First Venezuela, Next Iran?

A Colombian soldier stands guard at the border between Venezuela and Colombia, after U.S. President Donald Trump said the U.S. has struck Venezuela and captured its President Nicolas Maduro, in Cucuta, Colombia, January 3, 2026. REUTERS/Luisa Gonzalez

U.S. President Donald Trump on Sunday threatened military action against Colombia's government, telling reporters that such an operation "sounds good to me."

"Colombia is very sick, too, run by a sick man, who likes making cocaine and selling it to the United States, and he's not going to be doing it very long," Trump told reporters aboard Air Force One, in an apparent reference to Colombia's President Gustavo Petro.

Asked directly whether the U.S. would pursue a military operation against the country, Trump answered, "It sounds good to me."

The comments came after the United States captured Venezuelan President Nicolas Maduro in an audacious raid and whisked him to New York to face drug-trafficking charges.

Source: Reuters

Japan's manufacturing activity stalled in December as demand declined at a slower pace from the previous month, a private-sector survey showed, ending a five-month streak of deterioration.

The S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) was flat at 50.0 in December, improving from 48.7 in November and hitting the break-even point separating expansion from contraction.

"Japan's manufacturing industry saw conditions stabilise at the end of the year," said Annabel Fiddes, an economics associate director at S&P Global Market Intelligence.

The decline in new orders in December was the softest since May 2024, the survey showed. Although many firms noted subdued demand, some saw sales had improved, underpinned by new projects and stronger-than-expected customer spending.

While consumer and investment goods sectors reported improvement in business conditions, intermediate goods makers said they were weak.

New export orders declined at a slightly softer pace in December from November, partly affected by weaker demand in Asia, particularly for semiconductors, according to the survey.

Looking ahead to the next 12 months, overall business sentiment eased from November but remained above the survey's long-run average, the survey said.

"New product releases and greater demand across key industries such as autos and semiconductors were anticipated to boost the sector's performance in 2026," Fiddes said.

Some downside risks mentioned by firms were sluggish global economy, an ageing population and rising costs, she said.

Staffing levels in the manufacturing sector rose for the 13th consecutive month, while the rate of input prices accelerated to its highest since April, battered by a combination of increases in raw material, labour and transportation costs, as well as the weaker yen.

The Bank of Japan in December raised interest rates to levels unseen in 30 years and signalled its readiness to continue raising rates.

Source: Theedgemarkets

December exports accelerated thanks to strong demand for Korean IT products

South Korean exports rose a greater-than-expected 13.4% year-on-year in December (vs 8.4% in November, 8.5% market consensus). Of the 15 main export products, six increased. IT exports were particularly strong. Semiconductors rose the most -- by 43.2% -- thanks to robust demand for AI data centres and strong pricing. Other IT products, such as mobile devices (24.7%), computers (36.7%), and displays (0.8%), all increased. Yet autos, petrochemicals, steel, home appliances, and batteries declined. Automotive exports declined by 1.5% due to increased overseas production and temporary product cuts during line maintenance. Steel and petrochemicals continued to decline due to global oversupply and soft prices. Though not major export categories, newly emerging sectors -- primarily K-culture-related products such as food, bio-health, and cosmetics -- posted steady increases.

We expect IT- and K-culture-related products to remain the key drivers of exports in 2026. Despite recent concerns about AI overvaluation, global tech capex is expected to increase. Export items facing global oversupply are expected to undergo industry consolidation and are unlikely to rebound anytime soon.

Meanwhile, imports rose 4.6% YoY in December. Energy imports declined by 6.8% while non-energy imports rose firmly by 7.3%. We believe that increased capital goods imports will boost equipment investment in the current quarter. The trade surplus widened to $12.2 billion in December, likely boosting fourth-quarter 2025 GDP growth.

Tech exports will lead the overall recovery in exports

Source: CEIC and ING estimates

While sentiment indicators remain favourable, some risks are taking shape

The consumer confidence index slipped to 109.9 from 112.4, but remained above the long-term average. We believe recent KRW depreciation and a sudden stock market correction dampened sentiment. Inflation expectations remain steady at 2.6% for the third consecutive month, indicating no immediate concerns. Yet if the KRW remains around 1,450, both sentiment and activity will likely be affected.

