Introduction: Venezuela news drives up gold and defence stocks
Good morning and welcome to our rolling coverage of business, the financial markets and the world economy.
Donald Trump’s strike on Venezuela last weekend, and the capture of its president, Nicolás Maduro, and his wife, Cilia Flores, is sparking a dash for safe haven assets, and shares in defence companies, today.
Gold has jumped by more than 2% this morning to $4,420 an ounce, towards the record highs set at the end of last year.
Silver’s up around 4% at $75.50 an ounce, adding to its strong gains in 2025.
Trump’s move on Caracas on Saturday morning forces markets to react to political shockwaves just as investors return to their desks after the Christmas and new year break.
Ipek Ozkardeskaya, senior analyst at Swissquote, says markets are “barely flinching” at the Venezuelan news, although a risk premia is creeping back into asset prices.
Ozkardeskaya explains:
Unsurprisingly, safe-haven assets — led by gold — are enjoying a positive ride this morning. The yellow metal, which traded at a fresh record above $4,500 by the end of December but closed the year with a sharp decline below $4,400, is back above that level this Monday. Silver is up more than 3.6% at the time of writing, while the Swiss franc is softer against a broadly bid US dollar, and there is no particular sign of stress or lack of appetite across risk assets.
Most Asia-Pacific stock markets have risen today, with defence stocks rising across Japan and South Korea.
In Tokyo, defence contractor IHI has jumped 9% today, with Mitsubishi Heavy Industries up 8.4%.
Shares of South Korean defence giant Hanwha Aerospace are up by 7%.
The agenda
-
9.30am GMT: Bank of England money and credit report
-
9.30am GMT: Bank of England mortgage approvals data
-
4pm GMT: ISM survey of US manufacturing
Key events
The oil price has shaken off its earlier losses.
Brent crude is now up 0.5% at $61 a barrel, as investors recognise that it would take years, and a lot of money, to meaningfully increase Venezuela’s oil exports.
Joshua Mahony, chief market analyst at Scope Markets, explains:
Notably, we have seen oil prices rise despite the prospect of a sharp rise in Venezuelan output as US companies invest and expand operations in a country that boasts the highest oil reserves in the world. However, the reality is that we could see a sharp decline in Venezuelan output over the near-term, with Trump effectively shutting down the shadow fleet trade routes that have seen oil flow to the likes of China over recent years.
While Trump claims to run the country, it will likely take time to even organise the oil industry to start exporting into US refineries, while the potential to ramp up output will invariably take years given the crumbling infrastructure and lack of investment under Maduro.
Investors can be forgiven for wondering whether the US move on Venezuela increases the risk of geopolitical instability around Taiwan, says Chris Beauchamp, Chief Market Analyst at IG.
Beauchamp adds:
“Of potentially greater relevance is whether Washington continues to press its claims over Greenland, and how this may further strain cohesion within the Western alliance.”
The euro has weakened against the US dollar today, as traders have watched Europe’s leaders struggle to response to the capture of Nicolás Maduro.
The single currency has dropped by more than a third of a cent against the US dollar, to $1.1681, and is also down 0.35% against the pound.
Kit Juckes, chief FX strategist at Societe Generale, says there is a clear risk that the euro experiences a significant correction, adding:
The sense that three of the big global powers are flexing geopolitical muscles while Europe prevaricates, is hard to avoid and our belief that EUR/USD can make it to 1.20 before turning lower, is going to be tested.
European defence stocks have jumped today
Heightened geopolitical risks have pushed up defence stocks across Europe today.
German arms manufacturer Rheinmettal’s shares have jumped by 7.3%, as have RENK Group, which makes propulsion and drivetrain technology for military vehicles.
Thales, which makes defense systems, are up 4.3%, while aerospace firm Leonardo are 6% higher.
In London, BAE Systems remain one of the top risers, up 4.5%.
As well as the Venezuela invasion, investors are also digesting Donald Trump’s enthusiasm for acquiring Greenland.
Yesterday, the US president told The Atlantic magazine: “We do need Greenland, absolutely. We need it for defence.”
Greenland’s prime minister Jens-Frederik Nielsen has hit back, saying on Facebook last night:
“Threats, pressure, and talk of annexation have no place between friends.
Enough is enough. (…) No more fantasies about annexation.”
