>> good and gone. south african president jacob zuma has fired his finance minister and eight others. the rand plunges. and more momentum for china. official factory thee climbed for highest level in five years.

a warm welcome to "bloomberg daybreak." i am anna edwards. let's describe what has been called the night of the long knives in the south african political despair -- sphere. dhe devaluation of the ran coming through as president zuma replaces his finance minister. gordon is out, replaced by somebody with little financial experience. the former finance minister, speaking on the phone to bloomberg in the last few minutes, saying there are a range of characters troubling the treasury. andion between him and zuma part of the anc. also saying south africa's treasury has a strong team of

professionals. we will discuss this through the program. certainly, the new minister does not seem to have from the cv to have a great deal of experience. anc, could split. the presidency could be called into question. a fairly popular emerging market destination. let's come back to the south africa story shortly, but we will check out where we are on various assets in the overnight sessions. the bloomberg dollar index hanging onto its gains. fed commentary coming through this week. some of that communication coming from william dudley, suggesting growth and inflation risks moving, echoing some of that repositioning we have seen from the fed around the trajectory. that seems to be the theme. $50 a barrel the

level. let's move on to the asian equity session. he mentioned the strength of that session. pretty mixed this morning. the biggest quarterly gain in some five years. japanese stocks outperforming. an increase in core cpi in japan in more than a year. thein the china story, factory gauge at the highest level in almost five years. how sustainable is that in the face of tightening from the pboc? and how sustainable is it in terms of the surge in pbi? -- ppi? and closing down in australia by 0.3%. let's get to bloomberg first word news. deborah: the south korean former president has been arrested

barely three weeks after being ousted for alleged war option. cited the chance she could destroy evidence. she was taken to the detention center. she has denied wrongdoing. malaysia has released the body kim thatohn non--- to north korea. two women are suspected of wiping the nerve agent on his face. the incident prompted a theomatic standoff between two countries including refusing allowing citizens to leave. mike flynn is willing to be interviewed as part of inquiries into alleged contacts between the trump administration and russia in return for immunity from prosecution. an official confirmed on condition of anonymity flynn

made the offer. flynn was forced to stand down after it was revealed he had misled vice president pence about contacts with russia's ambassador to the u.s.. u.s. government policy may boost the economy and add fuel to an inflation rate. to new yorkrding fed president william dudley. these comments mark a shift from last year when most officials agreed risks were tilted to the downside amid tepid global growth and sliding inflation expectations. considerabletill uncertainty about fiscal policy contribution to economic activity. it seems it will shift over time to a more stimulative setting. it appears the risks for economic growth and inflation over the medium to long-term may be gradually shifting to the upside. scotland's first minister

letter.ted a she was pictured working on the letter. this contrasts with theresa may. global lows, 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg. anna: thank you very much. let's check in on the asian market session. down 0.5%. let's get to juliette. she has details and she is in hong kong. juliette: we are seeing australia's market, following -- falling off the two-year high. you have seen good movement coming on the csi 300 and china,

up 0.4%. japanese markets higher today. it is the quarterly picture we are looking at. a terrific quarter for asian investors. 9%, thex up over best corner in five years. let's have a look at some of the stocks we are watching. onean steel manufacturer, of the best performers in the index. . is after it posted its best profit in five years. jpmorgan saying, the fact it cut its dividend is disappointing but there is an upside because they have said they will return to payments in the future. and then in japan, down by 15%. merger after it said talks over its parent company -- with its parent company have fallen through.

that is the lowest it has fallen since 2011. looking at the china manufacturing story, continuing upward momentum represented by the green bars. the highest level since april, 2012. economists seem a little bit divergent as to whether this will continue. saying, it looks like the stimulus is working. but another saying, the strength probably will not last. you can see that on the bloomberg. thank you very much. market details for us. let's return to the top story around south africa. the south african president has fired his finance minister and eight other cabinet members in an overhaul that could trigger a revolt and put the country's credit rating at risk. wasfinance minister replaced with the home affairs minister, sending the rand down.

