Asian stocks climbed, driven by an AI stock boom and hopes of US interest rate cuts. Japan's Nikkei and South Korea's Kospi saw significant gains. The rally occurred after a US operation in Venezuela removed its president.
Asian stock markets began the week on a positive note on Monday (January 5), brushing aside global geopolitical jitters triggered by dramatic developments in Venezuela and focusing instead on the relentless boom in artificial intelligence stocks and hopes of US interest rate cuts.
Japan's benchmark Nikkei index surged more than 1,000 points in early trade, while South Korea's Kospi jumped over 2%. Markets in China also moved higher, with both Shanghai and Shenzhen posting solid gains. Hong Kong's Hang Seng Index, however, was largely flat.
Tech Stocks Lead the Charge
The rally was once again powered by technology heavyweights, as investors continued to pile into companies linked to the global AI boom.
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In Tokyo, shares of SoftBank rose about 4%, while chip equipment maker Tokyo Electron climbed nearly 5%, helping the Nikkei to a fresh multi-month high. The strong performance reflects optimism that AI-driven demand will continue to support earnings growth across the region.
Venezuela Shock Looms in the Background
Behind the upbeat trading, however, lies a tense geopolitical backdrop.
Over the weekend, the United States carried out a military operation in Caracas, during which Venezuelan President Nicolas Maduro was removed from power and taken to New York to face federal narcotrafficking charges. The dramatic development has sent shockwaves through energy markets and raised questions about the future of Venezuela's oil sector.
As the country holds the world's largest proven crude reserves, any attempt to restore production could potentially flood an already oversupplied global market.
Oil Slips, Then Recovers
Oil prices were initially under pressure in Asian trade but later clawed back some losses. Brent crude rose about 0.3% to around $60.9 a barrel, while US West Texas Intermediate edged up to roughly $57.4.
Analysts caution that even with a change in leadership, Venezuela's oil output is unlikely to bounce back quickly. Years of sanctions, mismanagement and crumbling infrastructure have slashed production to about one million barrels per day, a far cry from nearly 3.5 million barrels per day at the end of the 1990s.
Gold Shines as a Safety Play
With uncertainty surrounding geopolitics and global growth, investors also turned to traditional safe havens. Gold prices jumped more than 1%, reflecting renewed demand for assets perceived as stable in times of crisis.
