​Markets have started the new year on a strong note, led by small-cap stocks. It is still very early, but the recent performance, first of international equities, and now small caps, is an encouraging sign. A much-anticipated broadening of returns, away from the usual leadership, is a positive development for stock markets and is something investors should be watching.

Markets stumbled into the new year, with modest losses for US equities. International stocks continued to perform well, and after a long period of underperformance, one of the key questions for 2026 will be whether they can carry the momentum they built. 2025 was also a rare year in recent history where most markets provided solid returns; stocks, bonds, and commodities all generally performed well. Of course, we had our ups and downs at different points, but few would complain about the end results.