now, south african affairs reporter. a range of characters have been troubling me treasury according to the former finance minister. we know they haven't been seeing eye to eye for some time. >> we have seen a situation where the president and finance minister have been at loggerheads ever since he was reappointed in 2015. that after a cabinet shuffle that surprised many. the names that have been put forward as replacements certainly have been one to ponder about. agenciesargeting state , state owned companies in south africa. the likes of the airline. electricity

provider britain funding to those state companies has been an issue. the tax agency has seen many fights happening. a lot of griping and fighting has happened regarding those two. motivation may stem from that as well. anna: what do we know about the guy coming in to take gordhan' s place? what is that going to have for the credit rating agency. munis could issue a rating next week. could we expect a downgrade? finance minister is a former home affairs minister and also a former public enterprise a minister -- administrator. he was in charge of the state owned entities. we have a family that is politically connected as well, that has a case against the e

minister.o ody's said to come out with their rating. there is a likelihood they will say it doesn't matter who is finance minister but more importantly, if policies remain the same. anna: thank you very much. joining us there with the latest on what is happening in south africa. a very developing story korea getting comments coming through at the top of the hour from gordhan, saying a range of characters are troubling the treasury, but same he treasury has a strong team of professionals. let's bring into the conversation david. , a very south

african story. there might be some read across to other emerging markets because there could be flight from suffolk. -- from south africa. the fed, very much a focus. david: when the fed starts raising rates, that is a big problem for e.m.. the south african story is completely unrelated to anything happening in the u.s., but we ing risk aversion grow because we know the fed will be raising rates higher. expecting september, december. but if they go in june, these concerns may come more to the fore. anna: it has been a busy week for fed speakers. we heard from two members. president, william dudley, striking a hawkish tone.

he said fiscal stimulus was likely to push the economy higher. meanwhile, the dallas fed president discussed monetary policy in a speech on thursday before the chamber of commerce. outlined his projection for the number of hikes. >> the summary of economic projections showed a median estimate by all of us sitting around the table of about three rate increases for 2017. we have already had one in march. i think number three, is for me, a good baseline, base case for fed policy this year. expectations,r did they change this week? we have heard a few fed speakers talk about the uncertainty as how quickly rates are going to rise. u.s., the view in the ify could go again in june

obviously the economy remains very strong. the view here is they would wait and see whether the trump administration can push through on the fiscal side. honestly, that will be met -- will not be known for a while. but if we have some strong farm payroll data, they potentially will go. the market well price more in the way of 2018 as well. this is a contrast between the fed and the boj, and the ecb. the ecb is trying to roll back from the idea of raising the rate. peter pratt has done five speeches. the march press conference, try to reiterate this view ecb remains on the pedal. return to that certainly and the theme of german inflation to read sticking with the u.s. conversation for a moment, of course there is a question about how quickly rates go up. the how quickly they unwind balance sheet at the fed.

a lot of talk about the two and how interrelated they are. dudley talking about this last night. what are your expectations for how these interplay? david: the view of most central banks is we cannot stop reinvesting because we have the key policy rate up to a level where we can bring it down again. standpoint,omic that basically represents a further tightening and policy. the size of the balance sheet, really. they could taper, slowly but on the re-investments. to thousand 18, the fed will surely but surely not be reinvesting. anna: thank you very much. we will get many more thoughts as we go through the next hour

of programming. david owen from jeffries. later, we will be speaking exclusively to fed speakers. first, new york fed voting member william dudley. later, another. negotiatingout its guidelines for brexit next. we will go to brussels. this is bloomberg. ♪

anna: welcome back, everybody. bra. is debora manufacturing index has climbed to the highest level in five years. it is the latest evidence of

increasing momentum in the world's second-largest economy. japan has registered its first back inflation since 2015. rose 2%uding fresh food from a year earlier. the unemployment rate stood at 2.8%, lower than the 3% forecast. anna: takes very much. the countdown has begun for brexit, but the initial timing breasts in the european union4 inthe initial timing rests the european union's hands. the guidelines may not be made public until they have been finalized and approved by eu leaders. joining us now, our guest watching the stories closely. what do we hope to learn from the guidelines? they might not be made public, but there could be leaks. >> right.

