Breaking: U.S. Tech Stocks Under Pressure Ahead of Key Economic Data - Citi Strategists Warn
In a recent note, Citi strategists have warned that U.S. technology stocks could face significant pressure as investors continue to de-risk their portfolios. This trend has been observed over the past four sessions, with investors reducing risk across most markets.
Despite indexes in the U.S. starting to rise as investors unwind short positions, the overall trend of de-risking has persisted. The upcoming week is set to bring key updates on U.S. inflation and growth, with the Consumer Price Index (CPI) scheduled for release on Wednesday, followed by retail sales, industrial production, and jobless claims data on Thursday.
Specifically, the Nasdaq is highlighted as facing $22.5 billion in long positions at risk of potential unwinding, with average positioning remaining in loss below 20,050. Exchange-traded fund (ETF) flows have already turned negative for the Nasdaq, while remaining flat for the S&P 500.
In Europe, degrossing is also taking place ahead of the U.S. inflation report, leading to an extended net short position in the EuroStoxx 50 index. However, Citi strategists note that these shorts are only moderately extended, with less pressure on profits compared to the Nasdaq.
In China, bearish positioning is intensifying in the CSI 300 index, while the Hang Seng Index has turned more neutral. Japanese equities have been impacted by the unwinding of the Yen carry trade, but net positioning in the Nikkei 225 remains slightly long.
In summary, investors should be cautious as the de-risking trend continues in the market, especially for U.S. technology stocks. Key economic data releases this week could further impact market sentiment and lead to additional pressure on long positions. Stay informed and consider adjusting your portfolio accordingly to navigate through these uncertain times.