>> global markets approach their territory. -- bear territory. remains on the slide, falling the most since september. forecasts are gloomy. the new mantra is lower for longer. asia expects more declines for the nikkei. the yen is at its strongest in a year. welcome to first up. coming to you live from hong kong.

on wall street, but things could have been so much worse. su keenan joins us now for a look at what was a wild ride for u.s. stocks. su: what began as a severe selloff at one point, the dow 550 points. afternoon trading, the nasdaq, which had been down briefly, posted gains. the selloff began with great intensity. 82% above the normal trading volume. wall street appeared to join into the global selloff with renewed concern about the strength of the global economy. oil plunged. on pace for the biggest decline since the financial crisis. energy stocks leading the decliners, heading further into

five-year lows. 8% at one,plunged now near $26 a barrel. the worst trading day for crude and four months. oil causing problems for banks stocks and financial firms as well. iti, j.p. morgan chase, charles schwab taking severe losses on the day. vix was up again on the day. one of the few exceptions to the general selloff was a company involved in touchscreen technologies, which posted double-digit gains. relaying, left many to say the least -- reeling to say the least. angie: what is the view on how much lower the market could go? su: bloomberg talked to a number of strategists.

it could go a lot lower. we have not seen a bottom. unless there is some easing by the central banks, and there is chatter about what the ecb might do, what china might still do, this will continue. this wild volatile ride will continue. also questions about whether the u.s. could boost its strategic oil reserves, take some oil off the market. it is accepted that the fed is not going to touch rates when they meet next week. there is a growing view they never should have started us on a path toward higher rates. >> i was not somebody who thought the fed should have been raising rates quite yet. i would like to see a little more certainty in the global economy and i would like to see -- : we got a new round of economic data. the cost of living in the u.s. fell in december.

we are having no inflation here, a separate report shows new-home construction unexpectedly fell. a very tough picture. angie: a quiet day here for us in the eco-front, but on the equity front and the volatility front, things are shaping up to be kind of messy in the asian session. haidi: angie, we are anticipating what a battle inween different sentiment asia. thise one hand, you get sense of fear feeding into itself. the fundamentals are driving it, the plunging oil price. the economic slowdown, the extent of the slowdown and the rebalancing. none of this has changed. if you look at technicals, a number of markets are looking very oversold.

50% ofhong kong shares, all japanese stocks. japan is in a bear market. australia as well. that, we are seeing new zealandpicture, extending declines. the biggest loser in terms of kiwi stocks had been these milk companies. we had a number of banks revising down there forecast -- their forecast. i want to take a look in terms of where these major markets are sitting. asx, we are off

by 20%. the nikkei 225, this is interesting, the last time we saw the nikkei enter a bear 2013., it was back in may what happened after that, we saw a rally of about 30%. this time around, in terms of the drivers of this market, that is not going to change. they are seeing more pain ahead. when it comes to the hong kong the worststerday, levels we have seen. the hong kong listed companies -- chinese companies. you would think that could be a

bottom in terms of half of that market being technically oversold. bank of america merrill lynch saying it is nearing a level that some of the investment banks are minding their trades. angie: thank you. china's determination to defend the yuan is starting to burn through with foreign exchange reserves. taking atephen engle look into this for us. at some point, there must be an effect on confidence. stephen: there must be a psychological impact if it goes lower. that is why china built up its reserves, for a rainy day. china is having its rainy day right now. this is the last two years. it got to $3.99 trillion.

