Investing.com — Investors have reduced both long and short positions over the past two weeks and are turning cautious ahead of this week’s Federal Reserve meeting, major technology earnings reports and a key jobs report, according to Citi analysts.
This comes as stock markets have fallen sharply over the past two weeks as a mix of profit-taking in technology stocks and general risk-averse sentiment sparked broad-based selling, which has led investors to reduce their holdings across the board, although their overall net position remains slightly long, Citi said.
Selling long positions at the saw will turn them all into losses and risk further unwinding.
The focus this week is entirely on the outcome of a two-day rate hold on Wednesday, which the central bank is widely expected to keep rates unchanged, but with markets pricing in a 25 basis point rate cut in September, any signals as to when the central bank plans to start cutting rates will be closely watched.
Besides the Fed, attention this week will be focused on earnings reports from major technology companies, including Microsoft (NASDAQ:), Apple (NASDAQ:), Amazon.com (NASDAQ:) and Meta Platforms (NASDAQ:). The sell-off in technology stocks has been a major factor in the market weakness and volatility over the past two weeks, with disappointing results from Alphabet (NASDAQ:) adding to the sense of caution.
This week will see the release of a number of important data points on the U.S. labor market that the Fed will use to decide whether to change interest rates, but the most important will be released on Friday.
Outside the US, European stocks also struggled with a weak stance, with attention shifting to the Bank of England on Thursday.
In Asia, Japanese market positioning eased for two weeks ahead of an interest rate decision on Wednesday, with investors deeply divided on whether the Bank of Japan will raise interest rates by 10 basis points after a historic hike in March.
However, short selling positions in the Chinese market have increased over the past week amid ongoing concerns about a slowdown in the country’s economic recovery.
