>> good morning. i am tom mackenzie. asian stocks rally in the after

fresh monitoring of sticky inflation while jay powell points to progress in the u.s.. >> you are seeing demand for labor coming down, the labor market is -- is, you know, cooling off and we are watching it. tom: more than 200 candidates pull out of sunday's election ahead of the second round vote as members on the left and center tried to deny the far right a majority and the final countdown to u.k. elections with a historic victory for the opposition labour party, but we will break down the potential outcomes. european markets pointing.

[no audio] ♪ tom: a record for u.s. stocks. s&p closing above 5000 500. the european pickup right now, futures point higher after losses yesterday across equities. futures are adding 34 points. s&p has a breather. nasdaq futures are flat and gains come through without nvidia. tesla gaining 10%. focusing on debt markets of

france given political horseplay involving on sunday, a bid for french debt. weighing comments from jay powell, markets pricing in close to two cuts. brent crude holding steady around $86 a barrel so far indeed. avril is standing by for a check of asian markets. avril: the stock gauge is on a four session winning streak as infotech is outperforming the idea that chip investments are spurred by optimism thanks to

chair powell's comments about the path of disinflation. hang seng outperforming and i wanted to highlight the nikkei, highest level since march of of the 40,000 level and tech sector doing well although csi is underperforming. we got a data point that reinforces bleak prospects for the chinese economy. talking about services, that reinforces concerns. let's take a look at stocks in focus because ev numbers for tesla do well on a day when investors are reacting to teslas sales drop. lg energy are among the biggest boosts.

the other stock on top of byd which showed record sales is softbank, a big boost. it clocked past the record closing high and hit a session high of 10,000, no doubt a win or yoshi -- four yoshisan, helping the topix as well. highest level since 1990. moving toward the 17 level suggests momentum for japanese at these to the upside. as i mentioned there are concerns of the chinese economy along with the greenback doing decline in the offshore yen. dollar-yen approaching 730

against the backdrop of the implied volatility for one month suggesting traders do not see this strengthening. the pboc came through with a fix above 713, which suggests carry trade can carry on and we are seeing weakness of japanese currencies. tom: averill, thank you very much indeed. very fascinating indeed. now to the macro indeed, inflation getting back on a downward path but officials need more evidence. jay powell speaking in portugal. jay powell: we want to be more confident that inflation is moving down before we start the process of -- of reducing our

policy, loosening policy. because the u.s. economy is strong we have the ability to get this right. tom: indeed. let's bring in mark greenfield for the -- mark cranfield. mark: he may well himself have an idea that he wants to lower interest rates but you can see traders are not taking notice as avril showed. dollar-yen is stronger so certainly the strength of the u.s. dollar does not suggests that rates are coming down. they seem relaxed, they believe in a strong dollar. yields are not down a great deal

and it is no wonder because jerome powell sounded confident inflation would come down into the target range and we were thinking about a rate that. that did not happen, inflation numbers came in and people are thinking until we see hard evidence in the cpi we will not get excited, even though powell macy's something traders have not seen. in the background you've got the rumbling story about donald trump as the lead candidate. there is a steepening trade supportive for the u.s. dollar. equities are happy because tech companies are doing well so a disconnect across asset classes, hard to see a uniform opinion but interest rates are down in the u.s..

tom: there does not seem to be a uniform opinion on the ecb. there was interpretation that the cut, they were compelled to do that. what are the next steps? do we have clarity around where they will go next? mark: there is much more chance that the european central bank will follow with a rate cut in the ecb will probably have two rate cuts before the ecb get started. if you think about the european economy there are pockets of weakness and a country as big as germany not doing well, a major concern and weakness in small nations. the ecb committee is 28 people and getting them to agree is

difficult and you have a lot of doves look for any reason, a different picture compared to the u.s.. the fed have got indicators like the employment rate telling them it is not time to lower interest rates but inflation came down in europe. job situation is not as good across the region and growth is low so the ecb has reasons. whether they get across the line, maybe not but this quarter there is a decent chance they will lower rates and that is what markets are counting on. tom: ok, christine lagarde same services does not get down to 2%. they have to weigh out different evidence. with the analysis indeed in the

impact, mark cranfield. thank you, indeed. policymakers were asked about politics of france. more details on that indeed. more than 200 candidates have withdrawn from runoffs ahead of france's second round election to avoid splitting the vote against the far right national rally. let's get more from caroline connor who has been covering this from day one. how have parties maneuvered ahead of the crucial runoff on sunday? caroline: candidates had until 6 p.m. last night to register for the runoff and as you mentioned, more than 220 candidates according to the latest will get the result later today, pulling out of the race. those who came in third are not

out of the race. it is endurance in a lot of constituencies. less than 100 three-way contest and technically that decreases the chances of the national rally getting an outright majority. still a possibility, the national rally would get between 225 and 262 seats. before the first round, the national rally president said if i do not get a majority i will refuse the role of prime minister. marine le pen is saying they could still take the job if there -- if they are a few lawmakers away. 15 or 20 away from the majority, they might try to grab a from republicans.

