>> good morning.

i am tom mackenzie in london. these are the stories that that your addenda. u.s. market to be open after the president's day. america was against an israeli assault and a draft security council text. all s concerns grow about the humanitarian situation in gaza. plus we will review the numbers and look ahead to more big bank earnings later this week. let's check in on these features then. the u.s. will return later today from the presidents' day holiday. trading expected to be a little bit lower.

here in europe, you're effecting on the fact that you are close to those record 2022 highs. let's have a look at the asian session. you would see a pretty challenging day so far across asia despite that record cut to the five-year loan prime rate in china. that underpins many mortgages. the shanghai comp is about -- just about in positive territory. the benchmark in asia currently up about two -- .2%. there is pressure coming through the chinese stocks. tech stocks listed in hong kong on the news the chinese authorities are getting a firm

grip on the tech sector and tech development. still close to those 34 your highs. let's start with the u.s. tenure. a little bit of pressure coming through very modestly. yields of two basis points. the euro-dollar at 107. about a 10th of a percent. eurozone inflation data coming out on wednesday. iron ore under pressure once again. look at that. a drop of 3%. all this amid continuing concerns about china. holding at around the three month high. those geopolitical risks particularly around the red sea. let's get a check out what has been happening in china. the policy response. chinese banks have that key reference rate for mortgage rates by record amount.

the move has failed to lift sentiment as we mentioned with chinese stocks falling. let's get the analysis and bring in mliv's strategist, mark granville. what do you make of the fact that stocks seem to be pretty underwhelmed by the fact there was a record first time for the first time since june. it was well telegraphed that the room front -- loan prime rate was going to be cut. a bit of disappointment was not the one year. traders tend to be interested in shorter term. the other issue here is that although it does help them work's market, people are questioning if there is any real demand considering the state of the property market.

the absolute level of five-year rates is too high. even though the five-year rate was lowered, it was still at 4%. there were some suggesting the right needs to be close to 2% to generate any decent demand in china. there are a few things overhanging here. even though the rate cut was bigger than expected. >> that was really interested -- interesting. you are flag and view from some that you have to be down to present to generate that. that is a fascinating view. be more explicit in terms of stepping up support. we are seeing that money flow into equities via those etf purchases. does that boost sentiment longer-term? >> it is a combination of things but certainly in the short term, people like to see the chinese government direct money through

their main investment. the money goes into the market and buy a certain etf's. that is a positive thing. but they are concentrating their ammunition in just a couple major etf's. the flipside of that is you have concentration risk. the investors can say the huge amounts of money flagging into a couple of specific entities. traders will back away from that and say we are not going to test those etf's because there is too much involved there. so they will look for other bases. if the markets toss or turn a bit negative, people might start aggressively selling the other etfs which are not covered by the chinese investment fund. you do bring your own risks thereby putting too much money into just a small space. you could end up making it a target for people that don't want to be bearish on the rest of the market. >> there are concentration risks. that support coming through from the state players.

when it comes to japan and moving in terms of jew -- all of this, we have been hearing from officials. all as we look at the end at 150 and waiting at the fact that the fed seems to be in this part -- in this higher for longer mode at this point. what you make of this? >> the keyword we heard was urgency or urgent. since the end of last week we are from japanese officials that have intervened a few times. also tell traders they are watching very closely. the dollar yen has been going higher. there are couple of things about this in the past when they talk -- when they start to speak in that way -- that doesn't mean to say that intervention will be happening today but he will be much closer. the chief guy in terms of watching the end -- he did mention a move -- a move of 10

euros being the key factor. that was a fairly rapid move. he would also be concerned that the data came out over the weekend. the shorts in the market are bigger than they were when they intervened aggressively. he is probably weighing out a number of things here. he is thinking the market is getting a bit ahead of itself. it could be coming up over long trade. trade does not -- trade needs to be on alert. quiznos mark to the potential

intervention with young. let's switch focus to the geopolitics of the middle east now. getting the latest on what is happening. they propose a temporary cease-fire in gaza. that is where they have hardly been reluctant to use -- reluctant to use. they block some resolutions from immediate humanitarian cease-fire in gaza. that is a shift in tone from the u.s..

