Small-cap stocks brush aside debt concerns, as central banks remain offbeat

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Small-cap stocks brush aside debt concerns, as central banks remain offbeat

The Small-capital stocks had been the biggest losers in the stock market catastrophe last year, which had experienced the worst figures since the year of great financial depression, as investors had remained worried about their higher leverage amid growing interest rates.

Nonetheless, the small-cap stocks had surprised the market in 2019’s rebound, while the shares of debt-drowned companies had been leading the charges at this moment, largely boosted by the downbeat Fed comments and an end to the three-year long vitative cycle of interest rate hike, alongside, dovish tones of ECB as well as BoE, in the face of a nerve-wracking worries of global scale slowdown.

Citing statistics, so far in 2019, the Small-Cap Russell 2000 index had gained 12.9 percent, while the benchmark S&P 500 secured a 9 percent gain. Meanwhile, another small-cap index, the S&P 600 had surged over 12.1 percent.

The January rebound came as a fresh sigh of relief, after the small-cap Russel 2000 and the S&P 600 had dropped over 20 percent in December, 2018 from their August peak, indicating a correction in the index price, while the S&P 500 had been just an inch shy of a correction course, falling 19.8 percent below its September, 2018 peak.

The recent upswing momentum of the small-cap stocks would likely to keep pedaling the momentum, while the downcast tone of ECB, Fed and BoE appears to hold the debt-laden companies well supported.