Oil hits two-year low; dollar rises ahead of Fed
New York (Sept 15) Brent crude fell below $97 per barrel on Monday to its lowest in more than two years as lackluster economic data from China damped prospects for oil demand at a time of abundant supply, while expectations the Federal Reserve will provide new details this week about its plans to raise interest rates lifted the dollar.
Chinese factory output grew at the weakest pace in nearly six years in August as growth in other key sectors also cooled, raising fears the world's second-largest economy may be at risk of a sharp slowdown.
The Brent contract for October delivery, which expires later on Monday, fell as low as $96.21 a barrel, its weakest since July 2012. The contract later pared most losses to trade around $96.94, down 17 cents.
"Struggling global economic growth has resulted in falling growth in global oil demand," PVM oil analyst Tamas Varga said, adding that concerns over conflict in the Middle East, North Africa and Russia had not translated into supply disruptions.
The dollar rose on expectations the policy-setting Federal Open Market Committee will affirm the U.S. economy's steady recovery on Wednesday at the end of a two-day Fed meeting, and possibly provide a timeline as to when rates would start to rise.
U.S. manufacturing output fell for the first time in seven months in August, but the underlying trend remained consistent with steadily rising factory activity. That was confirmed by other data showing factory activity in New York state jumped to its highest level in nearly five years in September.
The euro fell 0.22 percent against the dollar to $1.2936, while the dollar index rose 0.01 percent to 84.251. The Japanese yen slipped 0.2 percent against the dollar to 107.10.
Most U.S. stocks fell, dragged lower by the tech sector as investors made space in their portfolios for Alibaba's planned initial public offering later this week and biotech shares weighed further on the Nasdaq.
"The Alibaba IPO is going to have a big effect, drawing money out of some stocks, and how it performs can help say a lot about the tech sector," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
The Dow Jones industrial average rose 11.72 points, or 0.07 percent, to 16,999.23. The S&P 500 fell 1.19 points, or 0.06 percent, to 1,984.35 and the Nasdaq Composite lost 33.85 points, or 0.74 percent, to 4,533.75.
MSCI's all-country world index of equity performance across 45 countries fell 0.17 percent to 425.43.
In Europe, the FTSEurofirst 300 index of top regional shares fell 0.04 percent at 1,382.41 points.
U.S. Treasury debt prices rose on bargain hunting encouraged by fresh signs of spotty economic growth, which might slow the Fed's shift away from loose monetary polices.
The benchmark 10-year Treasury not was up 8/32 in price to yield 2.5851 percent.