The ‘January effect’ appears to be materialising this year, with early capital flows and a broadening market rally setting the stage for gains across US equities, according to Citadel Securities. Scott Rubner, Citadel Securities’ head of equity and equity derivatives strategy, notes that January is historically the strongest month for inflows, and elevated money-market balances, currently at a record $US7.6 trillion ($11.3 trillion), support the theory that US stocks tend to rise more in January than in other months. Citadel Securities is a leading global market maker, providing liquidity and execution services across a range of financial products. The company connects buyers and sellers, helping to make markets more efficient and transparent.
As markets reopened following the holiday period, cash linked to retirement contributions, year-end bonuses, and discretionary wealth mandates is rapidly moving into passive risk assets. This seasonal pattern aligns with historical market performance. Since 1985, the Nasdaq 100 Index has reportedly posted gains in January approximately 70 per cent of the time. The average advance has been around 2.5 per cent, rising nearly 6 per cent in years when the tech-heavy benchmark finishes the month in positive territory, according to Rubner.
According to Rubner, flows are expanding beyond the market’s most crowded trades, even as volatility remains compressed relative to the month’s calendar of catalysts. ‘What began as an AI-led profit cycle is increasingly diffusing across sectors, reinforcing market breadth and supporting a more durable earnings expansion for the entire equity market,’ Rubner wrote.