ofis down to 3.33 at the end december of 2015. that is a drop of $513 billion. it burned through half $1 million defending the yuan. the one-way bet of appreciation in the minds of a lot of people and the confidence level in china's ability to contain the slowdown and wanted to see a to spur af the yuan recovery. a competitive disadvantage -- was at a competitive disadvantage. they have been defending it quite vigorously. last year,s dropped the first annual drop since 1990 two. the drawdown was equivalent to

nearly the entire size of switzerland. switzerland is number four in the world in reserves. that gives you the magnitude of the drawdown. how far will they let the reserves dwindle in defense of the yuan? we have heard officials in beijing say it would be foolish to bet against continued depreciation. the sentiment is there for continued depreciation. angie: they have a lot of firepower. it is for international investors around the world, what happens if it goes from four to three? stephen: it is going to go further. it could go down to about $2.6 trillion. $3 trillion is that critical threshold. we have an economist, a critical threshold is $3 trillion. saying, $2.8ist

trillion in reserves may already be spoken for to cover liabilities. noted professor of economics at the university of california san diego, he said there will be another psychological switch if it gets below 3 trillion yuan. i do not think there will be panic after that, but people in china will become alarmed. davoss a big topic at right now. none of these intervention measures are ideal. basically, more openness from china is what he is calling for. angie: we are getting some reports that shanghai banks are worried about capital outflows. stephen: authorities are

tightening the capital controls, tightening -- cracking down on illegal money transfers. this is the number one priority of -- their number one priority, the fx reserves. us barclaysrce tell big chief executive have started a fresh round of job cuts. been seeking ways to boost earnings growth and restore confidence in the bank since taking over last month. barclays new york and london office will also be affected. the bonus pool cut by 10%. goldman sachs fourth-quarter 27%nue beat estimates, a rise. net income dropped 65% after goldman had to settle a

government inquiry into its mortgage backed securities. a diversified business makes delivered solid results in a year of uneven economic activity. goldman shares fell 2%. deutsche bank expects a fourth-quarter loss after cost of litigation and restructuring. it is set to post its first loss since 2008. the co-ceo has been trying to restore investor confidence and because growth battered of ties to misconduct. we will hear more from riverfront investment group when "first up" continues. ♪

>> what is true for europe and for the u.s. is not true for china. it is more important in china. >> technology is doing throughout. -- doing pretty well. economyare changing the towards a more domestic consumption and focused economy. this has impact on exports of raw materials and energy and so on. >> there has been a disconnect between what the financial

markets tell you and what the real economy shows you. it is extremely pronounced in china. the financial markets went their own way almost unrelated to the real economy. angie: we are joined live from richmond, virginia, by the director of international folio management at riverfront investment group. you have been hearing it around the world. it is china. what are your concerns specifically about what is not being done at the pboc level? >> the concerns at the pboc level is the amount of opacity in terms of guidance we are getting on what the currency plan is going forward, what the plan is for accommodative

currency policy. the group thatk is in real trouble is not necessarily china as much as it is china's trading partners and the rest of asia and trading competitors as well as any country or region that makes their money by taking stuff out of the ground and trying to sell it to china. much of the emerging markets are being held at gunpoint by the lack of transparency. angie: lack of transparency, but remember who their audience is. 1.4 billion chinese citizens. calm the waters domestically. is injecting cash into the system in place of a rrr cut.

beyou think they need to much more transparent, much more obvious with an interest rate cut? chris: i think it would be really helpful. if you look at the equilibrium rate for where china's interest rates are, i think they could be meaningful lower. they sort of moved in increments. you bring up a really interesting point. if i were to put myself in the shoes of chinese policymakers. i think a gradual devaluation of the yuan is very much in my best interest. .ou have exports slowing it is proving costly for the po -- pboc to maintain the peg. in the end, that will be the right move for china, is to allow the yuan to free flow a little bit more and to devalue.

that is a bigger issue for countries in the southeast of asia, countries in latin america , then it is for china. is really, howve to we get chinese growth back on track and how do we maintain order? transparency would be welcomed. angie: growth is the word of the year. are we going to get it? chris: we are in a growth starved world. the only two areas that we are constructive on are two areas highly controversial, the first one being japan and the second one being the eurozone. if you look at chinese equity markets, japanese equities have acted as poorly as anything else on the globe. if you think about the effects of a currency devaluation in

china, the effects of low energy input costs, those are two very positive things for japan. yen hasn -- w aeak translated into a robust corporate earnings report in japan. japan is one of the countries, the largest commodity net importers. lower for longer in oil prices and energy prices, quite a boon to japanese consumers. the eurozone consumers also very much benefiting from low oil and we currency. -- weak currency. have elevated cash. are you waiting for further lows ? specificcannot be 100%

