此外，昨日区域性银行股也迎来大涨，其中 Impacted by the outcome of the election, the U.S. stock market surged across the board yesterday, with a focus on small-cap stocks. $Russell 2000 Index (.RUT.US)$ surging by 5.84% to 2392.92 points, approaching its historical high of 2458.86 points.
Vincent Juvyns, Global Market Strategist at JPMorgan Asset Management, stated that the tax reduction measures in Trump's plan may benefit a wide range of industries and companies more focused on the U.S. domestic market; while the fiscal measures in Trump's plan may boost the performance of small and medium-sized companies that have underperformed in recent years.
'America First' trade is bullish for mid-small cap stocks.
On Wednesday, 'America First' trade (U.S. assets outperforming globally) gained strong momentum, as the market speculated that the next U.S. president will introduce policies stimulating domestic growth and shielding the world's largest economy from overseas competition, making small-cap stocks more susceptible to the impact of domestic growth.
Regional bank stocks also saw significant gains yesterday, including $Spdr Series Trust S&P Regional Bkg Etf (KRE.US)$ Closing up 13.41%, hitting a high since March 2022.
Regional banking stocks surged, reflecting investors' bets that Trump will fulfill his promises to lower taxes and relax banking regulations. During his campaign, Trump vowed to reduce the corporate tax rate from 21% to as low as 15%, and for each new regulation added, he would eliminate 10 old ones. Compared to Harris's plan to increase corporate taxes, Trump will create a more attractive environment for banks. Trump also promised to reform major regulatory agencies and pledged to dismiss regulators, including the SEC Chairman Gary Gensler.
As financial stocks account for nearly 20% of the Russell 2000 Index, the performance of small bank stocks has a significant impact on the Russell 2000 Index. Influenced by the above bullish news, the Russell 2000 Index rose nearly 6% yesterday.
After the election, Wall Street is optimistic about the performance of mid and small-cap stocks.
Vincent Juvyns, a global market strategist at J.P. Morgan Asset Management, stated that the surge in Russell 2000 Index futures suggests that after Donald Trump's election victory, the performance of the US stock market will further shift from technology blue-chip stocks to other sectors. 'We expect to see a strengthening trend where the performance of the US stock market will expand beyond the technology sector to other sectors, particularly mid and small-cap stocks.' Juvyns said that Trump's planned tax cuts may benefit a wide range of industries and companies more focused on the US domestic market; Trump's fiscal measures may boost the performance of mid and small-cap companies that have underperformed in recent years.
Jefferies Financial strategist Andrew Greenebaum believes that as confidence builds, small-cap stocks will bring opportunities, and after the presidential election, the performance of these stocks will outperform.$S&P 500 Index (.SPX.US)$Based on data since 1980, in non-recession election years, the Russell 2000 Index has an average return of about 7% in the subsequent eight weeks.
Matthew Rowe, head of cross-asset strategy at Nomura Asset Management, stated that Trump's plan to reduce the corporate tax rate from 21% to 15% would benefit small-cap companies. Most importantly, the trading price of small-cap stocks is lower than that of large-cap stocks. Trump winning the election would be a reason to chase small-cap stocks.
It's almost certain to cut interest rates in November, and during the rate-cutting cycle, the performance of small-cap stocks may outperform large-cap stocks.
The next interest rate decision of the Federal Reserve will be announced in the early hours of November 8 Beijing time. The market unanimously expects the Fed to cut interest rates by 25 basis points, lowering the federal funds rate to the range of 4.5%-4.75%.
Bank of America Merrill Lynch pointed out that the weak October non-farm payrolls report is sufficient to prompt the Fed to cut rates by 25 basis points in November, followed by another 25 basis points cut in December.
JPMorgan economist Michael Feroli adjusted his forecast for the Fed's rate path, writing in his report on Wednesday that the Fed may cut rates by 25 basis points at both the meetings this month and in December, and then start cutting rates quarterly starting in March next year until the federal funds rate reaches 3.5%. JPMorgan believes that Trump's ability to reshape the Fed may only gradually materialize over time.
After the interest rate cutting cycle begins, the performance of small-cap stocks often outperforms large-cap stocks in the short to medium term. Especially during non-recession periods, rate cuts exert less pressure on the stock market. Rate cuts generally support the stock market, and small-cap stocks are considered to benefit more from loose monetary policy compared to large-cap stocks.
The main logic is that small-cap stocks are often very sensitive to the benchmark interest rates set by the Fed and heavily rely on floating rate loans. Therefore, in the background of Fed rate cuts, lower loan rates can help ease the balance sheet pressure for small-cap companies, which is expected to increase profit margins and stock valuations.
How to bet on small cap stocks through ETFs?
In addition to the Russell 2000 Index, there are also the S&P SmallCap Index and the CRSP SmallCap Index for small-cap stock indices, which have corresponding ETFs as well as leveraged or inverse ETFs.
Among them, the ETFs tracking the Russell 2000 Index include:
$iShares Russell 2000 ETF (IWM.US)$
Leveraged and inverse ETFs include:
$Proshares Trust Pshs Ultruss2000 (UWM.US)$
$Short Russell 2000 Proshares (RWM.US)$
$Proshares Trust Pshs Ulshrus2000 (Post Rev Split) (TWM.US)$
ETFs that track the S&P Small Cap Index and CRSP Small Cap Index include:
$iShares Core S&P Small-Cap ETF (IJR.US)$
Leveraged and inverse ETFs corresponding to:
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Editor/Jeffy