in addition, there will be a press conference after they are issued to the government rougher representatives. i think one of the main things you are going to see is the eu 27 remain firmly united on their position in brexit. there have not been any cracks in the nine months we have been waiting. another thing will be the sequence of the negotiations the eu wants to put in place. defining the bill, the exit bill for the u.k. first, before they do anything else. tensions been some about that. you see they will be clear in saying, that has got to be the first thing. tension around the sequencing, one of the early points of conflict. another point around the between -- linkage made

trade negotiations and security. sure if we mentioned specifically. it did cause a bit of an uproar on wednesday when it seemed like theresa may was using security quarter a as a bargaining chip, looking forward to a potential trade negotiation in these negotiations. u.k. officials seemed to walk that back a little bit. maybe we are coming to a more even keel. hear about security cooperation today, it will be in the sense it is very important and should not be a chip in the negotiations. anna: thank you so much. jones hayden joining us from brussels. i just want to bring you some latest comments coming across to theomberg in regards south african story. the banking association in south putca says zuma's actions

south africa into turmoil. they question the motives behind the reshuffle. n's removal creates a dire loss of knowledge, according to the banking association. upe on that story coming around 6:30 u.k. time. we will have investor commentary. meanwhile, the scottish mr. prepared the final draft of a letter to the u.k. seeking the scottishhold another referendum on independence. this link between security and realisms this pragmatic about what cards each side has to play? or the use of a non-credible threat? two separate things.

sharing the security situation is obviously going to continue. within prime minister's questions, there was a mention of boots on the ground in romania, estonia, and poland. physical bodies on the ground and the raf. you've got rush on the border. in a sense, it is very soft diplomacy. trying to pick countries off. the other thing which is very important and all this is the eu is going to have a major problem with the budget beyond 2020. that is coming into view. the u.k.'s contribution. germany will pay 5 billion euro more. these are things that are going around the surface.

diplomacy, boots on the ground, sharing security. anna: saying he wants a deal on the rights of citizens. what is your timing for something substantial? it is easy to see how nothing gets achieved until after the general election. david: heads of state meeting in brussels in late october, 19th or 20th. does when the issue could come to a head. meanwhile, the u.k. rationally will not want that divorce bill until everything is known. the thing in brussels is nothing it's decided until everything is decided. that is not the way the eu twice seven will be playing it. things will be very slow initially. we have the mood music set by task's -- tusk's reply.

then things will move very quickly. anna: we could spend a lot of the summer talking about the talks. writing her letter, requesting section 30 permission from theresa may but she knows she is not going to get it. theresa may saying it is time to come together and not time for another referendum. david: is very interesting. she will not get another referendum unless support grows. actually, 75% of scots support a number referendum, it will be hard for theresa may to say there will not be one. if it is still less than 50%, it will be hard for the government the québec situation, you had a referendum in 1975 and 1990. a lot of business migrated. it will be interesting to see if

businesses migrate. anna: thank you so much. an update onto get some of the data out of japan and china. that is coming up next. ♪ careful joe, they've got you outnumbered.

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and an exclusive encore performance by kelsea ballerini following the show on xfinity x1. the acm awards. live on sunday, april 2nd 8/7 central on cbs. ♪ anna: welcome back, everybody. 2:30 in the afternoon in tokyo where the dollar against the yen is pretty flat around that 112 level. let's get a check on the broader market teams. guy johnson joins us. guy: let's talk about what is going on here and the shakeup we are seeing in the south african government and how it is going to ripple through markets. a number of factors i want to talk about. this is rand volatility. it has been coming for a long time. the rand has been a reasonably strong performer lately and the reason is that kerry has been

working. regardless of the news volatility has been coming up which makes life tougher for the rand. overnight, the news we were going to see the rand having a tougher time going forward. to counter that, you have got to remember that the south african yield still looks relatively good. around 8%. the carry works in ways. you can still make it pick up. part of this huge flow we have been seeing. look at indonesia, for instance and other countries. locally denominated debt been doing well and this is part of parcel of the carry trade. still an 8.7 yield. though the ratings downgrade will make that different in the terms of buying or not buying.

