Crude fell on Monday, with Brent falling toward $107 as investors dumped risky assets over worries about weaker emerging market economies.
The U.S. Federal Reserve is widely expected to cut its bond-buying by another $10 billion at its regular two-day policy meeting starting on Tuesday, which would have knock-on effects for emerging market liquidity.
Tighter credit conditions in China are also raising fears of a slowdown. Analysts also pointed to concerns over Chinese growth following weaker-than-expected data last week. A Reuters poll showed economists expected Chinese GDP growth to slow to 7.4 percent in 2014 from 7.7 percent in 2013.
Brent crude was down more than $1 to under $107 a barrel. U.S. crude gave up early gains to trade down more than 1 percent to under $96. The weaker Brent price reflected a sell-off in stock markets in Asia and Europe following a hammering for emerging market currencies and bonds last week.
Emerging markets had benefited from investment flows when interest rates in the United States and other developed markets were low. But now that the Fed is changing tack, investors are getting out of the emerging markets with large current account deficits, raising fears over their future economic health.
No comments:
Post a Comment