Trump's Venezuela gambit tests investor appetite for geopolitical risk

By Ankur Banerjee and Rae Wee

SINGAPORE, Jan 5 (Reuters) - Markets whitethorn person shrugged disconnected the audacious U.S. seizure of Venezuelan President Nicolas Maduro, but immoderate investors pass that geopolitical risks are possibly being underestimated aft Donald Trump threatened further enactment successful the ​Americas.

Investors held their nervus connected Monday, with stocks successful Asia surging and lipid prices down modestly though safe-haven flows lifted golden prices, aft ‌President Trump said the U.S. would instrumentality power of the oil-producing nation.

While Washington has not made specified a nonstop involution successful Latin America since the penetration of Panama successful 1989, Trump's ‌threats against Colombia and Mexico highlighted the assertive displacement successful U.S. argumentation and brought geopolitical perils backmost to the fore for fiscal markets astatine the commencement of the year.

"We're being reminded that geopolitical risks are overmuch larger than immoderate fig formed connected imports," said Vishnu Varathan, caput of macro probe for Asia Ex-Japan astatine Mizuho Securities successful Singapore.

"The lawsuit and the question successful caput is - Is broader LatAm stableness astatine risk? Then it's a antithetic proposition isn't it, the flow-through ⁠effects and each could beryllium overmuch greater."

Analysts and investors ‌said the comparatively calm marketplace absorption to Maduro's seizure was due to the fact that Venezuela's lipid accumulation comparative to planetary output is tiny and it would instrumentality years of concern for accumulation to drawback up.

Still, the far-reaching interaction of the subject actions volition ‍weigh connected sentiment, though the determination could unlock Venezuela's immense lipid reserves and boost hazard assets implicit the longer-term.

American lipid companies are prepared to tackle the hard task of entering Venezuela and investing to reconstruct accumulation successful the South American country, Trump said.

"There should beryllium broader geopolitical implications from this event, but successful my view, the fiscal ​markets are not precise businesslike successful pricing specified risks accurately," said Tai Hui, main marketplace strategist for Asia-Pacific astatine J.P. Morgan Asset Management.

MARKETS' FIRST ‌TEST IN 2026

U.S. and planetary stocks made a accelerated commencement to the caller twelvemonth aft ending 2025 adjacent grounds highs, having notched double-digit gains successful a tumultuous twelvemonth dominated by tariff wars, cardinal slope argumentation and simmering geopolitical tensions.

The contiguous interaction is apt to beryllium seen successful the defence assemblage arsenic countries are expected to support raising defence spending successful the aftermath of Trump's readiness to usage U.S. subject unit arsenic portion of his broader argumentation agenda. At the aforesaid time, the heightened uncertainty astir U.S. policies volition measurement connected the dollar and its safe-haven status, analysts say.