Stock indices continue to grow despite geopolitics

Following Monday’s results, the Dow Jones Index (US30) rose by 1.23%. The S&P 500 Index (US500) gained 0.64%. The Technology Index Nasdaq (US100) closed higher by 0.69%. On Monday, the rally in the US stock market continued, with the energy and financial sectors providing the main support to the indices. Investors perceived the US arrest of the Venezuelan leader more as a potential opportunity for future investment in the country’s oil industry than as a factor for immediate geopolitical escalation. Chevron shares jumped more than 5% due to expectations of the company expanding its presence in Venezuela, while oil refining companies rose on prospects of increased heavy oil supply.

The Canadian dollar (CAD) weakened to 1.38 per US dollar, losing some of its recent gains after reaching its highest level since July. Pressure on the currency intensified due to the strengthening of the dollar caused by the geopolitical situation, specifically the US seizure of the President of Venezuela, which triggered an increase in demand for the dollar and raised concerns about the prospects for Venezuelan oil. Speculation regarding production and an uneven market reaction strengthened doubts about the stability of oil prices, which is a key support factor for the Canadian currency. Furthermore, the slowdown in economic growth in Canada in Q4 weakened the arguments for tight monetary policy, and global oil market expectations for 2026 suggest a supply surplus and moderate demand, further limiting the potential for the Canadian dollar to strengthen.

The Mexican peso (MXN) weakened to a level above 18 per US dollar, as the sharp rise in the dollar caused by US military actions in Venezuela outweighed domestic currency support factors. The increased demand for the dollar triggered pressure on regional currencies, and the easing of the Bank of Mexico policy in late December reduced the yield advantage that had previously supported the peso after strong growth in 2025. This pressure is partially offset by an improvement in the external position and a transition to a current account surplus in mid-2025, which creates a floor for a sharper devaluation.
Equity markets in Europe mostly rose on Monday. The German DAX (DE40) rose by 1.34%, the French CAC 40 (FR40) closed with an increase of 0.20%, the Spanish Index IBEX 35 (ES35) gained 0.70%, and the British FTSE 100 (UK100) closed at a positive 0.54%.

The Swiss franc (CHF) weakened to a level of around 0.795 per US dollar, remaining close to highs not seen since 2011, amid rising geopolitical tensions following the US capture of Venezuelan President Nicolás Maduro. Uncertainty in the global economy related to US trade policy, as well as expectations of further interest rate cuts, intensified demand for safe-haven assets despite the weakness of the franc. Investors remain focused on the upcoming domestic inflation data to be released on January 8: a 0.1% decrease in the Consumer Price Index is expected in monthly terms, with a growth of only 0.1% in annual terms. In December, the Swiss National Bank kept rates at 0%, and most analysts do not expect changes in 2026.

Palladium prices (XPD) rose above 1720 dollars per ounce, approaching a weekly high, amid rising geopolitical tensions in Venezuela following the US capture of President Nicolás Maduro and his wife. The events stimulated demand for precious metals as haven assets and also supported palladium due to its key role in catalytic converters for gasoline engines. Demand is also supported by expectations of the EU easing the ban on internal combustion engines by 2035 while maintaining strict environmental standards, and the launch of palladium futures in China, which increases liquidity and provides hedging opportunities.
Asian markets rose in synchronization yesterday. The Japanese Nikkei 225 (JP225) rose by 2.97%, the Chinese FTSE China A50 (CHA50) gained 1.57%, the Hong Kong Hang Seng (HK50) added 0.03%, and the Australian ASX 200 (AU200) showed a positive result of 0.01%.

On Tuesday, the Australian dollar (AUD) strengthened to 0.672 dollars, remaining near its highest level since October 2024, amid an improvement in global risk sentiment and a weakening of the US dollar. Investor attention is shifting to the publication of Australian inflation data for November, which is expected on Wednesday and is projected to show a moderate slowdown in price pressure. This data could prove key for the next steps of the Reserve Bank of Australia, which had previously allowed for the possibility of a rate hike if inflationary risks persist.