Asian Pacific indices make early gains

US stock index futures were firmer across the board in early trade on Monday. Traders have addressed the first full market week of 2026 with a spring in their collective step, despite, or because of, the Trump administration’s daring/foolhardy ‘kidnapping’ of Venezuela’s President Maduro and his wife.

This morning’s price action contrasts sharply with marked weakness over the holiday period. This was when investors cut their risk exposure in thin, illiquid markets. Information Technology (IT) took the brunt of the selloff last week, with the S&P’s IT sector down 1.5%. In contrast, Energy found some love at last. The sector rose 3.3% as investors sought out value across a neglected sector.

It will be very interesting to see how equity markets move over the next few weeks. US stock indices have had a tremendous run following President Trump’s Tariff Tantrum sell-off in early April. But that upside momentum has petered out over the last few weeks. In fact, both the S&P 500 and NASDAQ are currently below the highs seen at the end of October.

Source: TN Trader

Could this suggest that the rally has exhausted itself and that the next big move is down? Or could this represent a period of consolidation ahead of another push higher? Either seems possible.

But it’s worth considering that S&P volatility, as measured by the VIX, has pulled back to levels which indicate that investors have little interest in hedging against a sharp pullback. Does this foreshadow another push up to fresh all-time highs? Or is this an indication of extreme complacency which will lead, inevitably, to tears before bedtime? As ever, time will tell.

European stock indices opened the week in positive territory, with investors taking their lead from US futures and a strong Asian Pacific session. The overthrow of Venezuela’s leadership dominated headlines.

Source: TN Trader

Yet overall, the European price action suggested investors were unconvinced that immediate market disruption would follow. Having said that, there were notable gains for Defence Sector stocks, as there were in Japan and South Korea. Miners were also in demand, thanks to sharp gains in precious metals and copper. But generally, trade was measured and reflected a wait-and-see approach.

European tech was also back in favour, following gains across US semiconductor stocks. Dutch chipmaking equipment giant, ASML, jumped over 3% following an upgrade from Bernstein.

Foreign exchange markets were mixed in early trade this morning. Despite this, the US Dollar Index was firmer and hit a three-week high during the Asian Pacific session. The dollar had a fraught year in 2025.

Source: TN Trader

The Dollar Index lost 12% of its value over the first nine months of last year. It then put in a strong rally, making back around a third of its losses. But the cash Dollar Index was unable to break back above resistance at 100.00. It then sold off sharply and looked as if it was on course to make a lower low for the year, falling under 96.00. But it has since picked up and looks a bit brighter, and a retest of 100.00 can’t be ruled out. 

Both gold and silver attracted strong inflows overnight. Gold was up more than 2% at one stage, surging above $4,400 to hit a four-day high during early European trade. Silver was up over 4% by mid-morning.

Source: TN Trader

These moves in precious metals were triggered by the Trump administration’s unexpected defenestration of Venezuela’s President and his wife over the weekend. But it’s fair to say that many traders were just waiting for an excuse to buy back in at cheaper prices following the post-Christmas slump, which saw both gold and silver crater off their all-time highs. What’s next? Much depends on how sentiment shifts.

Silver dropped around 16% once it reopened after Christmas. That’s a scary move, and it could be sufficient to drive out the weaker hands, particularly those who bought when silver was above $75 and rallying. But gold only fell 6% over the same period. Could that be sufficient to reset the market for a rally to new highs?  Possibly. But one thing seems likely, and that is that investors should prepare for more volatility.

Source: TN Trader

Crude prices moved lower even as the weekend news about Venezuela dominated global headlines. Front-month WTI traded below $57 per barrel in early trade, although prices ticked up as the session progressed. This muted reaction suggested that traders were looking beyond immediate geopolitical developments and focusing instead on the outlook for future production, sanctions and investment flows.

Source: TN Trader

While Venezuela holds the world’s largest proven oil reserves, current output remains significantly below historical levels. With OPEC+ maintaining output levels and US sanctions still in place, markets were reluctant to price in a near-term supply shock.

Instead, the unruffled oil market appears to be pricing in an orderly transition in Venezuela’s leadership, along with the opening up of its oil market to the US majors. President Trump said that US oil majors would rebuild Venezuela’s energy infrastructure, spending billions, and provide access to those record reserves. 

Natural gas continued to underperform, extending its sell-off with a sharp 4.5% decline. The move stood in contrast to strength across precious metals and resilience in broader risk assets, highlighting ongoing pressure within the gas market itself.

Unlike oil, gas failed to attract any meaningful geopolitical premium. The continued slide reinforced the divergence within the energy complex, where different commodities are responding to very different drivers.

Crypto markets moved higher overnight, with Bitcoin leading the advance and briefly touching $93,000. The rally unfolded alongside gains in broader risk assets and was heavily amplified by derivatives positioning. A wave of short covering accelerated the move, forcing bearish positions out as prices pushed higher.

Liquidations were heavily skewed toward shorts, while long liquidations remained limited. Ether held near recent levels, and overall price action suggested renewed momentum rather than a purely defensive or technical bounce.

Despite escalating geopolitical tensions and sharp moves in several asset classes, volatility remained strikingly subdued. The front-month (Jan) VIX drifted down towards the 16 level, giving back recent gains and showing little appetite for sustained upside.

The lack of volatility continues to underpin risk assets, though it also highlights a potential vulnerability should sentiment shift abruptly. For now, markets appear comfortable absorbing headline risk without aggressively hedging.

Markets enter the week balancing supportive risk sentiment against a dense flow of headlines and upcoming data. The US ISM Manufacturing PMI is due later today, and a heavy slate of US labour data later in the week will be watched closely for confirmation on growth and policy direction. Earnings remain light for now, though the Q4 reporting season is on the horizon.

Precious metals remain the clear standout. Oil appears largely unmoved by Venezuela for the moment, and equities are attempting to build on last year’s gains. US stock index futures suggest a constructive start. Headlines are loud, price action remains controlled and that tension is likely to define trading in the days ahead.