peaks in December.
“The S&P is one-sided, with moderate long losses. Further declines could still drive positioning risks and amplify a sell-off,” strategists led by Chris Montagu said.
US stocks witnessed a sharp sell-off early last week after Chinese AI startup DeepSeek’s breakthrough in artificial intelligence spooked investors.
Citi notes that the investor sentiment towards US equities remains positive, but the fervor observed towards the end of the previous year has waned.
Moreover, there has been a significant decrease in gross market exposure, reflecting the growing concerns over economic and geopolitical risks.
By contrast, Europe has witnessed a positive shift in market sentiment in recent weeks. Over the past month, European investor positioning has shown consistent improvement.
While the DAX and European Banks exhibit moderately bullish positioning, the strongest momentum is observed in the EuroStoxx and FTSE, both leading the one-week change in positioning levels among the indexes tracked.
According to Citi, the positioning spread between the US and Europe has widened, now aligning with the historical average observed since 2021.
In Asia, the China A50 has seen a resurgence in bullish positioning during the holiday-shortened week, mirroring the S&P’s near one-sided positioning trend.
“A little over half of positions are offside, but the narrow trading range means loss levels are not extensive yet,” the note states.
Meanwhile, other Asian markets have shown little change in positioning, with the Nikkei maintaining bullish sentiment and the KOSPI and ASX 200 exhibiting mild bearishness.