In the final nine weeks of 2023, buoyed by the prospect of peaking interesting rates and avoiding the worst-case economic scenarios, equities took a turn for the brighter.
What was remarkable about this mini rally wasn’t just its force or geographic breadth, but the size of stocks that came along for the ride. In the UK, while the blue chips of the FTSE 100 index recorded a handy 8.2 per cent total return, the more domestic FTSE 250 – where market capitalisations range from around £4bn to £400mn – posted a gain of 17.4 per cent.
Head down the pecking order, and the momentum didn’t let up. The FTSE Small Cap index, which includes those main market firms too small for the FTSE 350, climbed 13.2 per cent in simple price terms, matching the rise in the Aim All-Share. This was after the junior market recorded a two-year peak-to-trough decline of around 49 per cent, its biggest drawdown since the 2008-9 financial crisis.