Asian Pacific indices rally again

US stock indices rallied yesterday in a move which saw the Dow Jones Industrial Average post fresh all-time highs. The Dow added 1.2% while the small-cap Russell 2000 jumped 1.6%. The NASDAQ and S&P made gains of 0.7% and 0.6%, respectively.

Source: TN Trader

The Energy sector outperformed as investors considered the possible opportunities of dealing with a Maduro-free Venezuela. Oil giants Exxon Mobil and ConocoPhillips both gained 2%, while Chevron, which already operates in the area, added 5.1%. But it was oil services operators which outperformed, with Halliburton and Schlumberger up 7.8% and 9% respectively.

This was an indication of the scope and cost of rebuilding and repairing Venezuela’s energy infrastructure, which must take place before producers have a chance to tap the world’s largest reserve of crude oil.

Overall, investors reacted positively to the shock events over the weekend, which saw US forces spirit away President Maduro and his wife out of Venezuela and into a New York jail. Investors also looked past a disappointing ISM Manufacturing PMI, which came in below expectations and continued to show contraction across the sector for the tenth consecutive month.

US stock index futures were mixed in early trade this morning. The Dow, S&P and Russell were modestly lower for the most part, while the NASDAQ traded positively thanks to gains across the major chipmakers.

Yesterday, Nvidia CEO Jensen Huang delivered the keynote speech at the 2026 CES show. He focused on the importance of robotics to the company and said that Nvidia was talking to robotaxi developers and manufacturers about using Nvidia’s chips and Drive AV software.

The S&P 500 and NASDAQ have effectively traded sideways since late October. This coincided with a pullback across IT and Telecoms on investor fears that these sectors were overvalued. Both indices are tech-heavy. But gains for the Dow and Russell indicate that investors are broadening out their exposure to equities, rather than drawing it in. And, while this can change suddenly, S&P volatility as measured by the VIX is remarkably subdued.

This is not the kind of environment in which one typically experiences a sudden stock market correction. Add in a set of relatively benign MACDs across all the majors, and it would suggest that the path of least resistance points upwards.

But this week sees the release of a stack of labour market updates starting with ADP and JOLTS tomorrow, and Non-Farm Payrolls on Friday. Could these trigger a jump in volatility, or will they help confirm the current bullish tone?

European stock indices were mixed in early trade this morning. The Euro Stoxx 50 and German DAX traded around their respective all-time highs hit yesterday. Meanwhile, the UK’s FTSE 100 surged back above 10,000 to hit a fresh record intra-day high. Once again, mining and defence stocks were in demand. Spain’s IBEX 35 also touched a fresh record high in early trade.

Source: TN Trader

Yesterday, European indices pushed higher, tracking the rally in US markets following the capture of Maduro and President Trump’s call for American energy companies to invest heavily in Venezuela. The consistency of gains across regions highlights how investors are currently willing to discount the risk of wider geopolitical escalation.

The US Dollar Index steadied overnight following Monday's selloff. The index began the New Year on the front foot. It rallied sharply and hit a three-week high yesterday afternoon. But it then fell sharply as geopolitical concerns eased, and after the release of a disappointing US ISM Manufacturing PMI. This reinforced forecasts of a softer growth outlook.

Source: TN Trader

The Australian dollar extended its advance against the US dollar for a third consecutive session. This came ahead of its November CPI release due out tomorrow. Support for the AUD also came from a survey of leading economists suggesting the Reserve Bank of Australia (RBA) may not yet be done tightening monetary policy.

Inflation is expected to stay elevated, and at least two further rate hikes remain on the table. Overnight, the AUD/USD hit its highest level since October 2024, having benefited from the softer dollar tone and reduced anxiety around geopolitical escalation.

FX markets are now focused on upcoming US data, particularly Friday’s Non-Farm Payroll report. The consensus expectation is for job growth of around 55,000, down from last month’s 64,000. Hopefully, this latest release will have ironed out the issues around data collection due to October’s US government shutdown.

Gold put in another solid performance yesterday and built on those gains in overnight trade.  Gold has made slow but steady upside progress ever since its post-Christmas plunge ahead of the New Year.

Just over a week ago, it topped out just a fraction below $4,550. It then fell sharply, dropping below $4,275 last Wednesday. This morning, it hit $4,475 before pulling back a touch and remains within sight of its recent all-time high.

The chart looks constructive from a bullish perspective. But gold needs to hold support around $4,300 on any pullback to keep the upside momentum going.

Source: TN Trader

Silver also looks constructive from the bullish perspective. It has put in a strong performance since last Wednesday, when it came close to hitting $70 per ounce. This represented a pullback of over 16% from the all-time high hit two days earlier. But since last Wednesday’s low, silver has rallied impressively. It broke above $79 this morning, representing a 13% recovery from last week’s low.

Once again, silver is unruly and extremely volatile, and this looks set to continue. Its daily MACD has pulled back from recent highs and has flattened out a touch. Despite this, it continues to suggest that silver is very overbought.

Source: TN Trader

Oil markets saw sharp two-way price action as traders digested developments in Venezuela. Front-month WTI fell towards $56 per barrel in early trade yesterday, hitting its lowest level in over a fortnight. 

But it then rallied strongly as headlines crossed around the US capture of Venezuela’s Maduro and as President Trump stated his ambition for US oil majors to invest billions in rebuilding Venezuela’s energy sector.

Source: TN Trader

Technically, it looks as if oil is attempting to break out of its recent downtrend. But as things stand, it doesn’t look as if there’s much conviction behind the rally. This could change should buying volumes pick up, as there are a ton of shorts who may be forced to cover should upside momentum accelerate. 

Otherwise, the current rally could provide yet another opportunity for sellers to load up at higher prices.

Natural gas followed oil higher during Monday’s rebound but gave back gains overnight, slipping 1.7% as volatility continues to grip the sector. The move highlights how fragile sentiment remains, with traders reacting quickly to shifts in the broader energy complex and headline risk. The overnight pullback suggests the market remains far from settled.

Bitcoin and Ether were a touch softer in early trade, though prices remain near the upper end of their recent trading ranges. Bitcoin and Ether appear to be consolidating after a positive run off the lows hit in mid-December.

Technically, both cryptos look quite constructive from a bullish perspective, and traders appear content to pause and reassess amid shifting macro and geopolitical signals.

The VIX was a touch firmer this morning but continues to trade at low levels. The January VIX approached 16.00 yesterday but rallied off here overnight. The decline in implied volatility reflects how markets are increasingly comfortable pushing risk higher, even in the face of weak data and elevated geopolitical uncertainty. For now, volatility remains subdued, reinforcing the sense that the equity bulls remain firmly in control.

With no major earnings due for now, focus shifts squarely to macro data. Attention turns toward the US non-Farm Payroll report on Friday, with ADP and JOLTS tomorrow. JPMorgan will kick off the Q4 earnings season next Tuesday, providing the next major catalyst on the corporate side.

The January Fed meeting on the 28th also looms. Geopolitical developments remain fluid, with Iranian unrest now being flagged as the next potential flashpoint. Maduro has claimed he was kidnapped and is a US prisoner of war, while US oil companies are reportedly looking to recover assets previously seized by Venezuela.

The Dow has hit a fresh record high, weak data is being ignored, and the dollar is showing signs of vulnerability. Metals are firmly in the spotlight, and energy markets deserve close attention. As things stand, the bulls remain in full control.