The removal of Venezuela's president, Nicolás Maduro, by U.S. forces was initially absorbed with remarkable calm. But this episode proved harder to file away. Venezuela is closely tied to China and Russia, and both capitals have condemned the move. Investors are now asking whether this is an isolated display of force or the opening chapter of a broader doctrine.
The question matters because precedents travel. If Washington believes it has the right to eliminate problems in its own backyard, others like China may draw lessons about theirs. Taiwan, inevitably, looms large. So do ongoing tensions over tariffs and the war in Ukraine. Markets dislike uncertainty; they dislike copycat behavior even more.
Unsurprisingly, defence firms are enjoying the moment. In Europe, military stocks continue to climb, and a newly launched ETF tracking the sector has already gained nearly 14% this year. In America, the catalyst was President Donald Trump's declaration that the 2027 defence budget should reach $1.5 trillion: around 50% more than the $901bn approved for 2026. Shares in RTX, Lockheed Martin, Northrop Grumman and smaller players such as Kratos Defense jumped sharply.
Yet even here, the cheer comes with a catch. Mr Trump paired his largesse with a warning: defence contractors that fail to speed up production could be barred from paying dividends or buying back shares. Investors looked past the threat for now, but the message was clear. This White House wants output, not financial engineering.
Beyond defence, markets are wrestling with more familiar concerns. Economic data are thin after the longest government shutdown in American history, but what has emerged is not reassuring. Job openings have fallen to a 14-month low, hiring remains sluggish and weekly jobless claims are under scrutiny. Friday's nonfarm payrolls report will be among the first solid readings in weeks, followed by December inflation data next Tuesday. Until then, conviction is in short supply.
This has nudged bond yields slightly lower, without shifting expectations for Federal Reserve rate cuts at its January and March meetings. Equities have responded with restraint. In premarket trading, the Dow Jones had slipped 0.35%, the S&P 500 edged down 0.06%, while the Nasdaq 100 was broadly flat.
In other news, Alphabet has overtaken Apple to become America's second-largest company by market capitalisation, a milestone reflecting continued enthusiasm for artificial intelligence.
Across Asia-Pacific, caution is more visible. Japan and Hong Kong were down more than 1%, with India and Taiwan also in the red. Europe is also in the red.
Perhaps the clearest sign of the times comes not from trading floors but from betting markets. On Polymarket, wagers now abound on scenarios once dismissed as far-fetched: U.S. strikes on Colombia, Nigeria or Mexico, the purchase of Greenland, Chinese action against Taiwan, Israeli attacks on Iran. Most carry low odds. So did regime change in Venezuela, until it didn't.
The lesson is not that these outcomes are likely, but that the range of possibilities has widened. Investors are adjusting accordingly. As Lenin once observed, there are weeks when decades happen. Markets are starting to suspect that we may be living through a few of those weeks.
Today's economic highlights:
Today: inflation figures will be released in France; in the United States, retail sales and the Philadelphia Fed manufacturing index are expected. See the full calendar here.
- Dollar index: 98,650
- Gold: $4,430
- Crude Oil (BRENT): $60.37 (WTI) $56.38
- United States 10 years: 4.14%
- BITCOIN: $89,730
In corporate news:
- Benchling and Eli Lilly's TuneLab partnered to expand scientist access to AI models for research and innovation.
- SKYX Platforms announced a collaboration with Nvidia to integrate AI and cloud services into its smart home platform.
- Accenture invested in Profitmind to enhance AI-driven transformation in the retail sector.
- Franklin Resources' Benefit Street Partners raised $10 billion for its largest-ever U.S. real estate debt fund.
- Charles River Laboratories will see CEO James C. Foster retire in May 2026, with Birgit Girshick named successor.
- Revolution Medicines received FDA Breakthrough Therapy Designation for its cancer drug Zoldonrasib.
- American Electric Power signed a $2.65 billion deal for fuel cell infrastructure with a 20-year energy supply agreement.
- Cyera raised $400 million in a Series F round led by Blackstone to address enterprise AI security demand.
- Turkey's TPAO and an Exxon Mobil unit signed an exploration accord covering the Black Sea and Mediterranean.
- Intercontinental Exchange will extend trading hours for European gas and power contracts to align with U.S. markets.
- Meta Platforms’ acquisition of AI startup Manus is under review by Chinese regulators for compliance with tech laws.
- Alphabet's $32 billion deal to acquire Wiz is under EU antitrust review, with a decision expected by February 10.
- Galp and Moeve are in talks to merge refining and fuel retail businesses, potentially forming a major European refiner.
- Morgan Stanley promoted 184 employees to managing director amid a dealmaking rebound in investment banking.
- Bank of America was accused by India’s SEBI of insider trading violations in a 2024 stock sale deal.
- China may allow Nvidia to sell H200 AI chips for limited commercial use, bypassing military and state-linked entities.
- Rivian is recalling nearly 20,000 U.S. vehicles due to a faulty rear toe link that could increase crash risk.
- Eli Lilly is expanding its drug portfolio by acquiring Ventyx Biosciences for $1.2 billion.
- Vornado Realty Trust acquired 3 East 54th Street for $141 million as part of ongoing financial activities.
- JPMorgan Chase took over the Apple Card issuance rights from Goldman Sachs, inheriting $20 billion in balances.
- OpenAI launched ChatGPT Health for non-EU users and set aside $50 billion for an employee stock grant pool.
- Galantas Gold Corp acquired the Andacollo Oro project in Chile.
Analyst Recommendations:
- Alphabet Inc.: Cantor Fitzgerald upgrades to overweight from neutral and raises the target price from USD 310 to USD 370.
- Ball Corporation: Morgan Stanley downgrades to market weight from overweight and reduces the target price from USD 68 to USD 63.
- Borgwarner Inc.: Piper Sandler & Co downgrades to neutral from overweight and reduces the target price from USD 52 to USD 51.
- Chubb Limited: Goldman Sachs upgrades to buy from neutral and raises the target price from USD 309 to USD 351.
- Clarivate Plc: Goldman Sachs downgrades to neutral from buy and reduces the target price from USD 4.20 to USD 3.60.
- Elevance Health, Inc.: Wolfe Research upgrades to outperform from peerperform with a target price of USD 425.
- Extra Space Storage Inc.: Scotiabank downgrades to sector perform from sector outperform and reduces the target price from USD 162 to USD 145.
- Ford Motor Company: Piper Sandler & Co upgrades to overweight from neutral and raises the target price from USD 11 to USD 16.
- General Motors Company: Piper Sandler & Co upgrades to overweight from neutral and raises the target price from USD 66 to USD 98.
- Icon Public Limited Company: Truist Securities downgrades to hold from buy and reduces the target price from USD 231 to USD 222.
- Invitation Homes Inc.: Mizuho Securities downgrades to neutral from outperform and reduces the target price from USD 30 to USD 27.
- Jack Henry & Associates, Inc.: Wolfe Research upgrades to outperform from peerperform with a target price of USD 220.
- Leidos Holdings, Inc.: Stifel downgrades to hold from buy with a target price of USD 220.
- Stellantis N.v.: Piper Sandler & Co upgrades to overweight from neutral and raises the target price from USD 9 to USD 15.
- The Gap, Inc.: UBS upgrades to buy from neutral and raises the target price from USD 26 to USD 41.
- The Travelers Companies, Inc.: Goldman Sachs downgrades to neutral from buy and raises the target price from USD 302 to USD 304.
- Toast, Inc.: Wolfe Research downgrades to peerperform from outperform.