tom: ok, so that message has been moderated. you touched on part of this, what are our predictions in terms of how this could line up? caroline: absolute majority is a possibility. clearly we will not get a majority from micron or left-wing so analysts are saying a technocratic government could be possible with a personality outside of politics coming back such as wto director pascal or bank of france governor or current ecb president who is not totally out of the french scene, even though some do not agree with that scenario. >> i think the government is not

in the french tradition. it might be a solution in other countries, namely italy. what i would expect in case there is no absolute majority by either political sensitivity, i think that the president would probably try to have a coalition government. caroline: so if it is not a technocratic government what could we have? a political coalition. the far left will not join a coalition and less emmanuel macron broadens pension reform, something he is unlikely to do, so getting moderates on both sides and the possibility of the

centerleft as prime minister, the former president, who is running as an mp and the former prime minister, a socialist and socialist mps have said they are ready to take the prime minister role. a lot of unpredictability for the runoff on sunday. it might be premature to see what is going to come out of this. tom: caroline connor, thank you indeed on the french elections and french politics ahead of the sunday vote. thank you very much indeed. today indeed we will get services pmi on the spanish economy. at 10:30 p.m. -- u.k. time we will see how much demand there is for german sovereign debt and on the back of what we hear from jay powell, it will inform how

the fed is thinking, fed minutes are important in terms of fed officials thinking's, in terms of the next steps and where they go with the first cut indeed. china's services sector expands at the slowest pace in eight months. the latest on the economy and how to position with exposure to chinese assets. that is next, this is bloomberg. ♪ i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar.

i've got another one.

tom: welcome back, happy wednesday. china services expanded in june adding worries over the outlook. let's get the details and how to

position if you have exposure. let's bring in the head of international shares. what you are seeing is underlying strength, data suggests that is challenged. what gives you confidence that this economy is resilient? >> since the recovery of pandemic, households does not spend at all. chinese corporate's have a strong balance sheet. those are very solid. policy has been so accommodative

it is yet to materialize, you have liquidity and you should wait for momentum. the chinese government lead by example. they have been gung ho about the climate. so in my opinion given where the valuation is, how healthy some of the corporate's are, it is not even happening. tom: there has been a view that if you follow the policy you can reap rewards as an investor and you flagged artificial intelligence and clean energy. the issue is if you align with those policies you risk facing a tariff and sanction risk, so how

do you pivot? >> those sectors have been heavily priced down and they may face restrictions. i was in china a few days ago, my second trip in three months. i also attended summer davos and listened and he mentioned state innovations 35 times and he said ai, clean energy and health care can be $1 trillion. and ai companies believe they have a product, it can be 80% of capacity. domestically they are not

pausing regardless of headwinds. headwinds allow them to position themselves. tom: how do you get exposure without exposing yourself to tariffs? >> domestic investors. we chat is owned by tencent. they have an advanced machine learning model. tom: you buy big names? >> we do, exactly. these big companies have to lead. we have a direct play of chinese technology. the government spent billions on

clean climate issues and solar panels, 35% is produced in china. excuse me, the solar company conversion rate. tom: what about november elections? how do you factor that in? >> this is the question i got asked during my asia trip. tom: our clients worried about trump or biden? >> this is the second term for both candidates so they are prepared. tom: one final one, the third plenum is a meeting of party leaders later this month.

what are you watching for? >> the market has high expectations. i want to hear action. a lot of policy has been introduced. excuse me, my voice. nearly five quarters. tom: ok, thank you indeed. head of international shares with the political overlay and opportunities around cleantech and ai. tesla beats estimates with a drastic drop in sales. the details next, this is bloomberg. ♪

tom: welcome back.

other stories making news, independent film and tv producers sky dance reached an agreement to buy national amusements and merge with paramount. an agreement could be announced within days. sky dance is offering to pay 1.7 5 billion. apple's app store head phil shiller will be offered a position. tesla shares jumped after a second consecutive drop in deliveries was not as steep as forecast. just short of 444,000 vehicles, 4.8% fewer than one year ago.