The initial reaction to the US military action in Venezuela across equity, fixed income and commodity markets is likely to be small, predicts Stephen Dover, head of Franklin Templeton Institute.
But, it will also reinforce the need for some countries to boost spending on national security, and could eventually lead to significant supplies of oil from Venezuela.
Here are some initial implications, Dover adds:
-
US intervention is not unprecedented. The US has a long history of intervening in the Western Hemisphere. The US first formally declared its ‘hegemonic interests’ in the region via the Monroe Doctrine of 1823. It would therefore be incorrect, in our view, to consider the recent action as a fundamental change in US foreign policy, or to suggest that similar steps might be contemplated in the Middle East or elsewhere.
-
Defense investment becomes more important. The Trump Administration has reinforced the perception that the US is willing to act unilaterally and to use force. Other countries, with territorial interests elsewhere, could be emboldened by the US use of power. This action will also likely add to the uncertainty of the dollar’s role as the “safe heaven” while raising further questions about deterioration of international institutional pillars. The US military’s recent action is therefore likely to reinforce the trend, well underway, for various countries worldwide to invest more in their national security. That has been one of our key investment themes since the Russian invasion of Ukraine.
-
Limited short-term oil supply impact. Given the uncertainties about how Venezuela will be governed and given the checkered US history of ‘regime change’ in petro-countries (e.g., Iraq or Libya), oil markets are unlikely to anticipate a rapid increase in crude oil supply from Venezuela. Venezuela has the world’s largest reserves of crude oil (over 300 billion barrels), but the poor state of its ageing oil extraction and transportation infrastructure, coupled with the low quality of its ‘heavy’ crude, suggest that even the arrival of political stability will not quickly increase its crude oil output or exports (presently around 1 million barrels per day or roughly 1% of world output). Another factor to keep in mind is that most of Venezuela’s oil is exported to China.
-
Potential long-term oil market impact stronger. Longer-term stability in Venezuela, coupled with a potential peace deal in Ukraine, could release more than 5 million barrels per day of oil onto global crude markets by the end of this decade. If so, that would amount to about 5% or more of global crude output, enough to keep oil prices depressed for longer, which would be a clear positive for global growth and a restraint on inflation.
Meanwhile in the UK, consumer borrowing rose by the most in two years in November, a sign that people put the cost of Christmas on their credit cards.
Bank of England data shows that net borrowing of consumer credit by individuals increased to £2.1bn in November, up from £1.7bn in October.
The BoE also reports that the annual growth rate for all consumer credit rose to 8.1% in November, from 7.5% in the previous month, adding:
That included a 12.1% increase in credit card borrowing, with other forms of consumer credit increasing by 6.3%.
Karim Haji, global and UK head of financial services at KPMG, says the data shows that consumers are being squeezed:
“The uptick in consumer borrowing will catch few by surprise as many households rely more heavily on credit to manage the elevated costs of Christmas.
“The clear theme as we enter 2026 is one of fragility, [with] continued economic uncertainty and cautious consumer spending. The regulator is putting a heavy emphasis on supporting customers. Lenders need to be very clear in their approach to customer focused rules like Consumer Duty, Fair Value and Targeted Support.”
US energy company stocks jump in pre-market trading
US energy company shares are set to rally when Wall Street opens later today.
Chevron, which is seen as well-placed to invest in Venezuela’s oil industry, has jumped by 7% in pre-market trading. It is already operating in the country under a special licence provided by the Trump administration.
Exxon Mobil are up 3.2% in pre-market trading, while Halliburton – who provide products and services to the oil and gas sector – have jumped 9%.
Venezuela’s bonds surge as investors bet on debt restructuring
Venezuela’s government bonds have leapt in value this morning (as JP Morgan predicted earlier), as investors bet on a debt restructuring following the capture of president Maduro.
As explained at 8.04am, Venezuela’s debt trades far below its face value after the country defaulted in 2017, but has been rising in recent weeks as some traders have anticipated regime change in Caracas.
Deutsche Borse data shows that a Venezuelan government bond that matures in 2027 has jumped in price, from 31.5p on the dollar to over 40p on the dollar.
A second bond which should have been repaid in 2022 has risen too, from 31.5p to 34p.
These gains mean bond vultures who swooped on Venezuela’s debt last month will already be sitting in profits, as the markets anticipate that Maduro’s removal could lead to a restructuring of Venezuela’s government debt.