about our plan. we are watching technical levels very closely. i find it very interesting, the market briefly went below that important level and we had a pretty powerful rally in the second half of the day. as we are sitting with very elevated cash levels, we are watching these things very closely because there are some assets that can still make positive gains for 2016. angie: there is still value out there. save that baby when you throw out the bathwater. thank you for joining us. the stories making headlines around the world. iran supreme leader has placed teameam -- has praised the

responsible for lifting sanctions. criticized saudi arabia's attempts to scuttle the deal. >> it spent millions of dollars in the united states to kill it in congress. it has done everything it could to undermine it since its inception. our saudi neighbors should come to their senses and understand they have a much better future in collaboration and coordination and accommodation with iran. angie: the latest industrial action -- accident in china has killed three people and left one more missing. it is not clear what caused the blast, but did confirm the

factory had a safety license. last week, 10 people were killed at a similar fireworks factory. vietnam will announce its plans for the next five years today when the communist party picks new leadership. they include reforming state owned industries, implement and trade pacts, and vietnam's relationship with china. just conservatives against reformers. dayal news 24 hours a powered by 2400 journalists in more than 150 bureaus around the world. as global stocks stand on the edge of a bear market, could there be signs of a rebound? we will take look at the numbers after this short break. ♪

angie: not long to go now until we see how this region reacts. japan and hong kong, two of the worst hit midweek. >> what a difference 30 minutes makes. throw my scripts out the window. let's have a look at what happened. wall street, late rally. it drove a fairly big portion of those two markets into one year lows. -- takeg back to levels a look at this big drop in japan yesterday. of 1800 were up. ofe a look at the percentage

stocks on the japanese stock market that entered oversold terrain, over 50%. look at this rally we are seeing on the asx 200. 56% are oversold. that could entice some buyers. hong kong, slightly worse. oversoldproportion relative to the overall number of stocks. the other thing i want to show ratio of stocks at one your lows -- one year lows is that 17%. that takes us back to 2008. could entice some buyers back into the market. angie: we heard from our previous guest, take look at technicals.

timing,p, talk about chevron's costly project is about to come on stream just as energy prices hit new

angie: only two stocks on the nikkei 2254 up yesterday. how many stocks today? we are 30 minutes away from the opening of trade their, as well as south korea. you are watching "first up." the top stories this hour, wall street saw big declines, but it could've been worse. the s&p 500 fell more than 3.5% in the middle of the session for what could have been the biggest selloff. it still load -- closed at its lowest since april 2014. stocks climbed their way back

from the edge of a bear market. crude shrinking by the most in four months. it is now nearing $26 a barrel. earlier, the international energy agency said markets could drown in oversupply as iran prepares to resume exports. the barclays new ceo has started a fresh round of job cuts. staff in asia will suffer the biggest losses. they are seeking ways to restore confidence in the bank. york and london offices will also be affected. the bonus pool cut i at least 10%. -- by at least 10%. crude is nearing $28 a barrel in new york.

for more, let's get to our energy editor. he is there for us in houston. richard, how are energy companies taking this? richard: they are not taking it very well at all. exactly as you would expect. to makewhole lot easier money with oil at $100 a barrel than it is to make it at $28.71. you are seeing things like we saw today where shell announced it expected fourth-quarter profit to be down 42%. they are reacting the way you would expect. most of your costs are people and that is what you would have to cut. angie: we are also seeing

producers cut back on dividends, production cuts. what else is shell considering? >> the other thing on shells plate is the acquisition of bg group and the vote on that is supposed to happen next week. shell is voting on tuesday and the bg group shareholders are voting the following day. the expectation appears to be that is going to go through and that will be a big thing for shell because it will change their entire portfolio and add a huge chunk of liquefied natural gas. you.: richard, thank after years of delay and cost overrun, chevron's australian project is about to come online. let's get more from james payton it sydney. one of the world most expensive