they blamed it on a suspected arson attack and shipping diversions from the red sea. the second quarter, deliveries were less bad. as questions linger over joe biden's bait performance we take a closer look at comments from senior democrats and what it could signal about how the democratic party is thinking about the president and his position. that is next, this is bloomberg. ♪

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tom: good morning. this is bloomberg daybreak. tom mackenzie in london. that's these are the stories that set your a general da. asia stocks increase. christine lagarde calls for close monitoring of sticky inflation. while powell points to progress in the u.s. >> if you look at the labor market, you're seeing demand for labor gradually come down in the form of job openings. you can see the labor market is cooling off appropriately so. and we're watching it very carefully. tom: french bonds gain as more than 200 candidates pull off of sunday's election run off as parties intent to deny a far right a majority in parliament. and is it the final countdown to the uk's election with polls pointing to a historic victory for the opposition labour party. but surprises cannot be ruled

out. we're going to break down some of the potential outcomes. european futures pointing higher to gains .04 of a percent the last time checked. on the back are the records. the s & p gaining crossing about 5,500. the nasdaq about 5,000. the 22nd record this year, year to date for the s&p. the momentum continues. and expectations that the fed is positioned to cut market prices close to two by the end of this year. and wearing out the commentary from powell. european stocks future picture looking to add about 22 points. the futsi100 on the final day of campaigning ahead of the vote tomorrow adding .04 of a percent. s&p taking a little bit of a breather with that fresh record pointing low. nasdaq essentially flat. we continue to eye moves in and

out of sovereign debt of france so for now, french debt big. we'll see how that shapes up through the trading day today as we continue to keep across how the parliamentary arithmetic is shifting ahead of that second round vote on sunday. the u.s. trading at .443. we look ahead to a lot of data in terms of jobless claims. euro dollar at 1.07. brent up .5 of a percent. is it the last day of campaigning before the generation. the labour party still firmly in the lead by 10:00 p.m. tomorrow, we will have an idea of the result as the exit poll is released. bloomberg's uk corporate lizy burden joining us now to walk through the likely outcomes. lizy, what are we looking at potentially in terms of what could come through at the opened the vote thursday?

>> all the polls have indicated that it's going to be a labor victory. the question is how big will that majority be? let me take you through the scenarios set out by the book makers in order of likelihood. start out with scenario one. a labour majority of 250 seats. the conservatives are warning this this could be a super majority, a term in the lexicon anatases new one but the reason that conservatives are warning about it is because the labour party will have power to pass the legislation. labour dismisses that as a desperate bid at the last minute for conservatives. there would be pressure on dahl me to be bolder about his economic agenda bloomberg economic says that would be a boom for the uk economy. some economists say that currently his plan is a gamble on growth.

let me take you to the next likely scenario. a majority of 150 plus, seats for labor. for tony blare in 1997, he got a majority of 179 seats. that kicked off 13 years in power. be bigger even than this record of tony blare's. and it would be twice as big as boris johnson's 80-seat majority in 2019 sorry less than tony blare but more than boris johnson. it would mean that dahl me could get his legislation passed but what it would not mean is that the conservatives would go on to extinction. a 50-plus, seat majority for the labour party if we dial back through history, this would have been a big deal before we had boris johnson's party get a and the premiership. but now, this would be kind of a disappointment for the labor party because expectations are

so high. i can tell you now, headlines on friday would be all about how starr squandered his poll lead. what went wrong from starmer and how did the conservatives stave off defeat? and now, the third scenario action hung parliament. this would mean that labour wins but they would not have the majority. does he want to run a minority government or does he want to go into coalition with the liberal democrats led by davey what would davey want in extension of his corporation? proportionate representation, close to ties with the european union and would starmer be willing to give him that? that would be a real threat for markets. let me throw a wild card as our fifth. this is liberal democrats becoming the main opposition. the labour party still wins but it would be the first time since

the first world war that you don't have the labour party or the conservatives as the official opposition. it would require the democrats to make significant inroads. it's not impossible but it is unlikely. tom: lizy burden on some to potential outcomes on the last day of campaigning ahead of the uk general election. lizy burden, thank you very much. to the u.s. where nancy pelosi says questions over president joe biden's debate performance are legitimate. comments come as james clyburn westbound the party said he would support vice president kamala harris if biden were to step aside ahead of november's election. let's get more from criti gupta. does this suggest there is a tide that is turning within the institution that is the democratic party when it comes

to joe bind and his role? >> i would call it the mini waves. what's important to note is the best indication are through the polling numbers. you can see that expecting president joe biden who is the only presumptive nominee, his poll numbers are going down not just in respect to president trump but clam harris, gavin newsom both have rallied around the president saying we support him. we expect hip to lead the party into a second term as well. that being said, you are starting to see cracks. this is the first time this has been outspoken. and a lot of this comes in the wake of just more and more kind of revelations and reporting around what if actually within the white house. the idea that not all aides get access to president biden. only members of his family get access to president biden there's a question about within biden's own circle they've been exposed to his true well-being.