Meanwhile, expectations on housing prices rebounded again. This should concern policymakers. Although strict macroprudential regulations are in place, housing demand in Seoul remains strong, resulting in a K-shaped housing market.

Recent business surveys similarly point to a K-shaped recovery, with manufacturing improving and non-manufacturing deteriorating. The manufacturing purchasing managers' index rose to 50.1, while the business survey index (BSI) outlook also advanced to 95.3 from 93.9 in November. Korean manufacturers are mostly export-oriented. As such, a de-escalation of trade tensions and weaker KRW may work in favour of sentiment. However, the domestically oriented non-manufacturing outlook declined substantially to 87.8 from 91.7. This likely reflects a slowdown in domestic demand as the impact of fiscal stimulus dissipates.

FX and housing are expected to be primary factors affecting policy decisions

Throughout December, the FX authorities implemented nearly fifteen measures aimed at stabilizing the Korean won. The USDKRW is significantly lower following verbal intervention and smoothing operations in the last week of the year. We don't think it has altered the underlying trend of the KRW weakness. While the upside remains limited by intervention concerns, strong USD funding needs should keep USDKRW above 1,425.

FX relief measures announced in December

Source: BoK, FSC, FSS, MoEF, etc.

Recent measures to cool Seoul's property market include tightening loan limits, designating the city a speculative zone with residency conditions, and accelerating urban renewal to increase supply. Since the steps taken on 15 October, housing transactions have declined overall, except in high-activity areas like Gangnam and southern Seoul. We believe stricter rules may temporarily slow down activity, but upward price pressures persist. Although some favour higher property taxes to curb demand, such measures are unlikely to be implemented before June's local government elections. Instead, the government might relax redevelopment rules and lower transaction taxes.

Seoul housing prices are still on the rise

Source: CEIC

Weak KRW added inflationary pressures

Korea's consumer price inflation eased slightly to 2.3% YoY in December (vs 2.4% in November, 2.3% market consensus). Weak fresh food prices lowered overall inflation, but petrol prices rose meaningfully, mainly due to higher import costs.

Going forward, we expect CPI to drop below 2% in the first half of 2026 mainly due to a high base last year. Still, the Bank of Korea is likely to keep policy rates unchanged at 2.5% in 2026 amid expectations of rising property prices in the Seoul area and the continued weakness of the KRW. Instead, the BoK will seek to expand the role of the Bank Intermediated Lending Support Facility as its favoured monetary policy instrument.

Inflation stayed above 2% in December, but expected to drop below 2% in 1H26

Source: CEIC and ING estimates

Source: ING

Japan's manufacturing activity stalled in December as demand declined at a slower pace from the previous month, a private-sector survey showed, ending a five-month streak of deterioration.

The S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) was flat at 50.0 in December, improving from 48.7 in November and hitting the break-even point separating expansion from contraction.

"Japan's manufacturing industry saw conditions stabilise at the end of the year," said Annabel Fiddes, an economics associate director at S&P Global Market Intelligence.

The decline in new orders in December was the softest since May 2024, the survey showed. Although many firms noted subdued demand, some saw sales had improved, underpinned by new projects and stronger-than-expected customer spending.

While consumer and investment goods sectors reported improvement in business conditions, intermediate goods makers said they were weak.

New export orders declined at a slightly softer pace in December from November, partly affected by weaker demand in Asia, particularly for semiconductors, according to the survey.

Looking ahead to the next 12 months, overall business sentiment eased from November but remained above the survey's long-run average, the survey said.

"New product releases and greater demand across key industries such as autos and semiconductors were anticipated to boost the sector's performance in 2026," Fiddes said.

Some downside risks mentioned by firms were sluggish global economy, an ageing population and rising costs, she said.

Staffing levels in the manufacturing sector rose for the 13th consecutive month, while the rate of input prices accelerated to its highest since April, battered by a combination of increases in raw material, labour and transportation costs as well as the weaker yen.

The Bank of Japan in December raised interest rates to levels unseen in 30 years and signalled its readiness to continue raising rates.

