NEW YORK, Jan 5 : Major stock indexes jumped and oil prices gained on Monday, with energy shares climbing and investors reacting mostly calmly to potential market ramifications after a U.S. military strike that captured Venezuelan President Nicolas Maduro.
The Dow Jones Industrial Average hit a record high early. The S&P 500 energy index jumped more than 2 per cent with shares of Exxon Mobil also up more than 2 per cent and Chevron up more than 5 per cent. Financial shares also rose, while an S&P index of defense shares was up more than 1 per cent.
After the dramatic events in Venezuela at the weekend, U.S. 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 U.S. efforts to open up its oil industry and stop drug trafficking. He also threatened military action in Colombia and Mexico.
Oil prices were also higher as traders assessed the possible impact on crude flows from Venezuela, home of the biggest global oil reserve.
“It’s a reasonable reaction from the markets to largely ignore the geopolitics around Venezuela, with the exception of a handful of oil companies, which are spiking,” said Oliver Pursche, senior vice president, advisor for Wealthspire Advisors in Westport, Connecticut. “Venezuela’s GDP has virtually no impact on global GDP… so the market should ignore it,” he said.
The Dow Jones Industrial Average rose 600.51 points, or 1.24 per cent, to 48,982.9, the S&P 500 gained 45.32 points, or 0.66 per cent, to 6,903.79 and the Nasdaq Composite gained 203.37 points, or 0.88 per cent, to 23,439.00.
European shares were up 0.9 per cent.
Brent crude futures were up 87 cents, or 1.43 per cent, at $61.62 a barrel, while U.S. West Texas Intermediate crude gained 90 cents, or 1.57 per cent, to $58.22.
US MILITARY ACTION SPURS SAFE-HAVEN DEMAND
Gold rose to a one-week high on bullion’s safe-haven appeal.
Spot gold rose 2.7 per cent to $4,447.05 an ounce by 11:20 a.m. ET (1620 GMT), after earlier hitting its highest level since December 29. Gold hit an all time high of $4,549.71 on December 26.
The dollar index was down slightly after hitting a near-four-week high on Monday against a range of currencies following a weak December, with traders focused on this week’s raft of key economic data and largely shrugging off events in Venezuela.
The U.S. dollar index, which measures the dollar strength against a basket of six currencies, was last down 0.2 per cent.
The data rollout this week begins with ISM manufacturing figures on Monday and culminates with the monthly non-farm payrolls report on Friday.
U.S. Treasury yields eased.
Source: CNA
