Yahoo Finance Investors de-risking both long and short bets as Fed, tech earnings loom- Citi
Investing.com-- Investors were seen reducing both long and short positions over the past two weeks, Citi analysts said, with investors turning cautious before a Federal Reserve meeting, major technology earnings and key jobs data this week.
This comes with stock markets nursing steep losses over the past two weeks, as a mix of profit-taking in technology and a broader risk-off sentiment sparked widespread selling. This in turn saw investors cut their positions across the board, although overall net positioning on the S&P 500 still remained slightly long, Citi said.
Selling in the NASDAQ Composite saw long positions all turn to loss, bringing the risk of added unwinding.
Focus this week is squarely on the conclusion of a two-day Fed meeting on Wednesday, where the central bank is widely expected to keep rates unchanged. But any signals on when the bank plans to begin cutting rates will be closely watched, with markets pricing in a 25 basis point cut in September.
Apart from the Fed, focus this week is also on a slew of mega-cap technology earnings, including Microsoft Corporation (NASDAQ:MSFT), Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN) and Meta Platforms Inc (NASDAQ:META). A rout in technology stocks was a main driver of market weakness and volatility over the past two weeks, with underwhelming earnings from Alphabet Inc (NASDAQ:GOOGL) also sparking increased caution.
A slew of key U.S. labor market reports- which are considered by the Fed in altering interest rates- are due through the week, most importantly nonfarm payrolls data on Friday.
Outside the U.S., European equities were also grappling with bearish positioning, with focus turning to a Bank of England rate decision on Thursday.
In Asia, positioning in Japanese markets moderated over the two weeks, with the Bank of Japan set to decide on interest rates on Wednesday. Investors are largely split over whether the BOJ will raise interest rates by 10 basis points, after a historic hike in March.
Chinese markets, however, saw increased short positions over the past week, amid sustained concerns over a slowing economic recovery in the country.
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