this idea that the rand is going to be beaten up is what is happening in china right now. south africa has a number of issues and things going on. on it has going forward is that .t is a commodities story and just to lean in lots -- in honest sell the rand story is the chinese manufacturing pmi data. that has been improving, that means we are likely to see more demand coming through commodities. we see what is happening in iron ore. -- if the survey data is to be believed, we are likely to see a stronger chinese story going forward which should be better and theory. it is not all one way despite the fact that the rand clearly stands out on the gmm this morning. there you will -- go. the big move, down 1.64. anna: let's get more on the

shakeup of south africa's government. joining us is africa's chief economist. great have you on the program. i am reading comments, they say this move has produced a dire loss of knowledge -- i think they mean that the treasury. what is your take? >> absolutely. what has happened is really something that is unfolding on an unprecedented scale. at the beginning of this week, had thewhen the markets news that the finance minister and deputy finance minister were being called back to south africa for cancellation of the roadshow, there were concerns about what this might mean for the institution. the changesk that could be involved that the treasury. what is unclear is how far down those changes are going to go.

that has been noted for its institutional strength has represented a certain amount of stability in the eyes of many south africans and global investors. the big concern is how far-reaching these changes are. experience,ot of coming in as finance minister. is this somebody that has the experience for the job? razia: markets are unlikely to look at this in terms of what are the qualities of the individual who is replacing the people at the treasury. the key point, first of all, what was the reason behind the need for the cabinet reshuffle? and this week at the treasury? if the concern was that the wasn't fulfilling its mandate and there were moves to there to governance, that

was spending control increased, the reassurances that are ,ypically given to investors the immediate concern is going to be how much can anyone trust that that continues? following that, there are questions around the validity of the ministerial experiences, their track records with their previous portfolios, what that suggests in terms of being able to put up any kind of resistance to the idea of state capture. i guess those concerns and questions that you highlighted there will be at the forefront for rating agencies when trying to work out what rating to attach to south african debt. what are your expectations about the rating? john: we know this issue is significant to the rating agencies. over the last year, rating

agencies have mentioned without fail the politics and the impact that that has on the appetite and the operational aspects of structural reform. do we see growth enhancing reform? do we see a political backdrop that lends itself to greater investor confidence? things south africa desperately needs to drive the growth rate. there is no question that this will have major significance for the ratings agencies. the question is, how quickly should we be expecting some kind of ratings action on the back of that? ratingunced its regular in south africa on april 7, south africa had been rated higher than other institutions. stepping back from the downgrade one point because of the on south africa's institutions. that looks to be more at risk. justification in

last night to bring forward its ratings review of south africa is -- not necessarily going to be bound by rating schedule. anna: we have seen previously president zuma bounced into a change of heart by market reaction, in part by market reaction. , am thinking of the debacle and court on being appointed. furthere we get reshuffled or is this a done deal? razia: the key thing to watch is what triggers in response. there has been a deal of talk there could be other resignations from cabinets. cabinet members who were not effective, who do not necessarily agree with what was

decided. unfolded made clear that this does not necessarily have anc,road consensus of the for example. an organization that has always consulted on decisions with this magnitude. the days ahead are going to be key in terms of the kind of south africa that will be revealed. anna: thank you very much for your analysis. great to speak with you. african chief economist at standard chartered. daybreak is available on your mobile. b go.unction is day this is the man who instigated that they cabinet reshuffle in south africa that sends the rand reeling. president jacob zuma filing the finance minister and release -- replacing him with the home affairs minister. he was once president of the

ruling anc and has no financial or business experience. the south african banking association has a dim view of the overnight developments this morning. the next story is euro area inflation. on that.ta consensus is at 1.8%. we called it an 0.8%. french and italian consumer prices are also do. also, the final reading of u.k.'s fourth-quarter gdp which will provide a look at whether consumers trimmed savings in the period. finally, a focus on china's manufacturing story with pmi numbers climbing to the highest number in almost five years. new export orders were also at the highest in a half decade. with trade set to dominate next .eek's summit that takes place in the united states. in japan, we have seen that country register its third back connect inflation rise for more than a year. 0.2% in february on the