Reuters reports that bonds issued by the country’s government and state oil company, Petroleos de Venezuela (PDVSA), jumped as much as 8 cents on the dollar, or around 20%, in early European trading, with analysts predicting further gains to come.
The oil price remains in the red this morning, with Brent crude now down 1% at $60.15 per barrel.
Analysts are in broad agreement that while the Venezuela attack is unlikely to boost demand for oil, it also won’t lead to a rapid surge in supply.
Kathleen Brooks, research director at XTB, says:
The question is, will traders focus on the potential for future Venezuelan oil flooding the market, which could tank the oil price, or will they focus on how much investment will be needed to get Venezuela to pump more oil? Right now, Venezuela pumps less than 1 million barrels per day, at its peak in 1998, before socialist dictators took control, it was pumping out nearly 3.5 million barrels per day. To get back to this level will take hundreds of billions of dollars in investment, which President Trump has said will partly come from US oil companies.
However, the type of investments needed including upgrading old and decaying infrastructure, drilling new oil wells and building more refineries to process Venezuela’s heavy crude oil. Optimizing resource-rich Venezuela to generate the income needed to turn the country around could take until 2030 and beyond, according to some oil analysts. Thus, any decline in the price of oil at the start of this week could be short lived.
Lale Akoner, global market analyst at eToro, agrees that it would take several years to incease Venezuela’s oil exports significantly.
“The reported capture of Venezuelan president Nicolás Maduro might be a geopolitical shock, but for markets it’s not an oil-price earthquake. Venezuela accounts for roughly 1% of global supply, and even in a best-case political outcome, restoring production would take years. Most of the disruption risk is already priced in, meaning this is a slow-moving structural story rather than a trigger for sustained oil price moves.
“For investors, the earliest impact is likely to appear in US refining, where heavy Venezuelan crude fits existing infrastructure. Refiners with exposure to complex facilities may see improved economics at the margin, while Canadian oil sands producers face increased competition over time.
“US shale producers are largely insulated, but Canadian oil sands may face longer-term pressure. Venezuelan barrels compete most closely with Canadian heavy crude, and any gradual return could erode the scarcity premium that has supported pricing for producers such as Suncor and Cenovus Energy. For investors, the signal isn’t to trade the headline, but to watch where incremental supply quietly reshapes margins and relative winners.”
Precious metal producers Fresnillo (+4.2%) and Endeavour Mining (+4.3%) are also among the top stock market risers in London this morning, tracking the jump in gold and silver today.
Defence stocks lift London stock market
London’s stock market has opened higher, lifted by weapons makers.
BAE Systems, which makes fighter jets, combat vehicles, artillary, warships and torpedoes, have jumped by 4.6% in early trading.
Defence contractor Babcock have risen by 3.8%.
Mining company shares are also rising in early trading, helping to push the FTSE 100 share index back over the 10,000-point mark which it hit for the first time last Friday.
JP Morgan: Maduro’s capture could trigger rally in Venezuela’s bonds
The US capture of president Nicolas Maduro is expected to set to trigger a rally in Venezuela’s international debt, analysts at JPMorgan have predicted.
Reuters reports that JPMorgan analysts told clients that debt issued by state oil company Petroleos de Venezuela (PDVSA) could also see strong demand:
“Venezuela and PDVSA bonds have roughly doubled in price since during the course of 2025, but should still see a strong bounce — up to 10 points — at the start of Monday’s session.”
Venezuela’s and PDVSA’s debt trades far below their face value since the country defaulted in 2017. But, its bonds rallied last month as investors gambled that the US might end Maduro’s regime, leading to a debt restructuring.
“China asks banks to report exposure to Venezuela after US raid”
Bloomberg are reporting that China’s top financial regulator has asked its policy banks and other major lenders to report their lending exposure to Venezuela.
The move suggests there are growing concerns among regulators about potential shocks to the banking sector as geopolitical risks intensify.
China has provided significant support Venezuela in recent years, with billions of dollars of loans to finance development.
Victor Shih, a professor at the University of California, San Diego, suggests those loans could come under strain:
“If the US gets its way and US creditors and claimants become the senior creditors of Venezuelan debt, Chinese creditors would face higher risks of missed payments as the Venezuelan government and state firms struggle to meet US demands and domestic expenditure needs.”
