Citi downgrades European equities to ‘neutral’
Citi downgraded its stance on European equities on Monday to ‘neutral’ from ‘overweight’ as it said near-term risks have increased, with markets narrowing and political uncertainty taking centre stage.
At the same time, the bank upgraded the more "growth-oriented" US.
Citi highlighted key reasons for the downgrade: (1) heightened political risks; (2) narrowing market leadership; and (3) potential for a continued positioning unwind.
"Our sector allocation is tilted towards growth (‘overweights’ in tech, industrials) and select defensives (healthcare)," it said.
The bank said it remains constructive over the medium-term due to early-cycle macro dynamics in Europe and inflecting fundamentals.