what are is the defense strategy of team biden right now? >> well, he already came out from the get-go and said this is due a cold. this is due to two weeks of travel. it doesn't excuse it but it offers some sort of explanation. that's verbatim from his comments as early as yesterday. the administration is campaigning on the idea that this is not about debate performance this is what is within as cheesy as that sounds it really is about the fact that can you do the job? can he be chief? can he be in the situation room when the tide arises? and can he have a team behind him? and that's the message they're trying to get across. >> tom: thank you. opening trade anchor on how the democrats are thinking about the role of president biden ahead to that election in november. >> now, the u.s. ambassador to nato says there are concerns over russia and china.

nato is working to expose china's efforts to support putin's war in ukraine. >> china takes every effort, every chance it can get to argue that somehow it's a neutral player in this war in ukraine. but in reality, the p.r.c. is providing a long list of duel use components. things like machine tools and micro electronics that are enabling russia to pursue this war of aggression in ukraine. >> meanwhile, alexander stoop says china should do the right thing and help broker peace in the ukraine speaking exclusively to us. he said that russia is so dependent on beijing that president xi could solve the crisis with just one phone call. >> in the beginning of of the war, i think china was sitting on the fence. it was sort of looking around trying to understand what was happening and why putin was doing it and what the

ramifications are for itself. but as time has progressed and we're almost two and a half years into the war, china has started to provide russia with different types of aid. not direct military aid but issues linked to energy and sometimes duel use of goods. i argue that russia is so dependent on china that one phone call from president xi jinping would solve this crisis. if he would say time to start negotiating peace, russia would have no other choice. >> how likely would it take to make that phone call? >> i don't know but i call upon china to do that if china is genuinely is interested in peace. if china is genuinely interested in harmonious between nation states, it cannot allow a country like russia to drive an emperial at the end of the day an aggressive and independent

war. it needs to protect the international rules which are linked to territorial integrity and sovereignty. that is the right thing to do. i think it would get a lot of good will. not only from the global south but also from most countrys in the global west where it to be taking a stronger war in ending this war. tom: alexander stoop speaking duly to bloomberg. hurricane beryl is expected to have a strong winds and storm surge. the storm leaving a path of destruction in grenada. the storm is expected to cause more than $1 billion in damn. let's bring in our energy report. steven, as we take a look at the humanitarian toll and the reaction to this. $86 barrel on brent what is the potential i packet on the sector

that you monitor from the storm? >> this storm has brought a bit of an alarm bell. beryl became a category five. that's the highest. and it's the earliest that our category five of urban called in the u.s. in the atlantic. and so because of that, you know, we're expecting a very busy -- a very robust hurricane season. many powerful hurricanes are likely to go through the atlantic and also into the u.s. golf coast. now, the gulf of mexico is where there's a lot of off-shore drilling as well as facilities that export not just oil but financial gas and many shale fields when you go onshore. there is a fear that maybe not this storm but many storms after this could affect -- affect

output. usually when a hurricane comes along a lot of off-shore rigs will shut or curve productions for safety reasons. so if there are many hurricanes that come through and the larger they are you're going to see a lot of these field get shut. at the same time if there are going to be repairs that removes oil from the marriage prices are rising because at this time of the year people are driving. it's the driving season. so we have some early indication that there could be -- one of the biggest crude oil draws reductions in inventories for this week since january. so that's tightening the market. you've got potential disruption because of an active heck season. those two are pushing to push brent higher. we're at that 86 level. and opec are going to be bringing oil barrels later this year. but right now, they're still restrained.

tom: thank you very much on some of these factors including the weatherer systems. -- weather systems. ely lily's shares after u.s. president joe biden demand price cuts. in an editorial published in u.s. today, the companies are charging "unconationably high prices that are above those paid in other countries. meanwhile, a line crossing on sinofy and dupex sense winning clearance in europe for a long disorder. so we'll keep that story for you as you and see how it reacts to that detail. 8:00 a.m. uk time. we'll be speaking about bloomberg technology and how the company is leveraging a.i. for drug discovery and development central banks offer a hunt of

inflation data. but will any of these years of election results add to the bump to lower rates? this is bloomberg.

