Citi’s Chew highlights growing risk appetite for Europe amid US AI turmoil, pointing to a potential leadership change in global equity markets.
US equities face selling pressure as AI woes hit US markets, according to Citi's Chew. The reallocation of risk demand toward Europe suggests bearish sentiment for US indices.
Citi's Chew cites AI-related losses pressuring US markets, while European valuations and sector composition provide a buffer. The shift in risk demand implies capital outflows from US indices.
It is short-term in nature, dependent on the trajectory of AI sentiment and any catalyst that revives confidence in US tech. Citi's view suggests it may persist until AI uncertainties subside.
Europe is attracting risk demand as US AI woes boost the relative appeal of European equities. Citi's Chew highlights growing appetite for the region, benefiting the DAX.
According to Citi's Chew, Europe's lower exposure to AI bubble concerns and more attractive valuations are drawing risk-seeking capital away from the overextended US tech sector.
The DAX, with its heavy industrial and financial components, stands to gain as investors rotate from US growth stocks into cyclicals. It could outperform in the short term.
Citigroup strategist Chew signals a rotation into European equities as AI-driven losses batter US markets. Risk demand tilts toward Europe, where valuations and sector composition offer a haven from the US tech selloff. The divergence underscores a potential shift in global equity leadership as AI exuberance fades.
According to Citi's Chew, AI-related woes are hitting US equities hard, prompting investors to rotate into European markets where valuations are more attractive and sector exposure differs, particularly to cyclicals and financials.
It could mark a leadership change if sustained, as Europe has lagged the US for years. The rotation reflects a broader reassessment of AI hype and its concentration in US tech stocks.