Bullish momentum in US futures moderated last week, markets still extended - Citi
According to Citigroup strategists, bullish sentiment in US stock futures saw a moderate increase last week, signaling a tempered pace compared to recent trends.
Strategists highlighted that long positions in the Nasdaq 100 have reached their highest level in the past three years.
“Investor’ risk appetite resumed as PCE results came out in-line with expectations, perhaps alleviating some of the on-going concerns with respect to sticky inflationary pressures,” they wrote.
“Further risk flows were seen post PCE, which more than offset some of the profit taking witnessed earlier in the week,” added strategists.
In Europe, the positioning for EuroStoxx and DAX has become less overstretched compared to the previous week on a normalized basis. Nonetheless, the ongoing closure of the last few short positions in EuroStoxx has resulted in a lopsided, one-sided positioning configuration.
“With net positioning still extended long and profit levels near 6%, there is considerable profit taking risks, which could pose a headwind for further upside,” strategists wrote.
Elsewhere, the recent uptrend in bullish sentiment among Asian markets seems to have stalled. Despite some underlying stock indices experiencing gains, the Nikkei, KOSPI, Hang Seng, and China A50 all saw declines in notional positioning.
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