The bank highlights the DAX as most vulnerable to squeeze-driven gains while US positioning remains concentrated in small caps.
European equities face heightened short-squeeze risks as investors unwind bearish bets, according to Citi. The bank noted improving sentiment and easing energy concerns have spurred fresh long positions alongside short covering in the region.
Positioning in US markets remains bullish but increasingly concentrated, with the Russell 2000 reaching extended levels. In Asia, short exposure in South Korea’s KOSPI has risen, while Hong Kong’s Hang Seng benefited from profitable short unwinds.
Citi identified Germany’s DAX as the most likely candidate for further squeeze-driven upside, citing regional divergence in investor positioning.