GLOBAL-MARKETS-European defence stocks hit record high, dollar gains amid geopolitical events

The euro, meanwhile, flirted with its eighth straight drop against the dollar, with only the mixed U.S. data keeping the dollar bulls in check ahead of Friday’s closely watched non-farm payrolls report. "What ​investors are realising is that the threat of geopolitics is not going away," Peter McLean, head of multi-asset portfolio solutions at Stonehage Fleming Investment Management, said.

European defence stocks jumped to a record high and oil prices and the dollar both made ground on Thursday, as geopolitical developments from Venezuela ‌to Greenland kept traders guessing. The seizure of two Venezuela-linked oil tankers in the Atlantic came alongside news U.S. Secretary of State Marco Rubio will meet Denmark's leaders to discuss Greenland next week, with some mixed economic data thrown in too.

Europe's record high STOXX aerospace and defence stocks index was up 1% in a fifth day of gains. The index has already surged 13% ⁠this year and more than 260% since Russia's 2022 invasion of Ukraine. SUBDUED START EXPECTED ON WALL STREET

Wall Street was expected to see a subdued start after a tick up in jobless claims although arms makers were pointing higher there, too, after President Donald Trump had called on Wednesday for a two-thirds increase in the U.S. military budget. The euro, meanwhile, flirted with its eighth straight drop against the dollar, with only the mixed U.S. data keeping the dollar bulls in check ahead of Friday's closely watched non-farm payrolls report.

"What ​investors are realising is that the threat of geopolitics is not going away," Peter McLean, head of multi-asset portfolio solutions at Stonehage Fleming Investment Management, said. "While it is unlikely we see military action in Greenland there is clearly an impetus to ‍increase defence spending in Europe."

OIL CLAWS BACK ABOVE $60 Oil prices have slid this week on the prospect of higher Venezuelan crude output, though Brent clawed back above $60 a barrel on Thursday and U.S. crude rose 0.5% to $56.30 a barrel.

Top U.S. officials said on Wednesday the country needed to control Venezuela's oil sales and revenue indefinitely to stabilise the latter's economy, rebuild its oil sector and ensure it acts in America's interests. "The market's negative reaction to the Trump comments on controlling Venezuela's oil looks a little misplaced," said Daniel Hynes, ANZ's senior commodity strategist.

"U.S. control of oil sales could actually mean ongoing sanctions or restrictions remaining ⁠in place ‌in the short term, which would be bullish for oil prices. I ⁠suspect that is why prices are recovering." ROBUST START TO YEAR LIFTS GLOBAL MARKETS

Elsewhere, stocks mostly traded lower following a strong start to the New Year that has lifted markets globally. S&P 500, Dow and Nasdaq futures were all down over 0.2% and the pan-European STOXX 600 was down 0.4% by early afternoon despite ‍a surprise rise in German industrial orders and a fall in the euro zone unemployment rate.

Japan's Nikkei lost 1.6% overnight amid rising tensions with China which said it was launching an anti-dumping probe into Japanese dichlorosilane, a chemical used in chipmaking. "It seems the Asian markets are just ​taking a breather after a strong start to 2026,"

"Geopolitical headlines are in the driver's seat," said Charu Chanana, chief investment strategist at Saxo, also pointing to China's dual-use export ban to Japan, and talk of potential rare-earth risk. PAYROLLS DATA ⁠DUE ON FRIDAY

Investors also digested the tick up in U.S. weekly initial jobless claims ahead of intensely watched non-farm payrolls jobs report due on Friday. Analysts at Goldman Sachs said they were forecasting an above-consensus 70,000 rise in nonfarm payrolls in December, while expecting the unemployment rate to edge down to 4.5%.

Wednesday's slew of data ⁠had painted a mixed picture with JOLTS labour market figures bolstering "no hire, no fire" views, while the ISM services index had hit a reassuringly robust 14-month high. The readings did little to alter market expectations of two more Fed cuts this year. Ten-year Treasury yields were muted at 4.16% and Germany's 10-year bund yields were at just over 2.83%.

Britain's sterling had sagged to $1.344 as UK retailers warned of a tough year ahead, while Japan's yen rose slightly to 156.67 per dollar and safe-haven gold dipped 0.5% to $4,420 ⁠an ounce. "One of the big risk factors this year is the direction of bond yields," Stonehage Fleming's McLean said. "If the 10-year Treasury yield does fall below 4 and then fall further, I think that would be a real positive."

VENEZUELA DEBT ⁠RESTRUCTURING 'CLOSER TO THE BEGINNING' Venezuela's default-stricken bonds were finally cooling off following their ‌near 40% surge after the weekend's U.S. capture of President Nicolas Maduro fuelled investor hopes for a massively complex debt restructuring.

A restructuring is "closer to the beginning than it was six months ago, but we are still not at the beginning yet," said Richard Cooper, a restructuring Partner at Cleary Gottlieb Steen & Hamilton who represented bondholders in the past. It will be difficult ⁠to start "until you know how much it is going to cost to revive the oil sector and who is going to be in power," he added.

(Additional reporting by Rae ‍Wee in Singapore; Editing by Toby Chopra and Bernadette Baum)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)