including from the u.s. president joe biden himself. they have been talking on the phone point regularly. the u.s. has been expressing those concerns about a potential ground offensive in egypt where we have potentially a million palestinian refugees bunched up there at the moment. the u.s. has been say be careful about any of that. yet those concerns have been falling on deaf ears. israel says it has two goals. one is to get the release of the remaining israeli hostages. the other is to eradicate hamas. it is certainly interesting to see israel's biggest ally, the u.s.. >> meanwhile, in the red sea, a reminder that the u.s. and u.k. are so far failed to stop these

attacks by the two thieves. >> that is right. of course, that these are another iranian back group. and despite those, we have seen repeated air attacks on shipping in the red sea. they claimed to have sank the ship. for the first time they forced the group to abandon ship. sometimes those ships continue of course. that is really what they want. they want the shippers to go on the very long way around. this disrupts shipping in the long term. they have been doing that for

months. they amended -- they have been continuing to do that despite those airstrikes. >> thank you very much for the latest in terms of the development in and around the middle east. now to the corporate sector, the banking sector. switching focus to what is happening with barclays. the british letter caps off standard chartered. i am joined by william schorr who covers the finance sector across the u.k.. it has been a challenging time for barclays on a number of fronts. what are you going to be looking for when it comes to these earnings? >> the main focus will be this business which is very important to barclays. some x on wall street have had a tough quarter. both about 25% down.

analysts are expecting more like a drop of 15%. there will be potential on dealmaking capital markets activity. there has been a persistent slump in that kind of activity, corporate ceos on the sidelines amid volatility and interest rates. there is an expectation that investors will probably post about 406 million pounds in advisory and other -- underwriting fees. it is not a great outlook. it is likely to be under pressure. all of this as earnings come through. we will be scrutinizing those. there is the set up and there is the preview from william sure. thank you very much indeed. staying on the banking space.

results are due tomorrow. we will be speaking with the cl at 5:30 a.m.. that is london time. here is what else is on the agenda. he talked this barclays earnings. they will have that strategy review. how this bank is hoping to change its fortunes. we are looking for any details around potential further headcount cuts. that is the strategic review and the earnest coming out at 7:00 a.m. u.k. time and have a big week for the lenders across the u.k. space in terms of the numbers for the last quarter. on the microphone we will be hearing from the boe's andrew bailey. 10:15. the u.k. and recession. all to suggest that maybe the boe meet -- boe needs to start

taking a little bit more urgently about those rate cuts. and today we will get warmer earnings out of the u.s.. this will gauge the health of the u.s. consumer. are they trading down any changes around all of this? as well as wages and input prices as well. coming up, our interview with mike henry despite that weakness in the property market. that interview is next. this is bloomberg. ♪

>> >> welcome back, happy tuesday.

they are writing down the value of key assets. speaking to bloomberg, mike henry says the firms underlying performance remains strong. >> in terms of underlying operations and financial performance, it was a really strong have. they had operating cash flow buyable 30%. the balance sheet means strong. and all of that has allowed us to declare an interim dividend of 72 u.s. cents per share. we have had a couple of exceptional's including our look up -- nickel business. >> nickel business is the smallest by some margin. quick let's cross -- >> let's cross over to shanghai.

martin, we were talking about this $2.5 billion write-down on the nickel business. what went wrong? >> as you heard them say there, bhp's overall performance was not too bad but it was really this nickel write-down that really stands out amid this big slump in net income for the first half. two or three years, everyone was talking about nickel being the middle you had to get into. everyone was sort of panicking to try and get new supply set up. fast-forward to last year, too much supply. far too much coming out of indonesia. far too much nickel in the

world. there were high cost nickel assets. other countries around the world are really suffering because of this price slump. even had the government step in and say these metals are critical to future supply chains. we might have to give companies like bhp and australia support or they might have to shut down there minds. there is a familiar commodity store in nickel. but only a small part of bhp's business. >> is a relatively small part of the business. a junkie apart is what we are seeing in terms of iron ore and copper makes up a more sizable part of this business. it was striking to me was his relative optimism on the chinese market where you said the market -- talk to us, on a day when iron ore is down 3%, what are