year. unemployment was 2.8% in february, lower than the 3% forecast. asian theme, the china's top three airlines have reported their biggest combined profit in five years. despite taking currency losses from the weakening yuan. tom mackenzie is speaking to the cfo of air china, the cfo and he asks about the carrier's plans to hedge oil prices. i don't think now is a good time for oil hedging, given the uncertainty in the market at the moment. firstly, it remains unclear whether opec will extend their production cuts. secondly, the u.s. shale gas producers are very active, significantly ramping up their output. thirdly, we have seen great uncertainty surrounding the new u.s. government. we are still watching the market. i'm afraid it is not a start -- smart move to start now. >> you are planning to 868

aircraft.an on new how many planes does that translate into and what will it makes me between airbus and boeing? in the next three years, our plan is to buy 155 new planes. getting 56 are planes, 44 in 2018 and 55 in 2019. all of these orders have been placed and confirmed, and of those new planes, boeing and airbus will supply half and half. we always make it balance. >> how are you towards increasing your routes this year is to mark where will you be adding new roots? which regions at how many more can we expect to be added in 2017? >> we plan to increase our investment in european markets. for instance, we are to offer two new routes to europe. shanghai, barcelona will be launched on may 5. later, we will launch basing zurich.

we expect to see good results on both as they are mainly to meet the demand for business travel. in the u.s. market, we will increase flight frequency two feet growth. we saw on the news that president she and president trump are going to meet on april 6 and april 7, we hope this meeting can boost further economic cooperation between our two countries. airlines can benefit from the out comes of the talk as well. anna: the cfo of air china speaking exclusively to bloomberg, to tom mackenzie. if you are a bloomberg customer, you can watch the show using tv . as well as getting the video stream and you can follow the charts and functions we are using. you can contact the show's producers. use the button at the bottom of the screen and it goes right to them. coming up, you does combat. the eu resident response to trump's taunts with a threat of his own. this is bloomberg. ♪

♪ welcome back, everybody. the morning this friday come along: 45 in the morning in new york. equities suggested to be weaker at the start of the europe -- u.s. equity day. snp futures looking down 3/10 of a percent. let's get a business flash. >> thank you very much. china's official factory gauge has climbed to the highest in almost five years. manufacturing pmi increased to 51 .8 in march, beating estimates. the latest as -- evidence of momentum in the world's second-largest economy. japan has registered its first back-to-back inflation rise since 2015. pdi excluding fresh fruit rose 0.2% from a year earlier. the unemployment rate stood at

2.8 in february. toshiba shares have jumped in tokyo trading. that on expectations that the crisis hit companies 2016 loss that theand a report chip business may be sold for $17.8 billion. according to nikkei, about 10 bidders have come forward to make offers. the problem challenge. for china's biggest bank, which has worked over the first half of the decade may finally be easing. earning reports this week from china construction bank shows that provisions for losses on bad loans stabilized last year, helping them to post higher than estimated profits. lenders have been contending with loans, narrowing margins and tighter regulations. china's top three airlines have reported their biggest combined profit in five years, despite taking currency loss from the weakening yuan. bloomberg spoke exclusively to the cfo about the carriers plans to hedge oil prices.

gooddon't think now is a time for oil hedging, given the uncertainty in the market at the moment. unclear if remains opec will extend their production cuts. secondly, the u.s. shale gas producers are very active, significantly ramping up their output. thirdly, we have seen great uncertainty surrounding the new u.s. government very. >> apple is reportedly set to start assembling its iphone se in india this summer. what it calls a reliable source -- d, it also said other iphones could be made there given the right tax incentives and more relaxed local regulations. that is your bloomberg business flash. anna? anna: deborah now there, thank you. jean-claude juncker has hit back .n donald trump's comments

the european commission president told delegates from group, if he goes on like that, i am going to promote the independence of ohio and the exit of texas. at 10:00 a.m. london time we get an inflation reading from the euro area. i'm not sure -- david owen is still with us. under -- underlines the crazy atlantic -- transatlantic relationship. jean-claude juncker to donald trump. but in terms of politics around europe, we have had this meeting, the treaty of rome celebration, the 60th anniversary of the weekend and the maltese meeting -- meeting. there is a big argument as to how much closer together than the eu 27 are able to become and how much there is a two speed europe going on. what is your view on the strength of this union? razia: i think brexit and everything else is politically

