Citi: US stocks have scope for further rally amid sustained futures, ETF inflows

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Citi: US stocks have scope for further rally amid sustained futures, ETF inflows
(Updated - April 3, 2024 5:50 AM EDT)

Citigroup strategists said Tuesday that US stocks have the scope for a further rally as indicators point towards sustained interest in riskier investments, and current market positions are not considered overly extended.

The strategists observed a dip in investor optimism mid-March but noted a resurgence in investment flows over the last week.

Investors added $16 billion in new long positions on S&P 500 futures last week, while the exchange-traded funds (ETFs) registered net inflows.

Furthermore, they pointed out that market positions are not historically overextended, which supports the potential for continued positive market trends.

"Positioning is not stretched relative to history, meaning the current trend can continue in the coming weeks."

Elsewhere, the strategists observed improvements in European market sentiment over recent weeks, with positioning in the Euro Stoxx 50 showing a slightly more bullish stance compared to the U.S. market.

“​​The positive sentiment continued with over $2bn new longs in the past week and ETF inflows,” the team highlighted.

In China, the investor sentiment was more divided, with the Hang Seng seen bearishly at -1.1, while FTSE China A50 enjoys a bullish outlook at +1.8. The A50 has gained positive momentum recently and consistently over the past month.

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