Stock markets rose in European trading on Tuesday, and U.S. stock futures pointed to further gains, as traders focused on key market data later this week and showed limited reaction to the U.S. capture of Venezuelan President Nicolas Maduro.
Europe's STOXX 600 closed at an all-time high on Monday, and on Wall Street the Dow Jones Industrial Average also hit a new record (.DJI), opens new tab, helped by gains in U.S. oil companies and financials. The risk-on mood continued during Asian trading on Tuesday, and European stocks opened higher.
Toppled Venezuelan President Nicolas Maduro pleaded not guilty on Monday to narcotics charges, after the United States seized him and took him to New York at the weekend.
Markets remained positive on Tuesday, with the STOXX 600 up roughly 0.2% on the day at 1217 GMT, having touched a new all-time high earlier in the session. The MSCI World Equity Index was up 0.3% (.MIWD00000PUS), opens new tab, while London's FTSE 100 was up 0.7% (.FTSE), opens new tab, helped by gains in oil and defence stocks.
"It doesn’t look like it’s rattling the market in any serious way at all... The market’s not pricing in an escalation of risk, not pricing in a ripple effect of Trump potentially delving into other South American countries," said Fiona Cincotta, senior markets analyst at City Index.
S&P 500 futures were flat while Nasdaq futures were up 0.2% on the day .
The raid on Venezuela provided a boost to big U.S. oil companies' stock on Monday, as investors bet Washington would give U.S. firms access to Venezuela's oil reserves. U.S. President Donald Trump plans to meet executives from U.S. oil companies later this week to discuss boosting Venezuelan oil production, Reuters reported, citing a person familiar with the matter.
Oil prices edged slightly higher on Tuesday, but analysts said it was too early to assess the impact on Venezuela's oil output. Brent crude futures were up 0.5% at $62.07 a barrel . "Venezuela’s energy infrastructure remains in severe disrepair, so any meaningful production rebound will be a multi-year prospect at best," UBS analysts wrote in a research note.
Venezuela's main opposition leader Maria Corina Machado has vowed to return quickly, declaring her movement ready to win a free election. Trump has given little indication of backing Machado.
The U.S. dollar was steady, with the dollar index flat at 98.392 . It had surged to a four-week high in the previous session but gave up all of its gains after a measure of U.S. manufacturing activity slumped to a 14-month low. The euro was down 0.1% at $1.1710 .
The upbeat mood in markets was driven by expectations for U.S. interest rate cuts. Traders were focused on a U.S. monthly employment report, due on Friday, which will influence the market's monetary policy expectations. Financial markets are pricing in two Federal Reserve rate cuts this year, according to LSEG data.
In an interview on CNBC on Monday, Minneapolis Fed President Neel Kashkari warned of the risk that the jobless rate could "pop" higher, but said inflation was slowly trending down.
