Asian stock markets opened higher on Monday (January 5), unaffected by the geopolitical tensions sparked by the US arrest of Venezuelan leader Nicolás Maduro over the weekend. Both the Japanese Nikkei 225 and South Korean Kospi indices surged to record highs.
Following the US authorities’ actions, Maduro and his wife, Cilia Flores, were transported to New York and charged with “narco-terrorism conspiracy” and multiple illegal weapons offenses. The indictment alleges that drug trafficking has enabled political and military elites in Venezuela to “enrich themselves and consolidate their position.”
Despite Venezuela being a founding member of the Organization of the Petroleum Exporting Countries (OPEC) and having the world’s largest proven oil reserves, international oil prices surprisingly dropped after the US operation.
Initially, Brent crude prices fell by 1.2%, but later narrowed to a decrease of 0.25%; West Texas Intermediate (WTI) crude dropped by 0.4%.
The stability of oil prices is attributed to the market’s belief that the impact on supply is limited. Sources indicate that crucial Venezuelan oil infrastructure, such as the Howdah Port and the Amuay Refinery, remained operational after the US attack.
Experts generally believe that the oil price impact will be short-lived. Jung In Yun, CEO of Fibonacci Asset Management Global, told Bloomberg, “We do not expect the situation to escalate into a sustained oil crisis; this should be a temporary drag on sentiment.”
Defense-related stocks in Japan and South Korea saw significant gains. The Nikkei 225 index rose by 2.85% to 51,772.1, while the Kospi index in South Korea also surged over 2% to 4,398.54. Taiwan’s weighted index also climbed by 2.58% to 30,107.95.
In the Japanese stock market, Kawasaki Heavy Industries and Mitsubishi Heavy Industries soared by 5.7% and 6.4%, respectively. South Korea’s defense giant, Hanwha Aerospace, saw a 4% increase in stock price. Taiwan’s stock market was led by semiconductor, electronic, and optoelectronic sectors.
Despite the strong performance of stock markets, there remains a risk-averse sentiment due to short-term uncertainties, with spot gold prices rising by approximately 1% to $4,371.29 and silver also increasing by 1%.
Simultaneously, the US dollar index continued its rise for the fifth consecutive trading day. Analyst Kim Doo-un from Hana Securities in Seoul pointed out in a report that due to increased uncertainty, the US dollar is likely to continue its short-term rally.
Analysts generally believe that the direct impact of this event on the short-term global economy is limited. Neil Shearing, Chief Economist at Capital Economics, told Reuters that the US arrest of Maduro is “unlikely to have significant economic consequences for the global economy in the short term,” but its “political and geopolitical effects will continue to simmer.”
This week, market investors will shift their focus from geopolitical tensions to key upcoming US economic data releases. Key points include the December employment report, job vacancy data from the US Bureau of Labor Statistics, and manufacturing and service sector surveys from the Institute for Supply Management (ISM).
Despite geopolitical tensions, Wall Street strategists are generally optimistic about the stock market outlook for 2026.
Nevertheless, analysts caution that the escalating tensions will test the resilience of global stock markets after achieving their best annual returns since 2017 last year.
Dave Mazza, CEO of Roundhill Investments, told Bloomberg, “Even with heightened market volatility, stocks may continue to overlook these news headlines, with the ultimate market direction still influenced by interest rate trends and domestic catalytic factors in the US around 2026.”