Stocks climb after Monday's drop, oil gains 5%

NEW YORK (Reuters) -Global equity indexes mostly rose 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.

FILE PHOTO: TV screens show the German DAX Index during a trading session at the Frankfurt stock exchange, amid the coronavirus disease (COVID-19) outbreak, in Frankfurt, Germany, December 30, 2020. REUTERS/Ralph Orlowski

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.

The start of vaccine rollouts boosted equities heading into the end of the year, and U.S. stocks ended 2020 at record highs.

The discovery of a more contagious variant 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 coronavirus variant.

The Dow Jones Industrial Average rose 167.71 points, or 0.55%, to close at 30,391.6, the S&P 500 gained 26.21 points, or 0.71%, to 3,726.86 and the Nasdaq Composite added 120.51 points, or 0.95%, to 12,818.96.

The pan-European STOXX 600 index lost 0.19% and MSCI’s gauge of stocks across the globe gained 0.62%.

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

Saudi Arabia pledged additional, voluntary oil output cuts of 1 million barrels per day (bpd) in February and March as part of a deal under which most producers from the Organization of the Petroleum Exporting Countries and allies will hold production steady in the face of new coronavirus lockdowns.

In the currency markets, the dollar fell against a basket of major currencies in the wake of China’s decision to lift 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.

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-19 cases in the United Kingdom forced the nationwide lockdown until mid-February.

The dollar index fell 0.418%, with the euro up 0.35% to $1.2291. Sterling was last trading at $1.362, up 0.38% on the day.

Bitcoin traded at $34,077.96, up 6.41%, following a roller-coaster ride that took it to a record high of $34,800 on Sunday and a subsequent tumble to as low as $27,734 the following session.

Spot gold added 0.4% to $1,949.46 an ounce.

In the bond market, benchmark U.S. 10-year notes last fell 12/32 in price to yield 0.9549%, from 0.917% late on Monday.

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