Small caps are back. The week saw a familiar S&P 500 and Nasdaq hit fresh all-time highs, while a long-lost little brother, Wall Street’s small-cap benchmark the Russell 2000, surged to a record close, marking its first peak since a bull run to November 2021.

The rally signals renewed investor confidence in small caps. The sector is riding a wave of optimism and bull run data, which historically delivers robust returns when the United States Federal Reserve cuts rates.

Reduced policy rates are particularly beneficial for smaller, rate-sensitive firms, which rely heavily on debt financing. As a result, the gap is narrowing between the underperforming small caps and the blue chips. After years of divergence, the punters’ market is risk on.

Australian resources faced a tough week, whether

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