Asian stocks experienced an uptick on Monday, while oil prices exhibited volatility as investors evaluated the impact of recent U.S. military action in Venezuela. This event sets the stage for a busy week filled with economic data releases in the first complete trading week of the year.
MSCI’s broad index of Asia-Pacific shares, excluding Japan, increased by 1.2%, and S&P 500 e-mini futures saw a 0.1% rise.
The market is processing the effects of a significant weekend development where the U.S. captured Venezuelan President Nicolas Maduro. On Saturday, President Donald Trump announced that Venezuela would temporarily come under American control.
According to Neil Shearing, group chief economist at Capital Economics, “The removal of Venezuelan President Nicolas Maduro by the U.S. is unlikely to have meaningful near-term economic consequences for the global economy. However, its political and geopolitical ramifications will reverberate.”
Brent crude futures rose slightly by 0.2% to $60.87 as the oil market considered the consequences of U.S. involvement in Venezuela and 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 support, both financially and in terms of engineering, to approach its maximum production capacity, which was not particularly impressive to begin with. We are therefore not sellers of oil in this situation and, in fact, think that upside risks could develop.”
Regional stock markets displayed varied performances. The Nikkei 225 surged 2.8%, nearing a record high reached two months earlier. Japanese stocks benefited from data indicating stabilization in manufacturing activity in December, ending five months of decline.
In contrast, Seoul’s Kospi and Taiwan’s TWII both climbed over 2%, achieving new record highs. Meanwhile, Chinese markets were more subdued, with the Hang Seng Index inching up 0.1%, hampered by a 3.1% decline in Hong Kong-listed energy stocks. Australian shares saw a 0.1% increase.
Vasu Menon, managing director for investment strategy at OCBC in Singapore, noted, “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 currency’s strength against a basket of six others, rose by 0.1% to 98.55, marking its 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 prices climbed 1% to trade at $4,371.29. Bitcoin rose by 0.2% to $91,452.90, while ether remained stable at $3,141.29.
