Stocks climb, oil volatile as investors assess Venezuela implications

SINGAPORE: Asian stocks climbed, and oil prices were choppy on Monday as investors considered the implications of U.S. military action in Venezuela to prepare for a packed week of economic data releases in the first full trading week of the year.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.2%, while S&P 500 e-mini futures were 0.1% higher.

Investors are assessing the repercussions of a dramatic weekend of events, which saw the U.S. capture Venezuelan President Nicolas Maduro. President Donald Trump said on Saturday he was putting Venezuela under temporary American control.

“The removal of Venezuelan President Nicolas Maduro by the U.S. is unlikely to have meaningful near-term economic consequences for the global economy,” said Neil Shearing, group chief economist at Capital Economics. “But its political and geopolitical ramifications will reverberate.”

Brent crude futures edged up 0.2% to $60.87 as oil markets assessed the impact from the U.S. intervention in Venezuela and a vote by OPEC+ on Sunday to keep oil output unchanged.

“A bearish oil price story is highly unlikely. Venezuela is going to need a lot of help, both capital and engineering, to get its production anywhere near its maximum, which was never that impressive to begin with,” said Marko Papic, chief strategist at BCA Research in Los Angeles.

“We are therefore not sellers of oil in this situation and, in fact, think that upside risks could develop,” Papic added.

Among regional share markets, the Nikkei 225 soared 2.8% to near a record high reached two months ago. Japanese stocks extended gains as data showed manufacturing activity stabilised in December, ending a five-month streak of deterioration.

Seoul’s Kospi and Taiwan climbed more than 2% apiece to hit fresh record highs.

Markets in China were more muted, with the Hang Seng Index up 0.1%, dragged down by Chinese oil companies as a gauge of Hong Kong-listed energy stocks fell 3.1%. Australian shares were up 0.1%.

“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, said Vasu Menon, managing director for investment strategy at OCBC in Singapore.

“The strategic calculations are unfolding against the backdrop of a midterm election year, and developments are unpredictable,” he said. “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 greenback’s strength against a basket of six currencies, was last up 0.1% at 98.55, extending recent gains into a fifth consecutive day.

The yield on the U.S. 10-year Treasury bond was up 0.2 basis points at 4.187%.

Gold tacked on 1% to trade at $4,371.29.

Bitcoin climbed 0.2% to $91,452.90, while ether was flat at $3,141.29.