Financial markets have opened the first full week of 2026 with a jolt, reacting to a dramatic geopolitical development over the Christmas break. A military strike authorised by former US President Donald Trump against Venezuela, resulting in the capture of President Nicolás Maduro and his wife Cilia Flores, has triggered a classic flight to safety among investors.
Safe Havens in Demand as Political Shockwaves Hit
The immediate market response has seen a sharp rally in traditional safe-haven assets. The price of gold has climbed by more than 2% this morning, reaching $4,420 per ounce. This move brings the precious metal closer to the record highs it set at the very end of last year, following a sharp decline that saw it close 2025 below $4,400.
Silver, which had already posted strong gains in 2025, is performing even more robustly, up around 4% at $75.50 per ounce. The Swiss franc, however, has softened against a broadly stronger US dollar.
According to Ipek Ozkardeskaya, a senior analyst at Swissquote, markets are "barely flinching" at the Venezuelan news on a broad scale, though a risk premium is slowly being factored back into asset prices. She noted that while gold and silver are enjoying a positive ride, there is "no particular sign of stress or lack of appetite across risk assets" elsewhere.
Defence Sector Stocks Rocket Higher
The most pronounced equity moves have been concentrated in the defence industry, particularly across Asia-Pacific markets. Investors are betting on increased geopolitical tensions and potential military spending.
In Tokyo, shares in major defence contractors surged:
- IHI leapt by 9%
- Mitsubishi Heavy Industries gained 8.4%
The rally was mirrored in South Korea, where shares of defence giant Hanwha Aerospace rose by 7%. Most other Asia-Pacific stock indices also managed to post gains for the day, demonstrating a nuanced initial reaction to the weekend's events.
Market Context and Today's Agenda
The sudden development has forced traders and investors to rapidly reassess the geopolitical landscape as they return to their desks after the festive break. The action against Caracas, which occurred on Saturday morning, represents a significant political shockwave with immediate financial ramifications.
Key economic data releases scheduled for today, which will now be viewed through this new lens of uncertainty, include:
- 09.30am GMT: Bank of England money and credit report and mortgage approvals data.
- 04.00pm GMT: The influential ISM survey of US manufacturing activity.
While the initial market reaction has been selective, the events in Venezuela have undoubtedly reintroduced a layer of geopolitical risk to the start of the new trading year. All eyes will now be on further developments and the broader international response.
