In March and April, hedge funds undertook the most significant sell-off of European shares observed in a decade, largely due to Donald Trump's proposed trade tariffs and the strong euro impacting export competitiveness. The environment was characterized by volatility, leading to a reduction in long positions and an increase in bearish bets on European markets. Notably, German companies remained an exception with net long positioning, and following the suspension of tariffs, funds shifted to banks and defense industries, indicating a strategic repositioning in anticipation of rising defense spending in Europe.
Hedge funds exhibited the largest sell-off of European shares in a decade, prompted by trade tariff concerns and the euro's strength diminishing exports.
Despite a general reduction in long positions, hedge funds maintained a net long stance on German companies while reallocating to banks and defense sectors.
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