The gap in investor positioning between U.S. and European equities has begun to narrow, according to a recent note by Citigroup strategists. This shift reflects changing market sentiment as bullish bets on the S&P 500 ease, while interest in European equities, particularly the DAX, grows.
Let’s break down the insights and understand their implications for global markets and investor strategies.

Key Trends in U.S. and European Equities

Easing Bullishness on U.S. Equities

Investors added $5 billion in new short positions while reducing long positions on S&P 500 futures last week.
Nasdaq futures, though still showing strong long positions, have pulled back slightly from prior bullish levels.
Despite this, ETF flows for both the S&P 500 and Nasdaq remained robust, suggesting lingering optimism in these markets.

Growing Interest in the DAX

While Euro Stoxx futures still reflect moderate bearish sentiment, exposure to the German DAX has turned more bullish since mid-2024.
Short unwinding in European indices suggests a potential pivot in sentiment, though overall positioning still lacks strong conviction.

Diverging Sentiment Between Regions

Citi emphasizes a “clear divergence” in investor sentiment: continued bullishness in U.S. equities versus lingering bearishness in broader European indices like Euro Stoxx.
Volatility in flows further underscores the cautious outlook on Europe.

Asian Markets Mixed

Positioning on China A50 and Hang Seng indices remains slightly net long, but these positions are currently at a loss, with China A50 longs averaging a 3.4% decline.
Japan’s Nikkei index has seen gradual increases in net positioning, reflecting moderate bullishness.

Investment Implications for 2025
The narrowing positioning gap between U.S. and European equities signals evolving market dynamics. For investors, the focus should be on identifying opportunities in regions where sentiment and fundamentals align.
Leveraging FMP APIs for Data-Driven Decisions

Sector P/E Ratio API: Compare valuation metrics across U.S. and European sectors to identify attractive entry points.
ETF Holdings API: Analyze ETF flows and exposure to sectors like technology (Nasdaq) or industrials (DAX).

Key Takeaways

U.S. equities remain a stronghold for investors, but easing bullish sentiment indicates potential headwinds.
Europe, particularly Germany’s DAX, is showing signs of growing interest, offering diversification opportunities.
Asian markets like China and Japan present mixed prospects, requiring careful evaluation of positioning and macroeconomic trends.

By utilizing tools like FMP’s APIs, investors can make informed decisions amid these shifting global dynamics.