Market Reactions to US Actions in Venezuela
On Sunday night, stock futures showed some strength as global markets digested the news of the US attack on Venezuela and the subsequent detainment of its leader, Nicolas Maduro.
The Dow Jones Industrial Average Futures were up by 7 points, while the S&P 500 futures saw a slight increase of 0.1%. Meanwhile, Nasdaq 100 futures rose by 0.3%.
Following the attack, both Maduro and his wife, Cilia Flores, were transported to New York, where they face charges related to narco-terrorism conspiracy among other serious allegations. The indictment claims that drug trafficking has “enriched and entrenched Venezuela’s political and military elite.”
This dramatic development marks Maduro’s removal, occurring over a decade after he assumed power in April 2013, succeeding Hugo Chávez. It certainly raises eyebrows regarding Venezuela’s future, especially considering it houses the world’s largest proven oil reserves.
President Trump addressed the situation on Saturday, stating that the US would “manage” Venezuela until there’s a safe, appropriate transition of power. However, Secretary of State Marco Rubio seemed to walk back that assertion the following day, mentioning that the United States would leverage its influence to achieve its objectives, but didn’t suggest direct control over Venezuela.
Interestingly, some Wall Street analysts doubt that US intervention will significantly sway the market. Venezuela, despite its massive reserves, reportedly produces less than 1 million barrels of oil daily, which accounts for under 1% of global output.
Marco Papic, a chief strategist at BCA Research, remarked that the Venezuelan military plays a key role in stabilizing the government. He pointed out, “President Trump’s claims that the US ‘runs the country’ and is not afraid of ‘ground forces’ should be taken as a signal. The US will likely negotiate with the military and rebel factions during any transition.”
In early trading on Sunday, oil prices dipped. Wall Street recently wrapped up a somewhat mixed session. On the first trading day of the year, the S&P 500 and the Dow ended on a positive note, whereas the Nasdaq finished just shy of flat.
This week, traders will be focused on the December jobs report set for release on Friday. Economists surveyed by Dow Jones are predicting an addition of 54,000 jobs in the previous month.
