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IN a holiday-impacted week, markets were focused on the surprise US military action in Venezuela.
This was largely shrugged off despite the seriousness of the military action and capture of President Nicolas Maduro. It signals that investors do not see the event as a serious threat to global growth. Crude oil prices barely moved, reflecting ample global supply and the fact that Venezuela now accounts for only around 1% of world oil production.
Instead, the immediate market reaction was selective rather than fearful: energy stocks rose sharply, with Chevron (a long-term investor in Venezuela) jumping around 6%, Exxon Mobil gaining more than 2% and oilfield services firms such as Halliburton and SLB (Schlumberger) up roughly 7%, as investors began to price in potential opportunities linked to rebuilding Venezuela’s ageing energy infrastructure.
Traditional safe havens also attracted interest, though the moves were measured rather than dramatic. Gold extended its strong 2025 performance by rising modestly but the volatile silver price climbed more than 6% on the first day of trading this week. Bitcoin traded above $93,000, a level not seen in a month, suggesting cautious investor hedging.
The important Volatility Index hovered around 14, a level associated with stable rather than stressed markets. Analysts broadly described the episode as a headline shock, with investors focused on whether further escalation will follow, rather than reacting to the event itself.
While G7 government bond yields were little changed, there was a lot more action in Venezuelan debt. Defaulted bonds issued by Venezuela and its state-run oil company PDVSA jumped more than 30% to 40 cents on the dollar, suggesting that investors are anticipating that a more US-friendly administration, or regime change, will eventually lead to the lifting of sanctions and pave the way for a debt restructuring.
In a quieter week for corporate news, shares in Tesla fell almost 3% on the first trading day of the new year after it was revealed that China’s BYD had overtaken it to become the world’s biggest seller of electric vehicles.
Elon Musk’s company delivered 1.64 million vehicles last year, a second consecutive year of declining sales, following a backlash against Musk’s political activities, the cancellation of US tax credits for EV purchases and fierce competition from lower-cost Chinese rivals such as BYD, Geely and MG.
BYD reported a 28% increase in sales to 2.26 million, boosted by a successful expansion into Europe and south-east Asia. In contrast to Tesla which focuses on its Model 3 and Model Y cars, BYD also offers dozens of models spanning budget hatchbacks to premium SUVs.
Shares in Novo Nordisk gained 5% on Monday after it announced its new once-a-day GLP-1 weight-loss pill will be available for $149 a month until April, and $199 thereafter. Patients with insurance can pay just $25 a month. The Danish company is hoping that the Wegovy pill, the first and only oral GLP-1 for weight loss, will enable it to regain market share from arch-rival Eli Lilly’s jabs Mounjaro and Zepbound. Eli Lilly is also working to develop its own anti-obesity pill.
Looking ahead, attention now turns to upcoming economic data, particularly the latest US jobs figures on Friday, which will help shape expectations for growth in the world’s largest economy and the direction of interest rates in 2026.
