FTSE 100 At Record As Markets Digest Venezuela Situation

The premier UK index started the year by crossing the 10,000 mark on its first day of trading, but the Trump Administration's capture of Venezuela's president could generate considerable uncertainty.

The Latest Developments

• FTSE 100 starts the year on a positive footing, popping above 10K amid holiday optimism
• Geopolitical risks are seen rising as investors study the fallout of the US's move to seize Venezuelan President Maduro over the weekend.
• Initial market reaction is cautious, with crude prices down slightly at the start of the week after OPEC+ kept its production targets unchanged.

FTSE Peaks Over 10K For the First Time

The leading UK stock index climbed above 10,000 points for the first time on Friday, the first day of trading in 2026, although it fell back to close below the milestone by the end of the session. The buoyancy is likely the result of the extension of the Santa Rally, which supported global assets during the holiday period, and after the UK December manufacturing PMI hit a 15-month high. But the upward trajectory faces considerable headwinds going into January after the surprise detention of Venezuelan President Nicolas Maduro by a midnight US military operation over the weekend.

Institutional investors are back at their desks and may reintroduce some sobriety after the holiday cheer and ahead of key market-moving events this week, including Christmas trading updates from notable retailers and major data releases, such as US NFP. Additionally, investors will be closely watching the fallout from the situation in Venezuela, given that FTSE 100-listed oil majors BP and Shell account for almost 10% of the index's weighting.

How Could Venezuela Affect the FTSE 100?

Early Saturday morning, local time, US military assets captured and extracted Venezuela's president from Caracas, with US President Donald Trump holding a press conference calling him an "outlaw dictator". The event would have shocked markets, but the weekend has given traders time to digest the potential fallout. One of the first considerations, and something repeatedly mentioned by Trump in his press conference, is Venezuela's participation in the energy market. The country produces between 800 and 900K boepd, with the bulk sold to China. It also has the world's largest reserves, estimated at 300 billion bbl. It wasn't immediately clear what would happen with those assets. State-run Venezuelan oil producer PDVSA said that its operations are unaffected, although there was some damage to port installations, which apparently don't include crude handling. What has garnered considerable speculation is whether the regime change in Venezuela will enable the nation to increase production in a market already saturated with supply. This could take the form of Washington easing sanctions or further investments by Chevron, which already has operations in the country.

The immediate market reaction was caution, with WTI down 0.2% at the open on Monday and Brent flat. Further influencing crude prices was the OPEC+ meeting over the weekend, at which the cartel recommitted to its output pause, with several members citing the need to maintain price stability. Crude prices are down 18% over the past year, the biggest annual loss since 2020, as output was ramped up amid weak global demand due to slower economic growth. Outside of the Venezuelan situation, North Korea launched ballistic missiles into the Sea of Japan on Sunday ahead of a meeting between China's President Xi Jinping and South Korean President Lee Jae Myung. The incident highlighted growing global tensions that could make traders more cautious at the start of the week. The FTSE 100 was up modestly in early trading on Monday and back above the 10K level, with defence names outperforming, but early gains were quickly erased.

FTSE Could Go Into Consolidation Stage

With prices below the 10k handle after hitting the upper Bollinger Band amid overbought momentum, the next critical support lies at the middle BB near 9950. Losing this support, along with the auto-trendline showing support near 9930, could open the door to the lower band at 9875 and set up a consolidation. However, if the middle band holds firm, the upside could extend to the record peak of 10050.

Source: SpreadEx, UK 100, 4-hour chart