to form a closer union. david: things like the creation of the euro bombs would make logical sense. much, butt cost very it would take risk off of the banksand be a big help to going forward. obviously we still have a situation in italy where 10% of of italianomprised bonds. this is an issue that if we get yields going to hike, the banking sector becomes under further stress. you have this creation of the euro bond at some point, it would make life easier. anna: we have dipped our toe into the euro bond area. but is this a-- realistic suggestion? i have read thought pieces around how this symbolically would be a good thing for the euro to reduce redenomination risk. how thecan understand

germans who borrow at low rates, why they might not be so keen. can understand, but they are begging price anyway. with greece, that should have been dealt with sooner. the thing in europe is always taking these things into dutch -- keeping these into dutch, but they have a way of biting it. if we don't get a stronger economy in the next two years and the ecb turns off the tap, what happens inside the system? in allis interesting this because it happens just before mario draghi leaves the ecb. in october leaves 2019. the ecb will be doing more policy easing as the bank of england did following the brexit itself. if they have the euro bonds, it would make their life a lot easier. they may not want war, but politically it may not be

popular, but economically it makes an awful lot of sense. anna: the euro bomb would regulate more fiscal institute -- integration. --e you read that customer that? david: you can't have it within the currency bloc itself. there is only one currency. you have a situation where you the the eurozone comprising 19 countries, they should form a closer union, and you have currencies around the, the satellite economies and that seems to come into it. then you have the u.k. further out. you are closely attached. you are trading an awful lot still with the rest of the eu. anna: that is what the u.k. hopes. david: logically that should happen, but politically it may not. we're in a serious time when issues cleric. -- flare up.

every single time that jean-claude trichet a would go brussels, they kept saying, you guys have to do visiting, we will do that again. more media matters around data and where the ecb goes, i have this chart decelerating. consumer price growth slowing. for a long time, it had been the -- we need toting think about quantitative easing and part of the concern for draghi goes away. david: in order for the eurozone stop truly safe and liquidity into the system. you have -- inflation running three or 4%. input -- the situation with the eurozone is that core inflation rates have basically

converged in most cases, below 1%. germany has a core inflation slightly above one. this is not really acceptable. 5% is modest. i don't see where all of these inflation concerns in germany come from. , almostot just over 5% printing money, great. situation -- but we going to get core inflation up towards target in the next two to three years? today we could see core inflation actually printing lower, given the german data. let's say it drops .6. get too granular this time of mourning, but my colleagues don't worry too much about the drop in cpi. it is right to some

degree, but the wider interest, you strip out volatility and still have core inflation in germany just about 1%. core inflation in countries like italy and france around .5. they are living in a world where inflation expectations could be below 1% forever. how the ecbms of exits its policy, let's discuss that. we have pulled up -- pulled up the polling tracker around the french election. test.s the next political pen shows macron and le fighting in the first round of voting. tell me about how timing and exit from policy fits with the political calendar. david: i think it was no coincidence that when they announced the change and extended the qe program, which happened in december. the idea was that it goes right

through the fiscal calendar this 2017,o the very end of which gets you through the hump of german elections. dodges the french elections. they are providing that support over the period. now press conferences always confused. mario draghi speaks, he confuses and you have the vice president coming out with various speeches and interviews. five speeches and two interviews. areforcing a message they not going to raise the rate until they stop to eat. anna: not everyone says that. next week, very importantly in french hurt, we frankfurt, they will reinforce the message of the sequencing here and the rate won't be going up. anna: thank you so much for your time this morning, david. the change in policy.

next, zuma cleans house. we are live in johannesburg. the presidents overnight firing sends the room plumbing -- rand plummeting. this is bloomberg.

♪ south african president jacob zuma has fired his finance minister and eight other cap -- with credit rating at risk, the rand plunges. you counsel president -- eu council president speaks later in malta. more momentum for china. the factory gauge climbed to the highest level in almost five years and after we wrapped up the third quarter, asian stocks on call for the strongest gains since 2012.

welcome to "bloomberg daybreak: europe." i'm anna edwards. theerms of where we are on equity markets, let's look at what has happened in the asian session. down 9/10 of a percent on the msci asia-pacific read if people up there risk radar, how various acids are doing, including the japanese story. we have the japanese market closing up. the u.s. dollar index pretty flat this morning as we saw more fed commentary. wrote that inflation risk moving gradually to the upside. fed commentary this week, is it resetting expectations? 50.1, down by half of a percent. the japanese close on these markets. the topics down by 1%. japan's topix index erasing all of its 2017 games.

