Venezuela: Indirect impact on markets could be unexpected theme of 2026

Risk is on for the second trading day of the year as equities rise, copper hits a record and Asian tech stocks reach fresh all-time highs. It seems like investors are very happy to do two things at the start of this week, 1, continue to rally on a broad basis even though geopolitical risks are rising, and 2, continue with last year’s bull market.

Another strong start for risk

While it is extremely early days in the trading year so far, all global indices are in the green. Asian stock indices are leading the pack, especially the Nikkei, followed by Europe’s main index and the Dow Jones. Gains are strong, the Nikkei is higher by more than 2.8%, while the Eurostoxx 50 is higher by 2.7%. The S&P 500 is up by just under 1% so far, along with the Nasdaq.

Can the US recover lost ground in 2026?

Broad-based gains for stocks suggest a continued broadening out of the stock market rally. After outperforming the US in 2025, more European indices look like they are overbought compared to their US counterparts. For example, on an RSI basis, 22% of the Eurostoxx 50 have an RSI greater than 70, compared with 6% of the S&P 500. Thus, the valuation gap has narrowed between the US and Europe, which could attract inflows into US stock markets in the coming weeks.

Financials lead US stocks higher

Two US sectors stand out on Monday. The first is financials. This sector is higher by more than 2% at the start of this week and is led by large gains for the likes of Coinbase, Robinhood and KKR. Bitcoin is rallying alongside other risky assets on Monday and is up by nearly $2.5k, this is boosting the broad US financial sector.  

Big Banks shrug off geopolitical risks

Big banks are also in demand and there have been decent gains for the likes of JP Morgan, up more than 3% today, and for Bank of America, which is higher by more than 2% so far. There are three factor driving inflows into US bank stocks at the start of the year. Firstly, valuation discounts compared to more richly valued tech stocks, secondly, a steepening yield curve, which boosts Net Interest Margin and thirdly, hopes for a further relaxation of banking regulation from President Trump’s administration.

US oil majors get boost from Trump’s actions in Venezuela

The energy sector is also in focus and is the second-best performer in the S&P 500 so far today. US oil majors will make big investments into Venezuela’s oil industry, according to President Trump. This was initially jumped on by investors and Chevron and Exxon Mobil surged in the pre-market, although gains have been scaled back as we move through the day. However, this is still an attractive theme for investors. Haliburton is higher by 10%, as it builds oil wells and refineries. Chevron is higher by more than 5% and Exxon Mobil is higher by 2%.

FTSE 100 boosted by miners and defense stocks

The events in Venezuela may not be having a direct impact on markets today, but there is an indirect effect. European defense stocks outperformed on Monday and the best performing stocks on the FTSE 100 include BAE Systems, Babcock and Rolls Royce. UK miners have also had a strong start to the week, as the gold price rose by more than $115 an ounce, silver rose by more than 5% and copper reached a record high.

Venezuela: Indirect impact on markets could be unexpected theme of 2026

Overall, risk sentiment is strong and events in Venezuela did not weigh on positive momentum. However, this does not mean that the recent events in Venezuela have been dismissed by traders, instead they could keep upward pressure on defense stocks as investors assess who could be the next target for the US, and as Russia and China get emboldened to violate UN law to meet their own foreign policy goals. This added level of uncertainty in the world may also see continued demand for precious metals, which are getting a new lease of life as we start the 2026.