ventures. it is kind of appearing at a bad time for energy prices. james: that is right. project inargest australia's history and more than six years after chevron and its partners, including shell and a son, decided to build the venture, it is finally approaching the finish line. the world has changed dramatically since 2009. $78 al price was around barrel. today, it is around $28 a barrel. the costs have ballooned to from $37 billion billion. times have changed at the oil price is critical because that is what drives the revenue any economics for these projects. when oil prices tumble, that eases the returns for projects

like this. not the best timing, chevron cannot control the oil price. they are not alone. origin and santos have started up export projects in recent months and are facing the same dilemma. angie: oil is sinking. what kind of price trends are we seeing with lng? >> it is interesting. long-term projects tied to crude. that is good for chevron in that they have more than 80% of their volume in gorgon. the stock market for lng, prices have declined by more than two thirds since early 2014. the market is really reeling increasing supplies for most

-- from nus as well australia and the u.s. as well. that stock price is important because it has the potential to influence long-term contracts. according some of the people i talked to this week, that could lead asian buyers to attempt to renegotiate their long-term contracts. alreadytrend we are starting to see. if that happens, that could put pressure on suppliers like chevron and others around the world. as you are selling lng, there are other factors, too. in china, there are concerns they will need all of the lng they have contracted. angie: james payton, thank you so much. woodside petroleum says out may fall 7% this year.

the second-largest oil producer , it could be up to $1.2 billion. let's check in on shares. there you go. aussie minerals surging after announcing its latest production figures. gold in thes of fourth quarter. shares.ke a look at barely noticed amidst the wreckage, japan has stumbled into bear market territory. 80% of analysts surveyed were taken by surprise.

let's go to tokyo. year. performed well last what happened? >> you are right. the performance so far this year has taken a lot of investors by surprise. it has -- it is not just japanese equities that have been hit so far. the two major themes of oil prices falling and concerns over the chinese economy has been hitting again and again. we have been in a cycle whenever we have had a rebound in the market.

that has been casting a cloud over the markets. angie: what do you see bringing markets out of this slump? now, it seems to be an issue of sentiment. if you look at the technical , they are all pointing to the fact that shares in japan are oversold. valuations in japanese stocks are too cheap and it seems people are trying to see went to go back into markets. like actionomething from the u.s. or the japanese central bank, better data from china.

anything that is surprisingly good for japanese earnings would be a big help. angie: thank you so much for that out of tokyo. it's take a look at what we are following on the bloomberg terminal. shortncore has drawn up a list of potential buyers of its agricultural unit. the sale is part of glencore's plan to pay down $12 billion of debt. twitter jumped as much as 14% in new york on speculation that new score may be keen on buying all or part of the company. twitter was seen as a takeover target as shares slumped to a record low. news corp. wasd

not interested, but twitter was still 4% higher at the end of the day. glasgow smithkline and qualcomm are in talks for a joint venture. glaxo has been looking for ways -- apple has applied to open its own store in india for the first time. the indian government relaxed companies.ng foreign it may help apple better tap into the market just as iphone sales appear to be peaking. apple has 2% of the indian market. shares closed slightly higher in

new york. that is a look at some of the stories making headlines. angie: the yen advances to its strongest level in a year as the global selloff deepens. the view from -- stay with us. ♪

sayspan's economy minister he will provide in the nation today about allegations of financial impropriety to be published in a tabloid magazine. website claims he and his secretary violated political funding laws. not fully read the article but will investigate

the matter. the leader of a pakistani taliban campus says is grouped attacked a campus and killed 19 people. byy were eventually killed security forces. the faction said it was event for pakistan's military cracked down on militant groups. u.s., british, and japanese government agencies have confirmed that last year was the hottest on record, but that it was hottest by a record margin. american climate scientist blame the effects on human made global warming. day,l news 24 hours a

