Stocks, bonds stable; oil dips as investors watch Venezuela crisis

Trump said he was putting Venezuela under temporary American control and that he could order another strike if Venezuela does not cooperate with US efforts to open up ​its oil industry

Stocks climbed and bond yields firmed while oil prices dipped on Monday as investors weighed up the potential repercussions of the US capture of Venezuelan President Nicolas Maduro.

A STOXX ‍benchmark of Europe's biggest companies rose 0.5 per cent ​while MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 per cent to a record high and US futures such as S&P 500 e-minis gained 0.2 per cent ahead of a packed week of economic data releases.

After the dramatic events in Venezuela at the weekend, US President Donald Trump said he was putting the South American nation under temporary American control and that he could order another strike if Venezuela does not cooperate with US 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 US is unlikely to have meaningful near-term economic consequences for the global economy," said Neil Shearing at Capital Economics. "But its political and geopolitical ramifications will reverberate."

Oil prices see-sawed as an OPEC+ vote to keep output unchanged was offset by concern over market disruption from events in oil-producing Venezuela. Brent crude futures were last down 0.8 per cent at $60.26 a barrel.

Defence stocks led gains in Europe after the US military strikes stoked fresh concerns about geopolitical risks.

An index of defence shares rose 2.7 per cent and hit its highest in two months.

"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," said Vasu Menon at OCBC in Singapore.

"The strategic calculations are unfolding against the ??backdrop of a mid-term election year, and developments are unpredictable. This uncertainty could keep oil prices supported. A more fraught geopolitical environment may ‌buoy haven assets like precious metals."

US MILITARY ACTION SPURS ​SAFE-HAVEN DEMAND

Gold prices rose on Monday, with spot prices up 2.33 per cent at $4,430 an ounce, still short of last year's record high of $4,549.71.

Safe-haven bonds also held steady, with the yield on the euro zone's benchmark ??German 10-year Bund marginally lower at 2.893 per cent , having risen 3 basis points last week. The yield on US 10-year Treasury ??bonds held at ‍4.173 per cent .

The US dollar index, which measures the dollar strength against a basket of six currencies, was last up 0.13 per cent at 98.685, extending recent gains into a sixth consecutive day.

Against the yen, the dollar was flat at ‍156.79 ‌yen. Bank of ​Japan Governor Kazuo Ueda said on Monday that the central bank will ‍continue to raise interest rates if economic and price developments move in line with its forecast after raising rates ‍last ‍month by 25 basis points ‌to 0.75 per cent .

Bitcoin was last up 1.2 per cent at $92,327.40, while ether was up 0.4 per cent at $3,154.62.