Global markets experienced a rally on Tuesday, mirroring the year’s first record on Wall Street, as investors increased their bets on AI-linked technology. This surge occurred despite the ouster of Venezuelan President Nicolas Maduro, which had initially caused oil prices to fluctuate. The attention of investors has now shifted to US monetary policy and the release of key data that could influence the Federal Reserve’s interest rate decision at the end of the month.
The surprise US raid on Caracas, which resulted in Maduro and his wife being taken to New York to face drug charges, was largely ignored by traders. Analysts remain optimistic about the outlook for equities this year, with artificial intelligence being a primary driver. According to Charu Chanana, chief investment strategist at Saxo Markets, “Global equities are likely to keep looking through the geopolitical shock unless it threatens the broader supply chain or tightens financial conditions, because geopolitics has become a persistent feature rather than a surprise.”
The Dow ended at a new record, boosted by a rally in tech giants such as Amazon and Meta, as well as energy companies. The S&P 500 and Nasdaq also rose, supported by data showing US manufacturing activity contracted for the 10th consecutive month in December. This contraction provides the Fed with fresh justification to cut rates. Jobs data due to be released over the next couple of days could further support the case for easing.
Asian markets, including Hong Kong, Tokyo, Shanghai, and Seoul, experienced significant gains, with Seoul topping 4,500 points for the first time. The rally in Seoul was driven by a strong performance from chip giant SK hynix. In Sydney, Australia’s BlueScope Steel saw a substantial increase after announcing it was evaluating a US$8.8 billion joint takeover bid.
Oil prices slipped after rising 1.7% on Monday, as the impact of developments in Venezuela was being assessed. While Venezuela has significant oil reserves, a quick increase in output is unlikely due to the country’s infrastructure issues, low prices, and political uncertainty. The situation is being closely monitored, and its potential impact on global oil supplies and prices will be critical in the coming days.
Key market figures include the Tokyo Nikkei 225, which rose 1.3% to 52,518.08, and the London FTSE 100, which increased 0.5% to 10,049.60. The West Texas Intermediate and Brent North Sea Crude oil prices declined, while the euro and pound experienced slight gains against the dollar. As markets continue to evolve, investors will be watching closely for the release of key data and the Fed’s interest rate decision, which could significantly impact the global economy.
