Asian stocks experienced gains while oil prices showed volatility on Monday, as investors weighed the ramifications of U.S. military actions in Venezuela and prepared for a significant week of economic data releases in the first full trading week of the year.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose by 1.2%, while S&P 500 e-mini futures increased by 0.1%. Investors are currently assessing the impact of a dramatic weekend, during which the U.S. captured Venezuelan President Nicolas Maduro. President Donald Trump announced on Saturday that Venezuela is under temporary American control.
Neil Shearing, group chief economist at Capital Economics, stated, “The removal of Venezuelan President Nicolas Maduro by the U.S. is unlikely to have meaningful near-term economic consequences for the global economy, but its political and geopolitical ramifications will reverberate.”
Brent crude futures saw a slight rise of 0.2% to $60.87 as oil markets evaluated the effects of the U.S. intervention in Venezuela, alongside a decision by OPEC+ on Sunday to maintain current oil output levels.
Marko Papic, chief strategist at BCA Research in Los Angeles, commented, “A bearish oil price story is highly unlikely. Venezuela will require substantial assistance, both capital and engineering, to bring its production anywhere near its maximum, which was never particularly impressive to begin with. We are therefore not sellers of oil in this situation and, in fact, believe that upside risks could develop.”
In regional stock markets, Japan’s Nikkei 225 surged by 2.8% to approach a record high reached two months prior. Japanese stocks continued to gain as data indicated stabilization in manufacturing activity in December, breaking a five-month period of decline.
Both Seoul’s Kospi and Taiwan’s markets rose by over 2% each, reaching fresh record highs. In contrast, markets in China were more subdued, with the Hang Seng Index up by 0.1%, hindered by a 3.1% drop in a gauge of Hong Kong-listed energy stocks. Australian shares increased by 0.1%.
Vasu Menon, managing director for investment strategy at OCBC in Singapore, remarked, “Given the unexpected turn of events in Venezuela over the weekend, it remains to be seen whether the Trump administration has an appetite for more regime changes, such as in Iran. The strategic calculations are unfolding against the backdrop of a midterm election year, and developments are unpredictable. This uncertainty could keep oil prices supported. A more fraught geopolitical environment may buoy haven assets like precious metals.”
The U.S. dollar index, which measures the strength of the greenback against a basket of six currencies, rose by 0.1% to 98.55, marking a fifth consecutive day of gains. The yield on the U.S. 10-year Treasury bond increased by 0.2 basis points to 4.187%.
Gold increased by 1% to trade at $4,371.29. Bitcoin saw a rise of 0.2% to $91,452.90, while ether remained stable at $3,141.29.
