The US small-cap stocks, which have been under pressure in recent months, could experience a turnaround in June. Several factors suggest a comeback for this asset class:
1. Seasonal Opportunities
Historically, June often offers good opportunities for small-cap stocks. This asset class has frequently experienced a rally in June in the past, which can be attributed to seasonal effects.
2. Technical Signals
Technical analysis indicates that small caps are in an environment conducive to a comeback. Buy signals from technical indicators may encourage investors to invest in these stocks.
3. Excessive Pessimism
The current excessive pessimism towards small caps could act as a contrarian indicator. When sentiment is overly negative, it can lead to a correction, providing opportunities for investors to invest in these stocks.
4. Interest Rate Changes and Valuations
Interest rate changes could create a more attractive environment for small caps. The valuations of these stocks have declined in recent months, making them more interesting again. The risk premium of small caps has currently disappeared, which could prompt investors to take a closer look at them.
5. Diversification and Market Development
For investors looking to diversify their portfolios, small caps could be an interesting option. Monitoring market developments and seeking opportunities in this asset class is particularly relevant to benefit from potential rallies.
6. Comparison with Large Caps
Small caps have underperformed large caps in recent months, leading to undervaluation. This could be a strong argument for investors seeking growth opportunities.
7. Global Market Changes
As investors increasingly turn away from US markets and invest in European stocks, this could also draw attention to small caps. The improved outlook for the European economy could indirectly influence US small caps as well.
In summary, both seasonal effects and technical and fundamental factors give investors reason to pay closer attention to small-cap stocks in June.