Although the near-term economic and financial implications of the capture of Venezuelan president Maduro are “minor”, the geopolitical ramifications could keep some risk premia elevated, says Thomas Mathews, Head of Markets, Asia Pacific, at Capital Economics.
Mathews told clients this morning:
The key channel through which turmoil in Venezuela might affect global markets is energy. Recent developments don’t look like a game changer for the global oil market. Venezuelan supply accounts for about 1% of the that market, and even if production returned to its glory days of a decade ago it would only be about 2% of it. So, it’s not surprising that so far the effect on oil prices has been limited.
That makes for a stark contrast with, for example, the spike in those prices around the Israel-Iran conflict last year. But that episode also suggests that other markets should remain calm even if oil does ultimately move in response to the developments in Venezuela.
Looking further afield, the White House could use concerns over drugs and organised crime to extract concessions from other countries in the region.
Mathews adds:
Mexico is perhaps the most obvious candidate, and was indeed called out by Vice-President Vance in remarks on X following the raid. With that in mind, it wouldn’t be surprising to see higher regional risk premia for a while.
Bitcoin has risen by almost 1.5% this morning, amid growing geopolitical tensions.
The world’s largest cryptocurrency has climbed to $92,495, adding to gains over the weekend.
The US dollar is rising on the foreign exchange markets this morning; its up 0.25% against a basket of other currencies.
Oil price drops
The oil price has dipped this morning, as traders weigh up events in Venezuela.
Brent crude, the international benchmark, has dipped by 0.67% to $60.34 a barrel.
Donald Trump has put Venezuela’s oil reserves at the heart of his plan for regime change in the country, suggesting US oil companies will spend billions of dollars on its infrastructure.
Analysts, though, point out that it could take years before there is a meaningful increase in Venezuela’s oil exports.
“This morning there’s still a lot of uncertainty, and for markets, there’s a debate about the extent to which any short-term oil supply disruption from the upheaval will end up being outweighed by a longer-term supply boost from higher Venezuelan production,” reports Jim Reid, market strategist at Deutsche Bank.
Reid adds:
After all, the US Energy Information Administration have said that Venezuela has the world’s largest proven crude oil reserves, at 17% of the global total. But despite those reserves, production has declined significantly over recent years, with crude oil production in 2023 down 70% from its 2013 levels.
So the prospect of a long-term supply recovery would serve to lower oil prices, and Trump himself said over the weekend that US oil companies would “go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country”. Indeed, those expectations have already brought down oil prices this morning.
Introduction: Venezuela news drives up gold and defence stocks
Good morning and welcome to our rolling coverage of business, the financial markets and the world economy.
Donald Trump’s strike on Venezuela last weekend, and the capture of its president, Nicolás Maduro, and his wife, Cilia Flores, is sparking a dash for safe haven assets, and shares in defence companies, today.
Gold has jumped by more than 2% this morning to $4,420 an ounce, towards the record highs set at the end of last year.
Silver’s up around 4% at $75.50 an ounce, adding to its strong gains in 2025.
Trump’s move on Caracas on Saturday morning forces markets to react to political shockwaves just as investors return to their desks after the Christmas and new year break.
Ipek Ozkardeskaya, senior analyst at Swissquote, says markets are “barely flinching” at the Venezuelan news, although a risk premia is creeping back into asset prices.
Ozkardeskaya explains:
Unsurprisingly, safe-haven assets — led by gold — are enjoying a positive ride this morning. The yellow metal, which traded at a fresh record above $4,500 by the end of December but closed the year with a sharp decline below $4,400, is back above that level this Monday. Silver is up more than 3.6% at the time of writing, while the Swiss franc is softer against a broadly bid US dollar, and there is no particular sign of stress or lack of appetite across risk assets.
Most Asia-Pacific stock markets have risen today, with defence stocks rising across Japan and South Korea.
In Tokyo, defence contractor IHI has jumped 9% today, with Mitsubishi Heavy Industries up 8.4%.
Shares of South Korean defence giant Hanwha Aerospace are up by 7%.
The agenda
-
9.30am GMT: Bank of England money and credit report
-
9.30am GMT: Bank of England mortgage approvals data
-
4pm GMT: ISM survey of US manufacturing