♪ >> for us, there's obviously looking at how do we maximize trade with the european union in a sensible way? how do we make sure we keep our population. we have sovereignty for the british people. we will not compromise on that. but do we want to have great trade relationships with europe? absolutely. we want to don't have trading relationships with the united states and a lot of other countries too. >> do you think having a strict immigration policy is inflation? >> i think it's all about how you implement it. that's my position.

so what we -- so number one, if you look at the -- britain, we're sixth in the world in g.d.p. 2 1st in the world in terms of g.d.p. per capita. i would argue that's a reasonably good bellwether for quality of life for people in this country. no up with knows better than i the contribution that immigrants can make to this country. my parents did. i've done my part as well to get jobs and pay taxes. it's about making sure that we have -- number one action secure border if you don't have a secure border, you don't have a coherent immigration policy. secondly, it's work out, ok. how do yo insure that we're able to address some of the huge problems the country has which are driven in no small part by exploding demand for those services? >> ok.

reform uk party donor yusuf. central bank policy makers, sounded optimistic around recent inflation data but reiterated the need for patience on rate cuts. joining me now is jane from robo bank. what is the vulnerability of the pound leading up to this vote and the outcompost thursday? how much is priced in to the pound that point? >> of course, we're seeing as far as the pound is is concerned that this election has been quite done. poll tex is actually a very good thing in terms of loading up the confidence within the private sector investors and therefore building up the potential for growth. this is perhaps, you know, the market is hoping that this labor government will bring after, you know, years of uncertainty,

connected to brexit, the chaos of the johnson government and then of course, the fallout from the trust government. i think the market wants something done. in a way this is what the labour government has promise. if you look at the words of rachel arrive, she's been whoaing investors try to get them to come back to the company. many are hoping that del politics will lead the way and recovery which could bring the growth. there are risks to that. you know what, if, you know, we have a huge end of this super majority that the tories are warning about for the labor government. what if that means we are wanting to spend that perhaps less, prudence than rachel reeves is expected. they're all risks, but certainly if you take the labor party at its word, there could be a bit to a rally for sterling. on the hope that we can see a few years of boeing politics,

stable politics and therefore an improvement in investment growth. >> what is more impacting on the single currency right now? is it the politics of france or the e.c.b.? >> yeah, i think we need to look at both. now, certainly, you know, all year, perhaps longer than that. the market has been really focused on the outlook for interest rates. and quite right. and that will continue will be e.c.b. cut interest rates again? that remains, you know, a very important topic. but we've got to remember that the markets has until today been very complacent on the budgetary issues around france, italy and some other countries too. in now, in the middle of last month, we do have at brussels warn from about eight countries.

including france. can any highlight have the difficulties up front it will continue to have after some weekdays second round -- election results. the last few days the market has been celebrating the likelihood that france could have a hung parliament. but a hung parliament means that it's not going to be able to really make additional progress in bringing down its budget deficit. meaning that it is in line for further difficulties with brussels. i think as we move towards the end of the year that the market cannot be so complacent about that as it has been in the year to date. >> jane, just very briefly what, would a trump presidency mean for the dollar? >> well, you know, i think the trump presidency is inflationary particularly with the huge tariffs that we're talking about. that could actually be -- those

could be implemented without congress, meaning they can come through quite quickly. maybe the middle of next year. and that could mean that the fed's interest rate easing tykele could be cut short, very soon. almost irrespectable when it starts. that could be a stronger for longer dollar. i think a lot of these policies these growth policies could be dollar positive. >> really appreciate your insight this is morning. thank you very much. plenty more coming up. stay with us. this is bloomberg.

♪ >> welcome back. we've got a slew of u.s. data out today but we got the meetings of a recent meeting. some color on how officials are

thinking. the dot plots were providessed from three to one. the market is still pricing in close to two cuts. we're weighing on the comments of jay powell. here's how the hawks and doves have divide, ebbed and road in deed lying up to the details of the meetings later today. and in terms of how they're position, jay powell are saying there's balance between inflation and the job's market. coming up, jose manuel cam bow will be speaking to team. and the risk assessment report. the opening charade is next. this is bloomberg. (♪♪) (♪♪)

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