ASX 200: Australia ‘most extended’ global equity market: Citigroup

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Citigroup strategist Chris Montagu said there has been “no letup in bullish momentum” for the S&P/ASX 200, and profit-taking risk is high.

“There has been no letup in bullish momentum for the S&P/ASX 200. Positioning is one-sided and levels are currently the most extended seen in the past three years.”The S&P/ASX 200 on Monday closed up 41.3 points higher, or 0.5 per cent, to 7811.9 points, ending withing 50 points of the record high hit earlier in the month.

That view takes into account that sentiment in Chinese equities suggests investors are still not convinced onSimilar to the ASX, Mr Montagu said in the near term, Japan’s Nikkei appears more sensitive to potential short-term profit taking, “positioning bullish and profit levels highest amongst the indexes we track.

As for Europe, Mr Montagu said investor positioning appears to be turning increasingly bullish relative to the US. “Euro Banks, DAX and EuroStoxx are all extended long and almost exclusively one-sided. Extended levels of positioning and profits leave increased profit taking risks against DAX and Euro Banks.

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