Global Stocks Buoyed By Renewed Risk Appetite; Oil Rebounds

NEW YORK:Wall Street recouped losses on Tuesday after a bruising session the previous day, with oil prices also gaining as investors sought riskier assets despite surging Omicron COVID-19 cases around the world.

U.S. President Joe Biden on Tuesday said he would be taking steps to fight the Omicron variant, by opening federal testing sites in New York City and buying 500 million at-home tests Americans can order online for free.

World shares fell earlier in the week after Omicron infections multiplied around the world, but strong corporate earnings and reports that Moderna Inc’s COVID-19 vaccine provides protection against the variant gave investors hope on Tuesday. U.S. stocks had also taken a hit after Biden’s $1.75 trillion spending bill was dealt a potentially fatal blow on Sunday.

“We think this was kind of overdue over the past couple of weeks. We’re kind of set up for a rally in time for Santa Claus, which officially begins next Monday,” said Scott Brown, technical market strategist at LPL Financial, explaining that a so-called “Santa Claus rally” can happen in the last five trading days of the year and first two of the new year.

“We think we’ve had a little bit of a washout. We saw a lot of fear rush into the market.”

The Dow Jones Industrial Average rose 1.56% to 35,478.48, while the S&P 500 gained 1.61% to 4,641.34. The Nasdaq Composite added 2.02% to 15,282.95.

MSCI’s gauge of stocks across the globe was up 1.52%.

Oil prices rebounded from concerns the spread of Omicron would crimp demand for fuel and signs of improving supply. [O/R]

U.S. crude was last up 3.99% to $71.35 per barrel and Brent was at $74.10, up 3.61% on the day.

A somber U.S. trading session on Monday underscored market fears that rapidly rising cases of the coronavirus variant would yet again force governments around the world to impose lockdown measures, potentially choking off fragile economic recoveries from similar measures earlier in the year.

Still, investors were on Tuesday cautiously optimistic that the economic hit would not be as severe this time, buying stocks and selling perceived safe-haven currencies such as the dollar and Japanese yen.

The U.S. Dollar Currency Index was near flat on the day at around 96.53 after slipping as low as 96.336 earlier in the session.

The yen, considered a safe-haven asset, weakened 0.43% to 114.08 per dollar.

Elsewhere, cryptocurrencies – which often offer a reliable gauge to risk sentiment – gained ground. Bitcoin added more than 3% after trending lower in recent weeks.

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