(Sharecast News) - Asia-Pacific markets advanced broadly on Monday, starting the first full trading week of 2026 on a strong footing after the United States attacked Venezuela and captured president Nicolas Maduro over the weekend.
Investor sentiment was buoyed by gains in defence-related stocks across the region, while oil prices slipped as markets judged that the escalation involving the oil-rich nation posed limited near-term supply risks.
Stephen Innes, managing partner at SPI Asset Management, said equities were showing "the body language of a market that knows exactly where the liquidity is hiding and is not afraid to lean into it," adding that this was "not nervous money. This is allocation money."
US authorities said Maduro and his wife, Cilia Flores, were flown to New York and charged with narco-terrorism conspiracy and other crimes.
Despite Venezuela holding the world's largest proven crude reserves at 303 billion barrels, oil prices initially edged lower, signalling muted concern over immediate disruptions.
Innes said oil "steadied after an early wobble as traders weighed two opposing forces triggered by Washington's move in Venezuela," noting that while geopolitical instability argues for a risk premium, "the prospect of Venezuela's vast reserves eventually returning to market argues the opposite."
US equity futures were steady in early Asian trading after the S&P 500 closed slightly higher on Friday, supported by gains in semiconductor stocks.
Tokyo leads gains in Asia
Japanese equities led regional gains, with the Nikkei 225 surging 2.97% to a record 51,832.80, driven by sharp advances in heavy industry and defence-linked names.
Tokyo Electric Power rose 9.23%, IHI Corp gained 8.99% and Mitsubishi Heavy Industries climbed 8.39%.
The broader Topix index added 2.01% to 3,477.52, also reaching new highs as investors rotated into stocks seen as beneficiaries of heightened geopolitical risk.
Innes said the rally marked "the strongest start to a year for Asian equities since 2012," adding that momentum was being "reinforced by positioning and capital allocation rather than questioned by valuation fatigue."
Chinese markets also moved higher, even as fresh data pointed to slowing momentum in the services sector.
The Shanghai Composite rose 1.38% to 4,023.42, with Advanced Micro Fabrication jumping 14.28%, Guangzhou Fangbang Electronics up 14.05% and Jiangsu Sanfangxiang Industry gaining 10.18%.
The Shenzhen Component climbed 2.24% to 13,828.63.
A private-sector survey by RatingDog showed China's services PMI eased to 52.0 in December from 52.1, the weakest reading since June, as new business growth softened and new export orders slipped back into contraction.
Business sentiment nonetheless improved to a nine-month high, supported by expectations of better market conditions and expansion plans for 2026.
The composite output index edged up to 51.3 from 51.2, while firms cut staffing for a fifth straight month and continued to face rising input costs amid intensifying competition.
Hong Kong shares were little changed, with the Hang Seng Index edging up 0.03% to 26,347.24.
Kuaishou Technology jumped 11.09%, Innovent Biologics gained 6.09% and Chow Tai Fook Jewellery Group rose 5.13%, helping offset broader market caution.
South Korean stocks posted strong gains, with the Kospi jumping 3.43% to 4,457.52, led by sharp rallies in technology and semiconductor-related names.
CItech surged 24.55%, Sungmoon Electronics climbed 23.96% and Hanmi Semiconductor advanced 15.78%, as investors priced in stronger demand tied to defence and advanced manufacturing.
Innes said Asia was rallying because "the liquidity narrative is intact," with technology continuing to act as "the leading edge" of the move.
Sydney, Wellington in the green
In Australia, the S&P/ASX 200 was little changed, edging up 0.01% to 8,728.60, with strength in resource-linked stocks offset by broader market softness.
Paladin Energy rose 7.11%, IperionX gained 6.91% and Lynas Rare Earths added 6.14%.
New Zealand equities were firmer, with the S&P/NZX 50 up 0.29% at 13,587.23, led by Infratil, which climbed 3.16%, alongside gains in Fletcher Building and Ryman Healthcare.
Currencies mixed as oil prices rebound from earlier losses
In currency markets, the yen strengthened slightly, with the dollar last down 0.11% at JPY 156.66, while it edged higher against its Aussie and Kiwi counterparts, last rising 0.11% on the former to AUD 1.4959 and advancing 0.16% against the latter to change hands at NZD 1.7363.
Oil prices were modestly higher later in the session, with Brent crude futures last up 0.51% on ICE at $61.06 per barrel and the NYMEX quote for West Texas Intermediate rising 0.68% to $57.71.
Innes said the Venezuela developments were unlikely to have a lasting market impact, arguing that "the risk premium fades quickly when investors realize the event reduces tail risk rather than amplifying it," adding that risk assets were trading as if shocks would be "contained, not allowed to metastasize."
Reporting by Josh White for Sharecast.com.
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