Citi Research has downgraded the US equity market to Neutral from its earlier Overweight stance in its latest Global Equity Quarterly report dated April 14, 2025. The downgrade comes amid concerns over fading US exceptionalism and rising tariff-related risks under the Trump administration.
“The drivers of ‘exceptionalism’ are fading, both from a GDP and EPS perspective,” the report noted. Citi flagged the potential negative impact of US tariffs on earnings, stating that even after the recent market correction, the US still trades at an expensive ~80th percentile valuation multiple versus history.
Meanwhile, Citi has maintained its Overweight view on Europe, citing attractive valuations and ongoing structural support from fiscal stimulus. The firm also upgraded the UK to Overweight, primarily due to cheap valuations around the 20th percentile and its defensive nature which may help in a volatile environment.
In emerging markets, Citi has downgraded the overall EM view to Underweight from Neutral, with China seen as disproportionately impacted by current tariff developments. However, the brokerage remains bullish on India, highlighting its limited exposure to global trade tensions and a strengthening domestic macro story.
“Within the EM space, we are Overweight India,” Citi stated, adding that it sees incremental macro improvement in India along with Taiwan, Chile, and South Africa.
Australia continues to remain Underweight in Citi’s allocation model, despite showing minor improvements, as expensive valuations and weak earnings trends persist.
Disclaimer: This news article is for information purposes only and is based on Citi Research’s publicly available report. It does not constitute investment advice. Please consult a certified financial advisor before making any investment decisions.
