Asian stocks climbed on Monday with AI-linked themes in focus at the start of the first full trading week of the year, while oil prices dipped on the view U.S. military action in Venezuela would be unlikely to disrupt a well-supplied energy market.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab rose 1.4% to hit a record high, while S&P 500 e-mini futures were 0.2% higher as investors looked through the geopolitical developments ahead of a packed week of economic data releases.
Investors are assessing the repercussions of a dramatic weekend in which the U.S. captured Venezuelan President Nicolas Maduro and U.S. President Donald Trump said he was putting the South American nation under temporary American control.
Trump told reporters on Sunday he could order another strike if Venezuela does not cooperate with U.S. efforts to open up its oil industry and stop drug trafficking. He also threatened military action in Colombia and Mexico.
"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 moved between gains and losses, last down 0.7% at $60.33 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.
"Asia’s immediate market reaction has been muted, with investors largely brushing off the weekend’s developments," said David Chao, global market strategist for Asia-Pacific at Invesco in Singapore. "In North Asia, the focus remains firmly on the structural tailwind from rising AI investment, outweighing geopolitical concerns."
Among regional share markets, the Nikkei 225 (.N225), opens new tab soared more than 3.3% to near a record high reached two months ago, as markets reopened for the first trading day after New Year. Japanese stocks extended gains as data showed manufacturing activity stabilised in December, ending a five-month streak of deterioration.
"The AI investment surge, especially from the United States, has been a boon for top-line GDP growth in Taiwan and to a lesser extent Korea," analysts from Goldman Sachs wrote in a research note. "Between 5-10 cents of every U.S. AI investment dollar ends up in Taiwan... much of the rest finds its way to Asia, with TSMC the single biggest supplier."
Markets in China were more muted, with the Hang Seng Index (.HSI), opens new tab trading flat, dragged down by Chinese oil companies as a gauge of Hong Kong-listed energy stocks fell 3%. Australian shares (.AXJO), opens new tab were unchanged, with gains in major miners offsetting declines in the top energy stocks.
"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."
In early European trading, pan-region futures were last up 0.7%, German DAX futures were up 0.5%, and FTSE futures were up 0.6%.
The U.S. dollar index , which measures the greenback's strength against a basket of six currencies, was last up 0.2% at 98.746, extending recent gains into a sixth consecutive day.
Against the yen, the greenback strengthened 0.3% to a two-week high, last trading at 157.21 yen per dollar. Bank of Japan Governor Kazuo Ueda said on Monday the central bank will continue to raise interest rates if economic and price developments move in line with its forecast, after hiking rates 25 basis points to 0.75% last month.
The yield on the U.S. 10-year Treasury bond was up 0.8 basis point at 4.179%. Gold tacked on 2% to trade at $4,413.93 as the geopolitical uncertainty added to demand for safe havens.
Bitcoin was last up 1.3% at $92,393.99, while ether was last 0.3% higher at $3,153.41.
