Citi's equity markets positioning model shows global equities turn bearish amid Middle East conflict
- Citi writes that investors unwound positions in the indices where gains had been strongest, notably the FTSE, KOSPI and Nikkei, while establishing new short positions elsewhere amid the Middle East conflict.
- The bank notes that US positioning has shifted to a net bearish stance across both large- and small-cap indices, with the Russell 2000 seeing a marked decline.
- In Europe, Citi says DAX positioning has turned negative, FTSE flows were dominated by profit-taking, and both EuroStoxx and DAX showed signs of cooling.
- In Asia, Citi writes that KOSPI and Nikkei activity was driven entirely by reductions in long exposure, while S&P/ASX 200 and Hang Seng positioning eased.
- China A50 stood out, with positioning levels improving on short-covering flows.
Context
Citi's analysis highlights a significant shift in global equity positioning, primarily driven by the escalating Middle East conflict. Investors are moving from net long to net bearish stances across major indices, particularly in the US and Europe, indicating heightened risk aversion. This shift could lead to increased volatility and further downturns in equities as market participants react to geopolitical risks.
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