they saying about that demand for iron ore and for copper? >> iron ore and copper -- bhp's two biggest commodities look at underlying earnings and copper, 23%. this was a relatively good performance. we are cautiously optimistic on chinese demand this year. very much in line with broader market consensus. there are a lot of good policy intentions from the government but it is the transmission and if limitation of policy. they will feed through into better property activity. that was elected in bhp's remarks and then the rest of the world they were a little bit cautious. sank the aftereffects of hawkish central banks over the past few years and the energy crisis is still stifling industrial

commodities. they did see things picking up in the second half of this year. apart from that, the nickel write-down was very costly. the performance was reasonably ok. >> martinuzzi on the ground for us in shanghai with a company has a breakdown of those bhp results and earnings for us. thank you very much indeed, martin. staying on the mining and mental space. as many as 3700 jobs are at risk in south africa. this after the world's biggest primary producer of platinum reported a 73 percent fall in profits. what is behind this huge fall in profits that is starting? >> automakers are seeking

cheaper alternatives. we are seeing the prices of palladium fall and platinum 14%. this is what they had two years ago when these firms were reporting earnings like this do double demand. this year fell 24% since the beginning. last year, they had their profits drop by 73%. the $13 billion would force them to cut dividends by 81%. >> it is never obvious a good news to her about job cuts. sometimes for the investors it is good news. what does it mean in terms of south africa? landing at this particular moment. job cuts of the size and scale?

>> it is not a good indication because metals at the biggest exporter are bringing about $19.7 billion. 600 fans will have contracts reviewed. the company announced their earnings hit a record low in 30 years. this year they are looking for tighter measures. they are hoping to save more jobs and also save some money to the tune of $363 million. we saw another company go through the same issues. impala has offered voluntary redundancies.

this comes at a crucial time. elections are coming up in the popularity of all this is on the line. >> the politics at play as well. >> thank you very much, there is 20 more coming up. we will look at the airlines and also the latest on a massive merger in the credit card space. stay with us. this is bloomberg. ♪

chris china's trying to make its presence felt at this year's edition of the singapore air show. they're just making their international debut for the first time outside chinese territory. this is a jet that could potentially become an alternative to the boeing and airbus jets.

we are seeing how there are dozens of orders that have already been announced at the event just a couple of hours in. now sustainable fuels also being talked about in this event. off the back of singapore. announcing analysts for sts and decarbonization -- the need to be taught -- bought by travelers. i am ever hung at the singapore air show. chris coming up, the swiss software company has announced an independent review on allegations raised by this short seller. we you can make money the hard way as a bullfighter or a human cannonball... or save money the easy way, with xfinity mobile. existing customers can get a free line of our most popular

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tom: good morning, this is bloomberg daybreak. these other stories that set your agenda. record cuts to the key mortgage rate fails to impress investors. u.s. markets reopen after the presidents' day holiday. america warns israel against an assault on rafah in a trap security council text as concerns grow about the humanitarian situation in gaza. plus, barclays reports with a preview of the numbers ahead with more bank earnings numbers. thank earnings numbers coming through from barclays under 30 minutes time. european stocks pointed lower by 2/10 of a percent with a context that european stocks are still near record highs.

an added gains yesterday. in this session you are looking at 2/10 of a percent. price pressure coming through for iron ore. i will unpack that story in a couple of seconds. ftse 100 back below that 7700 level looking to lose a 10th of a percent. modest losses being flagged for the ftse 100. s&p futures as the u.s. returns from the presidents' day holiday looking to lose, still holding above the 5000 level. nasdaq futures, big week given the index coming through from nvidia on wednesday. nasdaq futures pointing lower by 2/10 of percent. the asian session, big day for china with the record cut to the five year loan prime rate. msci asia-pacific. benchmark for the region down over a 10th of a percent. csi 300, mainland china. benchmark up a 10th of a percent. a little bit of disappointment from investors with the one-year loan prime rate was in also cut. hang saying in hong kong up a 10th of a percent with russia coming through for the hstech on

