Citigroup Maintains US Equity Overweight, Favors Tech and Healthcare

Citigroup strategists led by Beata Manthey have maintained an 'overweight' stance on U.S. equities within the firm's global asset allocation, according to the bank's report. The strategists expect U.S. stock market outperformance driven by a small number of large technology stocks to continue.

Sector Preferences

At the sector level, Citigroup favors technology, healthcare, and materials, according to Manthey's report. The strategist wrote: "We anticipate that the 'concentration trend' within the market will continue to exist, and with the spillover uncertainty brought by the Iran conflict, fundamental factors will re-emerge as the dominant driver."

Market Concentration and Geopolitical Impact

Manthey emphasized that market concentration is expected to persist amid geopolitical uncertainty. However, she noted a potential path for rebalancing: "If progress is made between the U.S. and Iran toward sustained ceasefire, it could trigger fund rebalancing, causing previously underperforming assets to rebound."

European Market Outlook

Manthey indicated that the allocation attractiveness of continental European markets is rising. Within Europe, excluding the energy sector, she identified the most attractive sectors as software, retail, and real estate.