Investing.com -- Investor positioning in U.S. equities has moderated, with a rise in bearish flows driven by uncertainty around trade policy and mounting fiscal concerns, according to Citigroup (NYSE: C ).
The shift was most apparent in the Nasdaq and Russell 2000 , where the bank pointed out “a combination of new short positioning and long covering.”
But despite this trend, overall U.S. positioning remains net long, strategists led by Chris Montagu said.
They pointed out mixed activity in S&P 500 futures , while exchange-traded fund (ETF) positioning stayed close to neutral.
Meanwhile, small caps “exhibit a higher degree of positioning risks from current loss levels,” the team added.
In Europe, equity positioning was broadly stable despite growing pressure from potential U.S. tariffs.
Citi noted that positioning in EuroStoxx and FTSE indices remained near neutral, while sentiment on the DAX stayed bullish. European banks, in the meantime, continued to attract positive momentum.
Asian markets showed a more uneven picture. “Positioning trends diverged across Asian markets,” strategists wrote, as investors took opposite stances on major regional indices.
Bullish sentiment rose in China’s A50 and Hong Kong’s Hang Seng , despite declining index levels. Meanwhile, Japan’s Nikkei and South Korea’s KOSPI saw weaker positioning, with the Nikkei showing the sharpest drop of all indices tracked.
“Nikkei positioning is the most bearish amongst the indices we track and has also seen the largest decline for the week,” the note states.
Overall, Citi highlights how investor sentiment is shifting in response to macroeconomic and policy-driven risks, particularly in the U.S., where “ongoing U.S. trade policy uncertainty and heightened concerns regarding fiscal policy” are weighing on positioning.