reports that the party is looking to have a further grip on the tech sector. nikkei holding about that 38,000 level but still pointing lower, currently down. u.s. 10 year, 429. yields up to basis points. euro-dollar at 107. iron or dropping 4% on concerns linked to china and the demand picture for iron ore. brent, $83 a barrel. still at those three month highs on the geopolitical risks. let's get to a major story in terms of the credit card space. this is a larger u.s. story with massive implications. it's sizable. capital one has agreed to by discover financial services in a $35 billion deal. the takeover creates the largest u.s. credit card company by loan

volume. joined by bloomberg scree to goop the for a deep dive, what do you take away from this deal, the significance, what does it tell us about the credit card space in the u.s.? kriti: there was a rumor discover was looking for a buyer. it was dealing with regulatory issues, a change in leadership following accounting practices. they saw a big drop in the student loan business. a buyer was in the works. what wasn't in the works was that capital one would be that buyer. that for a price tag of 35.3 billion dollars. 26% premium to where it closed in trade yesterday. i think what's important to keep in mind is what capital one is getting out of this. there are only four major product -- credit card. american express, visa, mastercard. capital one works with visa and mastercard. discover adds a new element. 305 million customers, that is tripling, on top of the 100 million customer base they have. the numbers here are enormous.

the problem is how much the regulators are going to be a fan of this, given that it creates control over one of the four credit card networks in the u.s., arguably, the world. tom: is this smooth sailing? touch on the different makeup, in terms of customers, that the company's head. there is a different picture in terms of the customer makeup. the potential hurdles when it comes to regulation. kriti: there is a nuance in the mergers and acquisitions, the law you have to pass for regulators is that it cannot be good for the business, it has to be good for consumers. their concern is fees can be marked up similar to what you see in other credit card companies. think of jpmorgan chase, or any other credit card provider. the concern is discover a has a massive student loan business. you are hooking that to one of the largest banks in the country, that creates an issue

at a time when not only is there scrutiny on the loan business, but student loans in the united states. that's where you see the hiccup. that being said, for discover and capital one, this could be a solution to problems that both companies have had individually. tom: thank you for breaking down a 35 billion dollars deal in the credit card space. set to create the largest credit card business, that's in the u.s. on loan value. staying in the world of finance, barclays set to report earnings in just under half an hour. they kick off a big week for banks. with lloyds, hsbc and standard chartered do to report in the coming days. let's bring in bloomberg's william short who covers the finance sector across the u.k., europe and africa. are we looking for for the results? >> it will be in focus, that's one of the biggest parts of barclays business. it has been a tough quarter for some banks and some of its peers on wall street. goldman sachs and citigroup wasted revenue about 25%.

barclays, little grim, not quite as grim. analysts anticipating a drop of 15% year on year to 831 million pounds. there's also going to be focus on dealmaking capital markets. a lot of companies have had issues as corporate ceos take to the sidelines amid volatile interest rates. the expectation with barclays is , investment bankers posting around 406 million it in advisory and under visor he fees. that would be a drop of about 15%. if those predictions come correct, a challenging quarter. tom: a challenging quarter arguably for barclays. we get the details in under half an hour. then there's the strategic review. how important is that? william: it's the first for almost a decade for 2016. it will be an opportunity for analysts to see not only what's been going on the last few months, but what the future

really holds or what barclays executives would like it to holds. the ceo is expected to lay out plans to grow the u.k. retail bank, as well as the cars in the payments unit. there's also some expectation that he may announce the caps on risk rated assets in the corporate investment bank. there could be an update on m&a in there as well. tom: thank you, with a great preview of those barclays earnings expected to drop. details there at 7:00 a.m. u.k. time. tomorrow we will speak with the hsbc ceo. that interview, 5:30 a.m. london time. determine oscar will conduct -- the company will conduct an independent review. this was company defended its record with the chairman saying that temenos is rending --

running a sound business. major accounting irregularities, adding the company manipulated earnings, sending shares tumbling. tell minogue's -- temenos has denied the allegations. what can you tell us about the investigation? >> they hired two law firms, one in switzerland and one in the u.s. that they did not specify the name of to carry out this investigation. the chairman said it would take less than five months and that it was going to be thorough, but speedy. given the seriousness of the allegations that have sent the shares tumbling 25% lower last wednesday. yesterday, before earnings, shares. some losses, they were 10% higher. sentiment is pretty bleak. some analysts suspended their coverage, waiting for more clarity on the matter, there is a lot riding on today's capital

