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World stock markets and oil slide on stronger dollar

Financial Markets

Global equities and oil prices were under heavy pressure on Tuesday as the U.S. dollar rallied further
against the most of its major counterparts amid the specter of higher U.S. interest rates. The ECB’s QE
program that started yesterday was also helping push the dollar higher against the euro. The MSCI
developed-nation stock index sank 1.3%, the most in two months, with energy shares leading the decline.
Developing-country shares tumbled to a 2-year low with the benchmark MSCI index falling for an eighty
day. Brent crude prices fell more than 2% to near $57 a barrel, while U.S. crude futures dropped below
$50 a barrel.

U.S. Treasury prices advanced for a second day as investors sought higher yields available in the U.S.
relative to Euro Area, where the European Central Bank’s massive stimulus program is continuing to push
down the bloc’s already record-low borrowing costs. The yield on the benchmark 10-year Treasury note
dropped by 6 basis points (bps) to 2.13%, while comparable German yields fell 7 bps to a record low of
0.24%. Although the U.S. 10-year yield has risen from January’s low of 1.64%, it remain much less than
the 3.28% average for the past decade.



High Income Economies

Declining for the first time in four months, Italian industrial production fell 0.7% (m/m sa) in January, more
than reversing the 0.4% rise in December. Economists had forecast a 0.2% rise for January. On a yearly
basis, industrial production decreased calendar-adjusted 2.2% in January, reversing December's 0.1%
rise.

Developing Economies

East Asia and Pacific

Rising more than expected from a five year low partly due to the Lunar New Year celebrations,
China’s consumer price index rose 1.4% (y/y) in February, up from 0.8% increase in January.
Economists had forecast a modest increase of 1.0%. Separately, Chinese industrial producer prices
declined 4.8% in February, larger than the 4.3% decline expected by economists and saw in January.
The latest reading is the biggest fall since October 2009.


Middle East and North Africa

In an effort to create a business-friendly environment in order to attract much need investment, Egypt has
slashed its top tax rate to 22.5% ahead of a high-profile international investment conference being held
this weekend. The rate slash effectively means that the 30% levy on annual incomes above 1m Egyptian
pounds has been abolished. Known as the "millionaire's tax" the 30 per cent levy was intended as an
exceptional tax for three years only.
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March 10, 2015



The Global Daily is an informal briefing on global economic and financial developments compiled by the
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