S&P 500 & Nasdaq futures positioning ‘nonetheless firmly in prolonged territory’ – Citi

Investing.com — Citi analysts cautioned that U.S. fairness markets “stay prolonged and bullish,” even after latest declines following the Federal Reserve’s extra cautious stance on 2025 fee cuts. 

Of their newest Fairness Markets Positioning Mannequin observe, Citi notes that “S&P 500 (+3.1) and Nasdaq (+4.0) futures positioning ranges marginally eased however are nonetheless firmly in prolonged territory.”

Regardless of a slight uptick briefly positioning final week, the analysts spotlight that this shift has not considerably altered the sturdy bullish sentiment round these indexes. 

“The general internet influence was restricted,” they write, pointing to the sustained optimism in U.S. equities in comparison with different areas.

In the meantime, the report flags a stark divergence in international markets. European equities are mentioned to be more and more bearish, with “constant and incremental rising bearish flows” throughout indexes, together with EuroStoxx, the place positioning turned reasonably bearish. Comparable developments had been noticed in exchange-traded fund (ETF) flows, indicating waning investor confidence within the area.

In Asia, Citi notes that positioning stays comparatively impartial however with a discernible bearish shift. For China A50 and Grasp Seng futures, the decline seems to be pushed not solely by rising quick positions but additionally by an “unwind of longs into year-end.”

Whereas U.S. fairness markets show resilience, the analysts warn that draw back dangers stay for smaller-cap benchmarks just like the Russell 2000, the place positioning is impartial however lengthy losses are mounting.

The report concludes that the desire for U.S. equities “appeared evident,” citing prolonged bearish sentiment in MSCI Developed Markets ex-U.S., the place quick positioning has climbed to a three-year excessive.