markets day. tom: more details are expected to be disclosed today at that capital markets event. what are the next steps? >> hopefully today we will see if they manage to calm investors nerves. as we know, the hindenburg research had two other very known reports out, one on nikolai and one on the adani group, which -- they have a pretty good track record, that's what investors were worried about. in 2022 they were in a pretty bad place. at the time the activist investor, which now owns around 2% of the outstanding shares of the company came in and put pressure on the company to get rid of their co at the time. after a few months of pressure they managed. they want a complete overhaul and want to oust the current

ceo. the chairman yesterday did say there were close to hiring someone in the second half of 2023. but efforts fell through. the lengthy search for a co is definitely ongoing. tom: thank with a look ahead to the capital markets day during a challenging time for this company amid those allegations. also making news, planning to cut dividends by and 95% in an effort to dig itself out of a hole created by the acquisition of monsanto. it will offer investors only the legal minimum required under german law, paying out 11 euros since per share since 2023. buyers share prices down more than 70% since the monsanto transaction settled the german company with massive debt and waves of litigation. lufthansa ground staff begin industrial assets. the airline said will disrupt travel for more than 100,000

people. it's the third bound to hit the german airline in three weeks. seven major airports in the country will be affected, including lift dances biggest hub, frankfurt and munich. executive chair earns more than 12 million euros with the spanish lender reporting record profit, both in total compensation was up just over 4% on the year before, on monday the bank announced a new 1.5 billion euros share buyback joining european pears and raising investor payouts. plenty more ahead when we get calls on the fx markets. stay with us. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe. happy tuesday. let's check in on the fx markets.

currency markets with the bloomberg dollar index up a 10th of a percent so far in the session. you had a move higher in yields. that appears to be spitting the dollar in the session. euro-dollar at 107, just down. largely a dollars story for the euro-dollar so far in the session. we look ahead to the wage data and the inflation print out of the euro zone. that's important for the ecb in its calculations as markets pair their expectations of cuts from the european central bank to 100 basis points in 2020 -- in 2024. we will hear from andrew bailey, the bank of england governor later in the day. we will see if anything comes through. 125 then on pound dollar. the yen and the focus for us, suggestions from officials in japan may intervention may be coming down at some point, 150 for the japanese yen, just down. in the euro $.95, a little bit of movement on the swiss.

let's check in on your fx markets and get calls within the fx space and bring in the head of ethics strategy at saxo. thanks for joining us. let's start on the bloomberg dollar index or at least on the dollar. the bloomberg dollar is up about 3%, little under 3% year to date. is there further support coming through for the greenback or are we starting to peak now. how much is pricing in terms of rate hike expectations are great cut expectations for the dollar? >> good morning, great to be on with you. i think this year, we started off, there was a huge expectation about the nearest dollar trend. there is expectations around the fed rate cut. in the first part of the year, we have come away with that with the pushback we've seen from fed officials to the easing expectations. as well as those hard nsb numbers, cpi, ppi, a lot of the economic data out of the u.s. is

coming in strong to stable. now, we are at a stage where the market expectations are pretty much aligned to what the fed wants to see. back in december in the fed's dot plot, they expected three rate cuts this year in the market is now expecting 80, 90 basis points. pretty much aligned to what the fed wanted compared to 125 basis cuts. i do think that from here on the part for the dollar to run higher, it's very high there because we priced in pretty much what the fed wanted to see. and from here on is just about when that first rate cut comes. i do still feel a lot of support in the way of the dollar because of this u.s. exceptionalism story and because of the high-yield the dollar offers, but the upside is looking rather

tough from here. tom: tough upside for the dollar on some of those views. interesting, we think about china. china has to take into account what's happening with the fed and concerns of pressure of the yuan as the fed aligned to the higher for a longer view. market stocks aligned with that dot plot, 75 basis points from the fed reserve. higher for longer, arguably higher rates of the u.s., pressure coming through for the yuan or concerns about the weakness on the back of that great differential. do you have conviction around shine as they come back from the lunar new year holiday, and if you have conviction around china, where it is a lie and how do you play that story? >> i would say that concern in the chinese authorities about fed for hire for longer was evident for what they've done. they were trying to postpone rate cuts. so far, they want to let fed

