Shares in US energy and defence companies rose sharply after Venezuelan President Nicolás Maduro was captured. Investors are betting that the US could gain access to Venezuela’s huge oil reserves, sparking a surge in markets.
Chevron led the gains, opening more than 4% higher after pre-market trading showed a 7% jump. Other energy companies like ConocoPhillips and Exxon also saw gains. Oil services firms, such as Halliburton, rose over 7% as investors reacted to the news.
Even with this market optimism, experts warn that Venezuelan oil won’t impact global prices immediately. The country’s oil infrastructure has been neglected for years, and its production now makes up only about 1% of the world’s supply. Bringing it back to full capacity will take billions of dollars, skilled management, and time.
Investors have reacted to increased global tensions by putting funds into safer investments. Gold prices increased approximately 1.9% to reach $4,412 per ounce, and silver prices increased approximately 3.6%.
Both metals have had a good run lately. Gold, for example, gained 60% in price over the past 12 months and hit a record high of $4,549.71 per ounce in December. As the demand for gold from central banks remains strong and there is growing concern regarding the global economy, demand is driving these record highs.
European defence stocks did very well in today’s trading. The share price of BAE Systems increased approximately 5% and the share price of Germany’s Rheinmetall increased more than 8%. Experts claim that typically, defence stocks rise in value when geopolitical tensions increase. When uncertainty increases, governments typically will increase their military spending.
Mining companies, such as Endeavour Mining and Fresnillo, increased their stock price by more than 4%, as a result of the increase in metal prices. Similarly, Asian stock markets experienced an upward trend in the first week of 2022. Japan’s Nikkei 225 was up approximately 3%. South Korea and China experienced modest stock market growth due to investors focusing more on the local economic situation than on events occurring in Venezuela.
