Citigroup strategists, in a recent note that included commentary from David Chew, observed a modest increase in new long risk flows into S&P 500 futures over the last week. By contrast, the strategists said positioning for the Nasdaq 100 and the Russell 2000 has remained close to neutral, creating a gap in risk exposure across major U.S. index futures.
The team interpreted the divergence between S&P 500 futures and the other two indices as evidence that investors have not yet completed a broad rotation into risk-on positions. While S&P futures activity dominated trading flows, Nasdaq and Russell 2000 positioning showed signs of stabilization without moving decisively into a risk-on stance.
Across European markets, the strategists reported that bank futures positioning has become extended and crowded. They warned that further additions to long exposure in bank futures raise the probability of near-term profit-taking among market participants. At the same time, positioning in FTSE and DAX futures has lost traction as investors pare back long bets.
In Asia, equity flows were mixed over the same period. The strategists noted particular vulnerability in South Korea's Kospi, attributing that assessment to stretched positioning coupled with ongoing profit-taking activity. Beyond the Kospi, the analysis did not identify a clear directional consensus across other Asian markets.
Overall, Citigroup's assessment highlights a split in positioning dynamics: a moderate strengthening in S&P 500 futures on one hand, and a more cautious, neutral stance in Nasdaq 100 and Russell 2000 futures on the other. In Europe, crowded long positions in bank futures and waning momentum in FTSE and DAX futures point to possible short-term reversals. In Asia, the mixed flow picture and the specific concern around the Kospi suggest localized vulnerabilities rather than a unified regional trend.
Investors and risk managers monitoring these developments should note the uneven nature of recent flow patterns and the potential for short-term profit-taking where positioning is most concentrated.