Asian stocks continued their record ascent on Tuesday, building on momentum from Wall Street, where gains in oil companies and financials propelled the Dow Jones Industrial Average to an all-time high.
The rise in U.S. oil companies was supported by the recent U.S. military operation that captured Venezuelan President Nicolas Maduro. Despite an initial $1 per barrel increase in crude oil prices, they later receded as traders evaluated the potential impact on Venezuela’s oil supply, which is the largest in the world.
Overall, these events had a limited impact on risk sentiment, with equities driven more by momentum, while currency markets remained focused on macroeconomic data. The U.S. dollar remained steady ahead of the release of monthly employment data on Friday. It had initially surged to a four-week high in the previous session but later retreated after a manufacturing activity index hit a 14-month low.
Precious metals stayed near historic highs, and copper prices reached a record level. MSCI’s broadest index of Asia-Pacific shares rose 0.4% to an unprecedented level, primarily fueled by gains in Japanese stocks, with the Topix index climbing 1.3% to a new peak.
Elsewhere, Hong Kong’s Hang Seng index increased by 0.7%, mainland Chinese blue-chip stocks advanced 0.3%, and Australia’s stock benchmark rose by 1%. South Korea’s KOSPI index dipped 0.4% after hitting record highs the previous day.
U.S. S&P 500 futures added 0.1% following a 0.6% rise in the cash index overnight, with Chevron shares surging over 5%.
U.S. President Donald Trump announced plans to place Venezuela under temporary American control and suggested that further action could be taken if Venezuela does not cooperate with U.S. initiatives to open its oil industry and combat drug trafficking. Trump also hinted at potential military actions in Colombia and Mexico.
Trump is scheduled to meet with U.S. oil executives later this week to discuss strategies for increasing Venezuelan oil production, according to a source familiar with the situation.
Yusuke Matsuo, a senior market economist at Mizuho Securities, noted in a client advisory that Venezuela’s relatively small economy appears to reassure investors that the global economy and financial markets are unlikely to be directly impacted. However, he emphasized that increasing the country’s oil production will take years. Matsuo added that while risk assets continue to perform well, gold, considered a safe-haven asset, is also expected to do well amidst ongoing geopolitical concerns.
In the latest trading session, Brent crude futures fell 19 cents to $61.57 per barrel, while U.S. West Texas Intermediate crude decreased by 22 cents to $58.10.
Gold remained steady at approximately $4,449 an ounce after a 2.7% increase on Monday, sitting just under $100 from its record high last month of $4,548.92.
Copper prices reached new heights in London and Shanghai due to supply concerns following a strike at a Chilean mine, with U.S. Comex copper hitting an all-time high on Monday.
The U.S. dollar was stable at 156.47 yen and showed little change at $1.1724 per euro. The British pound was valued at $1.3539. The dollar index, which measures the currency against a basket of six major currencies, edged down 0.1% to 98.291, after reaching 98.861 on Monday, the highest since December 10.
The upcoming U.S. monthly employment report, scheduled for Friday, is expected to be pivotal in shaping expectations for future monetary policy. Traders currently anticipate two Federal Reserve interest rate cuts this year, according to LSEG calculations based on futures data.
