🔔 The small-cap index breaks the 2200-point level
US2000 futures on the Russell 2000 index, representing small-cap companies from the USA, are gaining 2.00% today, breaking above the significant 2200-point level. US2000 has thus recorded a 7.25% increase over the last three trading days since Thursday.
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile appCompanies within the US2000 index are seeing significant double-digit gains today. Source: Bloomberg Finance LP
Broader stock markets are also seeing significant gains today, starting the new week optimistically. The gains appear to be driven by unexpected events from the weekend, specifically the assassination attempt on the presidential candidate in the November elections in the USA, Donald Trump. As a result of the attempt, markets are pricing in higher chances of winning the election. Among the best performers are oil producers, arms manufacturers, private prisons, and health insurers.
Despite impressive gains in recent days, small-cap stocks still lag behind large-cap stocks. Since the beginning of the year, US2000 has recorded just a 7.80% increase compared to over 20.00% gains in the US500 index. However, investor attention seems to be returning to the small-cap sector. The prospect of interest rate cuts as early as September supports investors' confidence in smaller companies. The effect of capital rotation was observed during the last CPI report release, when the US500 and US100 indexes recorded significant declines, while US2000 gained 0.70%. Weekly data on inflows into the IShare exchange-traded fund also seem to confirm growing interest in this sector. Of the total inflows of USD 8.65 billion in the week ended July 12, the largest participant was the Russell 2000, which added a net USD 3.7 billion.
US2000 (D1)
In the longer term, the correlation between the US500 and US2000 (Russell 2000) indexes remains very high. However, since the beginning of 2023, we can observe a significant divergence in the chart of both indexes. Large companies are faring much better in a more competitive environment of high interest rates. In recent days, however, we are seeing an attempt by the US2000 index to make up for "lost months," resulting in dynamic gains.
Source: xStation 5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.