U.S. and European Equity Market Positioning

Investing.com—Investor positioning in U.S. equities remained largely bullish as a rally on Wall Street showed little signs of stopping, while positioning on European stocks reflected a sustained bearish sentiment, according to Citi.

U.S. Market Developments

Investors continued to build long positions on U.S. stocks, with Wall Street’s benchmarks seeing extended bullish positions and the most profits among their global peers.

Citi analysts noted, "The US equity markets are now the top three most extended markets. However, the gradual build-up of positioning means that average profit levels are still modest."

Wall Street indexes rose sharply in November after Donald Trump won the 2024 presidential elections, leading investors to position for more expansionary policies and tax breaks under his administration.

The rally in Wall Street was also supported by sustained strength in heavyweight technology stocks, along with expectations of a December rate cut keeping stocks upbeat.

European Market Trends

In contrast, positioning in European markets, particularly in the Eurostoxx, remained net short, with 100% of long positions experiencing losses, according to Citi. The gap in positioning between U.S. and European markets is widening steadily.

Citi highlighted that French political turmoil, which might result in the collapse of the French government, is unlikely to lessen bearish sentiment towards European markets.

However, some long positioning has started to increase in Germany, and flows into the FTSE 100 seem to be shifting from bearish to neutral.