make the first mover be more open. that would mean that the pressure would be a little bit more manageable, but of course that higher for longer narrative that we've seen since the start of the year, and the first rate cuts of the year only priced in for june. they potentially understood that they won't be able to wait for that. that's why we saw that larger than expected cut to the five-year primates today. what that means for the chinese economy, i would say any of these band-aid measures like rate cuts, stimulus announcements, even just supporting the stock market, i think these are really not enough to address the issues the chinese economy is facing. they might be able to cut the rate. the problem is not on the demand. the problem is not on the delayed side, it's on the demand side. so unless that is adjust with routers structural measures, i do see these measures continuing

to fall short. there could be some rules for tactical rallies because the market is too cheap and investors are now just waiting for a reason to enter that market again. but i don't see anything here for structural upside yet. tom: the japanese yen, 15041 so far in the session, down. to you think they intervened to support this currency? >> i think the investors are cautious we could see levels of intervention but is very clear it's not coming around 150, we felt that around that 150 level. 152 is the one to be concerned about. interventions have been picking up a little bit. but again, from a structural standpoint, the whole volatility in the u.s. rate side continues to fall for further yen downside. i'd don't think japanese

authorities of a particular level in mind and thus we see a brat -- a rabbit one, i think they will stay away from it at these levels. tom: i will bring it back to the u.k. because there was an intriguing line around the linkage between nvidia's earnings and the pound. can you just unpack that story for us? >> the sterling has been related to the performance of the u.s. equity market right now. of course there's a reason to believe the bank of england has some rule to delay rate cuts right now, but the fact of the matter is that it is the economy that faces the biggest taxation risks. but despite that, i think sterling has been a strong performer in the g10 space, that goes down to the fact that it had that close correlation with u.s. equity. given how the u.s. equities are so focused right now and it is

the biggest driver, if we do see this momentum in equities getting carried forward, it will come down to support sterling as well. tom: really fascinating in terms of correlation between the pound. head of ethics strategy at saxo, thank you for the insights this tuesday morning. plenty more coming up ahead. stay with us. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe, let's reflect on what's happened when china, surprise coming through with the extent of the cut on the prime rate which is a benchmark for mortgages largely. surprise of the one-year year loan prime rate is up. it underpins many shorter-term

notes was not move lower, but you do get this record cut to the five year loan, 25 basis points. you can see the yellow line indicating that prime rate back below 4% to 3.95%. on concern there just isn't enough support coming through for the property market. this signals one concern about what's going on in that sector. number two may be that there will be more measures coming down. the other real issue is the demand to take up the loans, given the can's -- given the sentiment around the consumer in the housing market in china has been battered as of late. you saw that with the lunar new year holiday where you saw the record fall with transactions. february and march is a really important month in terms of housing transactions. so this cut coming in ahead of that march month, we will see if that has any effect at all. let's flip the board and look at what's happening with the rba because the signal you get from the reserve bank of australia is

that this is the central bank that is on watch, still for a pickup and inflation. they kept rates on hold but they did discuss whether or not a further hike was needed. ultimately, you've seen some data coming through in terms of employment and in terms of the consumer that has looked a little weaker. they are targeting that 2% to 3% level for inflation, but for the moment, they have decided to hold on those rates. caution is coming through from the rba. talking the central banks of australia, let's think about the fed and what's happening in terms of expectations as the swap market start to reprice. they've gone to around 150 basis points expectations just a the beginning of february -- february. the expectation that this will be a fed that is on the higher for longer motive 525 to 550 on rates in the u.s., what that has done for money markets because the flows just keep going into

those money markets because you can clip that coupon get that yield. that's despite all the issues about a trillion dollars that came through from the u.s. in terms of treasuries last year, you have seen 128 billion dollars, investors have added in terms of u.s. money market fund since the start of this year and company sitting on $4.4 trillion, record and cash by the end of the third quarter. so that appeal is still there and as markets adjust to expectations, rate cuts come through later, you can still pick up yields at 4% or 5%. coming up, we speak to the ceo of hotel group on the earnings to -- earnings. that conversation at 8:00 05 -- 8:05. that's up next. this is bloomberg. ♪

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