Source: Investing

The Guinea-flagged oil tanker MT Bandra, which is under sanctions, is partially seen alongside another vessel at El Palito terminal, near Puerto Cabello, Venezuela December 29, 2025. REUTERS/Juan Carlos Hernandez/File Photo/File Photo

• Venezuela interim government says it is united behind Maduro
• Trump says US embargo on Venezuelan oil remains in full effect
• OPEC+ keeps oil output steady amid turmoil among members
• Rights groups say 16 dead in Iran during week of protests

SINGAPORE, Jan 5 (Reuters) - Oil prices inched up on Monday as investors weighed whether political upheaval in OPEC member Venezuela would disrupt shipments after U.S. President Donald Trump seized Venezuelan President Nicolas Maduro, in a well supplied market.

Brent crude futures rose 17 cents to $60.92 a barrel by 0024 GMT, paring earlier losses, while U.S. West Texas Intermediate crude was at $57.43 a barrel, up 11 cents.

The United States snatched Maduro from Caracas at the weekend. Trump said Washington would take control of the oil-producing nation and that the U.S. embargo on all Venezuelan oil remained in full effect.

The U.S. strike on Venezuela to extract the country's president inflicted no damage on the country's oil production and refining industry, two sources with knowledge of operations at state oil company PDVSA said at the weekend.

In a global market with plentiful oil supply, analysts said any further disruption to Venezuela's exports would have little immediate impact on prices.

"We see ambiguous but modest risks to oil prices in the short-run from Venezuela depending on how U.S. sanctions policy evolves," Goldman Sachs analysts led by Daan Struyven said in a January 4 note, keeping its 2026 oil price forecasts unchanged.

Helima Croft, RBC Capital's head of commodities research, said: "Certainly, we think full sanctions relief could unlock several hundred kb/d of production over a 12-month period in an orderly transition situation."

"However, all bets are off in a chaotic change of power scenario like what occurred in Libya or Iraq," she added.

A top Venezuelan official declared on Sunday that the country's government would stay unified behind Maduro.

The Organization of the Petroleum Exporting Countries and their allies, together called OPEC+, decided to hold their output on Sunday.

Analysts are also watching Iran's reaction after Trump threatened on Friday to intervene in a crackdown on protests in the OPEC producer, ratcheting up geopolitical tensions.

At least 16 people have been killed during a week of unrest in Iran, rights groups said on Sunday, as protests over soaring inflation spread across the country.

Reporting by Florence Tan; Editing by Jamie Freed and Sonali Paul

Source: Reuters

Danish Prime Minister Mette Frederiksen warned President Donald Trump to stop threatening to acquire Greenland just a day after the U.S. carried out a military operation that captured Venezuelan leader Nicolas Maduro.

"The Kingdom of Denmark — and thus Greenland — is part of NATO and is therefore covered by the alliance's security guarantee. We already have a defense agreement between the Kingdom and the United States today, which gives the United States wide access to Greenland," Frederiksen said Sunday, in a statement.

"I would therefore strongly urge the United States to stop the threats against a historically close ally and against another country and another people who have said very clearly that they are not for sale," she said.

The warning from Frederiksen comes after Trump was quoted by The Atlantic magazine, saying, "We do need Greenland, absolutely."

Trump ordered a military operation over the weekend that captured Venezuelan President Nicolas Maduro and his wife. The pair has been brought to the U.S. on drug-related charges.

The operation came after months of U.S. military buildup and threats against Venezuela, which the Trump administration claims is complicit in trafficking drugs to the U.S.

The move to topple Maduro led to speculation that Trump's other territorial ambitions could be obtained by force.

Katie Miller, the wife of top White House aide Stephen Miller, posted to X a map of Greenland covered with an American flag with the caption "SOON," shortly after Maduro was captured.

Trump has long mused about acquiring Greenland, the mineral-rich and self-governing territory of Denmark. Last month, he appointed Louisiana's GOP Gov. Jeff Landry special envoy to Greenland. Trump has also openly spoken about making Canada, an independent nation, the 51st state of the U.S.

Greenland and Canada have both repeatedly rebuked Trump's advances.

Source: CNBC