Stocks climb after Monday’s drop; oil gains 5%

NEW YORK (Reuters) -Global equity indexes were mostly higher on Tuesday, with Wall Street rebounding from a weak start to the year, and oil prices settled up 5% after news that Saudi Arabia will make voluntary cuts to its oil output in February.

Investors anxiously awaited the results of two Senate runoff races in the state of Georgia on Tuesday that are expected to determine the balance of power in Washington.

A Democratic victory in both contests could tip control of the U.S. Senate away from Republicans, potentially boosting the agenda of Democratic President-elect Joe Biden.

“Investors are taking a wait-and-see attitude…There’s a lot to be concerned about – not only in the U.S. with the elections but also because of the different strains of the virus that are now being reported around the globe,” CFRA chief investment strategist Sam Stovall said.

Georgia results are expected to be known by Wednesday morning, according to state officials. No Democrat has won a Senate race in Georgia in two decades, but opinion surveys show both races as exceedingly close.

Equity markets were boosted recently by the start of vaccine rollouts, and U.S. stocks ended 2020 at record highs.

The discovery of a more contagious strain of the coronavirus and the latest virus-related restrictions have offset some of that optimism. Britain has begun its third national lockdown, and New York on Monday reported its first case of the highly contagious variant of the coronavirus.

The Dow Jones Industrial Average rose 242.21 points, or 0.8%, to 30,466.1, the S&P 500 gained 32.65 points, or 0.88%, to 3,733.3 and the Nasdaq Composite added 123.76 points, or 0.97%, to 12,822.20.

The pan-European STOXX 600 index lost 0.19% and MSCI’s gauge of stocks across the globe gained 0.77%.

In the currency markets, the dollar fell against a basket of major currencies after China lifted its official yuan exchange rate by its highest margin since it abandoned a dollar peg in 2005.

The Chinese move helped support demand for other currencies and kept MSCI’s emerging-market currency index near the record high it had hit on Monday.

In the offshore market, the yuan strengthened as far as 6.4419 for the first time since June 2018. It started the week at 6.4944.

The British pound recovered from a tumble on Monday, when a surge in COVID cases in the United Kingdom forced the nationwide lockdown until mid-February.

The dollar index fell 0.485%, with the euro up 0.42% to $1.23. Sterling was last trading at $1.363, up 0.45% on the day.

Bitcoin traded at $32,045.29 following a roller-coaster ride that took it to a record high of $34,800 on Sunday, followed by a tumble to as low as $27,734 the following session.

Earlier, in Hong Kong, China Mobile, China Unicom, and China Telecom rallied after the New York Stock Exchange suddenly scrapped plans to de-list the companies’ shares following a U.S. executive order.

U.S. crude futures rose 4.9% to settle at $49.93 a barrel. Brent crude futures also jumped 4.9%, settling at $53.60.

Spot gold added 0.5% to $1,951.52 an ounce.

In the bond market, benchmark U.S. 10-year notes last fell 14/32 in price to yield 0.9632%, from 0.917% late on Monday.

(Additional reporting by Marc Jones in London and Medha Singh and Devik Jain in Bengaluru and Stephanie Kelly in New York, editing by Gareth Jones, Mark Heinrich and Sonya Hepinstall)

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