United States: A Selective Start to 2026 and a Shift Toward Small Caps

The first full trading week of 2026 delivered a mixed picture in U.S. markets. Major indices posted only modest gains, while small-cap stocks clearly outperformed.

The Russell 2000 rose sharply, signaling a return of risk appetite toward small and mid-sized companies. By contrast, the S&P 500 and Nasdaq delivered more moderate performance, with pockets of volatility within the technology sector.

At the same time, Wix shares declined about 4.69%. The move followed a period of heightened volatility around valuation, growth expectations, and early-year portfolio adjustments. The decline appears to reflect a stock-specific correction rather than a broader sector shift.

The U.S. Dollar Index (DXY) strengthened by approximately 0.67%, signaling a cautious return to the dollar as a stability asset. The combination of a stronger dollar alongside rising small caps suggests a market attempting to balance risk exposure with defensive positioning.

Israel: Clear Outperformance and an Aggressive Start to the New Year

The Tel Aviv Stock Exchange delivered one of the strongest performances globally during the week. The TA-35 index rose about 4.40%, while the TA-125 gained roughly 4.67% — significant moves relative to most developed markets.

The rally reflects improving local sentiment, renewed institutional buying, and a growing perception that the Israeli market remains discounted relative to global peers.

Importantly, the gains were broad-based rather than concentrated in a single stock. Trading volumes improved, reinforcing the credibility of the move and suggesting a market entering 2026 with a greater willingness to take risk.

Europe: A Positive Opening With Broad Tailwinds

Europe began 2026 with a constructive trend. The FTSE 100 gained about 1.74%, Germany’s DAX rose roughly 2.90%, and France’s CAC 40 added around 1.39%.

The IEUR index climbed about 1.69%, confirming that the move was regional rather than isolated.

Gains are supported by expectations of macro stability, reasonable valuations, and renewed global investor interest following a prolonged period of European underperformance.

Asia: Sharp Divergence Between Markets

Asia presented a fragmented picture. In China, the SSE Composite rose 0.11%, indicating stability without a clear trend shift.

South Korea strongly outperformed, with the KOSPI surging approximately 6.64%, reflecting renewed demand for technology and industrial stocks and optimism around exports.

Japan’s Nikkei 225 rose about 1.55%, while the yen weakened. The JXY index fell roughly 0.83%, supporting exporters but highlighting ongoing monetary policy sensitivity.

Hong Kong was weaker, with the Hang Seng Index declining about 0.49%, underscoring continued investor caution toward China-related assets.

Crypto: Stability at Elevated Levels

The crypto market remained stable. Bitcoin traded around $90,000 throughout the week, suggesting the market is awaiting the next catalyst rather than showing stress.

Outlook

The first full week of 2026 delivers a clear message: markets are not moving in unison, and capital is flowing selectively.

Israel and South Korea stand out as outperformers. Europe shows broad constructive momentum. The U.S. and parts of Asia reflect caution and selectivity. A stronger dollar alongside stable crypto reinforces the sense that markets are still searching for direction.

The coming weeks will be shaped by early-year macro data, interest rate expectations, and earnings season — factors that will determine whether this opening phase evolves into a sustained trend or remains a tactical move.