powered by 2400 journalists in more than 150 bureaus around the world. it has been a very dramatic few days in the global markets. many commodity led currencies are being hit. it has been a hot topic at the world economic forum. that is a key feature. we have a floating exchange rate. there are immediate adjustments to the value of the estoril you and dollar. -- australian dollar. it helps to transition the to dealan economy and with the sorts of challenges we have been finding in recent times. >> one of the embarrassments for china is that they are competent, but no one can

control these exchange rate attacks. if you are trying to get your credibility out of controlling things you cannot control -- angie: let's get more on this with richard, head of global markets research. global currencies are seeing the kind of volatility it has not seen in a very long time. where are we right now in terms of pegs? arabia, a lotdi of attacks going on on these pegs? not great with cyclical dynamics and they are downright terrible with structural shifts. saudi arabia is facing a structural shift in oil prices. market iso doubt the

having a bit of vulnerability, and that is reasonable. hong kong is a different story. it is at the beginning of a structural shift after a very extended period of using liquidity. -- easing liquidity. angie: the one currency that has made us nervous around the world is the yuan. where do you see it going? does the pboc have a handle on it? will it be unpredictable as it has been all year? it is going to be unpredictable because that is by definition what a floating exchange is. back over theook last couple of years, the one

is allowing the currency to move in a way that reflects the forces of supply and demand. it is the beginning of a process of getting their rmb into a more modern system. it is going to be a volatile process, and it has already been a volatile process. depreciation is entrenched now. no doubt in my mind where -- which direction it is going. we can debate the east. angie: how -- we can debate the pace. angie: how weak? richard: in november, that looked downright heroic. timid.ary, that looked maybe we need something slightly higher than that. the direction is relatively

clear. we have already had record , which isa 4% move pretty remarkable when you think a year ago, it had annual volatility of less than 3%. angie: the betts are off -- the bets are off, risk is off. how does that affect the boj's plans? boj has a 10 problem. the currency has been strengthening, which, to us, is not really a surprise. the second issue is the labor market not delivering the outcomes they want. the pressure is building on them . we might see some easing between now and april. it will not get dollar-yen back

to 1.25. people should be expecting the dollar-yen has a meaningful downtrend the next couple of years. angie: richard, we will leave it there. coming up, milking the market. why the largest dairy markets are seeing tough times ahead. that is coming up next. ♪

angie: welcome back. you are watching "first up." the dairy market had a tough time in 2015. prices dipped to a 12-year low. there will be more turmoil this year. sluggish amidmain

the china slowdown. show, it will be tough, in my opinion. the weather is an important factor. we have seen some rain in new zealand. we still believe new zealand will stay behind when it comes to milk production. europe is slowing down because of capacity issues. the supply-side is kind of dancing to the new world of low prices. demand,really depend on and demand is sluggish at this point in time. if you have an uplift somewhere, uplift off you see an an importing region, the price

can pick up quickly. >> have you underestimated the slow down in china? ito: competitors are keeping on a high level. thathappened in china is consumer looked fidgety -- consumer liquidity burns on the stock exchange. people tried to make money, and lost money. consumer confidence was lost as well. that came on top of the higher prices. >> in the next two years, we can expect more pain before a pickup? >> there is definitely going to be more pain. it is a question of which supply pool or which country can adapt best to volatility and too low

prices? zealand, we have a farming system which is based on -- around the year. we have a very low-cost system. outan breathe in and relatively easy. >> the slowing in china has --sed a broader commodities do you see that making it harder for the dairy industry to recover? influx of affects the currency, the purchasing power of consumers. the economy of china was very much about building infrastructure.

the infrastructure which china has is not heavily utilized. it affects people who work in , the mineralies industries from around the globe. affects the balance. in the end, it affects fast-moving consumer as well. angie: before we go, let's do a quick check of the markets. australia, it is up 1.5%. we have also got a stronger

aussie dollar. over to new zealand, this is the view from there.

♪ ♪ angie: stocks plunge. optimistic of more growth in asia after the s&p hit a 21 month low. gloomy thecers are new mantra is "lower for longer." and china is burning through billions in its determination to defend the yuan. welcome to "first up," on angie lau, coming to you live from our asian headquarters in hong kong.