Investing.com: Bullish Momentum Builds in S&P Index Ahead of Fed's Dovish Pivot
Last week, bullish flows into the S&P Index gained momentum as it recovered, according to Citi strategists. Notional positioning in the index has reached levels not seen since late August, driven by fresh risk flows.
Strategists noted that current positioning risks are tilted towards S&P short positions, but forced unwinds are unlikely to drive significant upward pressure due to smaller position sizes. In contrast, exposure to S&P futures has remained steady, with investors cautiously increasing risk.
In Europe, positioning is more varied, with futures hovering close to neutral. While net notional levels suggest average positioning, new long risk has been light, indicating that growing investor confidence is not the main driver of the recent increase in net notional.
On the other hand, negative sentiment in China has intensified, with bearish positioning in the Shanghai Index reaching the 86th percentile. This may lead to near-term profit-taking, but the lack of new long flows points to persistent bearishness.
In Japan, the Nikkei Index closed slightly higher, with mixed positioning as opposing flows balance each other out. The upcoming Fed interest rate cut and uncertainty surrounding the size of the cut and broader easing strategy are key factors for global investors and policymakers.
The Fed's decision on Wednesday will have global implications, especially with the upcoming U.S. election adding to the complexity for investors and policymakers. Understanding these market dynamics and positioning trends can help individuals make informed decisions about their investments and financial future.