(Jan 05): Gold and the dollar rose after the ouster of Venezuela’s President Nicolas Maduro fanned geopolitical risk. Growth assets remained in demand, with technology stocks driving gains in equities.
Spot gold advanced more than 2% to climb above US$4,430 an ounce while silver jumped 4%. A gauge of the dollar headed for its biggest gain in more than two weeks. Nasdaq 100 futures rose 0.7%, with chip stocks such as Advanced Micro Devices Inc and Micron Technology Inc gaining more than 3% in premarket trading. Contracts on the S&P 500 climbed 0.3%.
Brent crude fell toward US$60 a barrel in a sign that oil traders were taking the developments in Caracas in their stride. Chevron Corp rose more than 7% in early trading, alongside sharp gains across US oil majors, after US President Donald Trump floated plans for a US-led revival of Venezuela’s industry.
On a day that saw demand for havens as well as riskier assets, the greenback and gold offered safety as questions swirled about what the weekend’s events hold for the global order. Equity traders, meanwhile, are showing little concern that tensions will curtail a three-year bull run.
“The economic impact of what happened in Venezuela is too small to weigh on equity markets,” said Christopher Dembik, senior investment adviser at Pictet Asset Management. “That’s also true when it comes to oil: people have had the time to take a look at the data and in the most optimistic scenario, it will take two or three years to have a significant impact.”
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The buoyant mood in big tech stocks was most prevalent in Asia, where a regional gauge hit an all-time high. Technology and mining equities led gains in Europe.
AI “absolutely stays the most dominant factor in the markets right now”, Charu Chanana, chief investment strategist at Saxo Markets, told Bloomberg TV. “Tech optimism continues to overpower any of the other narratives.”
There is still uncertainty about what comes next. Venezuela’s acting president Delcy Rodríguez asked the US to work with her country, striking a more conciliatory tone toward the Trump administration after her initial outrage at the capture of Maduro.
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In bond markets, the yield on 10-year Treasuries fell three basis points to 4.17%. The question is whether the events will add to the appeal of US debt by stoking risk or diminish demand due to concerns over inflation or US fiscal policy.
“There are too many uncertainties to contend with,” wrote Mohit Kumar, chief economist and strategist for Europe at Jefferies. “Near-term drivers are likely to shift back to macro — the AI debate, the unemployment and inflation picture and the large supply of government and corporate bonds in January.”
Venezuela bonds
Meanwhile, Venezuela’s deeply discounted bonds stood poised to gain after the capture of Maduro set the stage for the potential regime change that investors have been betting on.
Defaulted notes from the sovereign and state-run oil company PDVSA have already more than doubled to between 23 and 33 cents on the dollar in the past few months as Trump ramped up pressure. While still far out, the prospect of a potential debt restructuring could fuel further gains.
Key economic data will also shape the week ahead. In addition to the December jobs report, the US Bureau of Labor Statistics will issue figures on Wednesday (Jan 7) for November job openings, quits and layoffs. The Institute for Supply Management’s December surveys of manufacturers and service providers will also offer clues about employment in those industries.
Later in the week, the US government will report on housing starts, while the University of Michigan issues its preliminary January consumer sentiment index.
Uploaded by Arion Yeow