oft in the broader context the msci asia-pacific down 9/10 of a percent. pretty weak. japanese data with decent core cpi, the first back-to-back year.se in more than a the chinese factory gauge that of the highest in almost five years. if ppi slows and the government takes more action to stem borrowing in the chinese market, that is what we are seeing in the asian equities session overnight. let's have a look at where we are on the futures. we will be weaker across the european equities. when you see the extent of the weakness we have in the asian equities, the prize. we're expected to be weaker by about 2/10 of a percent on the euro stocks 50. the ftse 100 down a little more than that around three or 4/10 of a percent. let's have a look at the south african story. night has been

dubbed by some. ordhan is out. replaced by little finance experience. few positions held in previous roles. the banking association in south africa giving a very dim view of what we have heard from jacob zuma and what he has done, and what they see as a big loss of experience from the treasury. the stakes are high, the credit rating could be in question. this split the anc, couldn't bring the presidency into question? standard chartered a little earlier today and razia said we need to watch what we get from the anc and the broader political story. >> south korea's former president has been arrested

nearly three weeks after she was arrested for corruption. park was taken today detention center. she has denied wrongdoing. malaysia has released a body of kim jong un on. the half brother was murdered more than a month ago. of women are expected putting the nerve eight on his face. michael flynn is willing to be interviewed after alledge inquiries-- alleged forrump ties to russia

immunity. scotland's first minister has prepared a final draft of a letter to the uk's prime minister seeking the power to hold another independence referendum. contrast with the may's -- of theresa you can find more stories on the bloomberg. it has been an hour of selling since we last spoke in. so far closing down by 8/10 of 1%.

if you look at a broader picture, it has been a really good quarter for asian investors. stock, the steelmaker in korea having a good day after it reported its best profit in five years. said the payments are a silver lining. it was derived to 54.8. the highest level since april. economists -- possibly or says it

less. >> and overhaul could trigger a vrable of -- and put the company's credit rating at risk. joining us from johannesburg, is bloomberg's reporter arabella. what do he know about what is motivating it? in south africa saying they are doubtful of the motivations. >> painting a bleak picture indeed. of not supplying any sense positivity or its ability into the economy.

there are a lot of political motivations here. which does linked have a court case currently going against the finance minister in which their bank accounts or close and they wanted the finance minister to intervene. thursday as well we saw a family trying to open in south africa. that process seems to be a lot more politically motivated. tot family is linked as well president zuma so that is one issue in itself. we are finding that a lot of into howeing impacted relationships form. about whatdo we know

this is going to do to the credit rating agency? see how theto politics plays out. after markets closed, going to send out to that possible statement. it is a calendar day. it isn't necessarily going to be a movement of any sort. seeay be a case of wait and . it matters mostly what the policies are and if those are in place, that nothing has really changed. revenuesof increasing and stabilizing or decreasing expenses in south africa will be a key focal point.

of course, we did see the previous finance minister get that certainly will bode well for investor confidence. anna: a quick word on south .frican assets performance of this 30 year bond. i see the south african rand continues to fall. what has been the fallout and does that continue? >> as mentioned, the bonds themselves heading in the wrong direction for south africa. this morning around midnight, cigna collapse in the south

african rand. the currency itself is losing over 8% if i'm not mistaken. it is still up around 3% this year, but by the seam of things, it may raise the. a recent is given to the president as to why these changes have happened, particularly with regards to national treasury. thank you. we will keep an eye on these south african assets as we talk about these. and, thank you for time. ofuick reminder overnight

the political risk attached to bring markets. seeingnd of move we are a reminder of a very domestic story i guess. i don't think any investors would have predicted that this event would have occurred. to see these moves is not unusual by historic standards. bit certain,little but i suspect those who have been there for a long time, they do not see this as a huge surprise. i've been drawn to the indian story this morning. best of thes the

rupee. >> at think everything has been bullish for a long time. i changed we are able to find good company and have a good may contrast to some of the other large emerging markets where the rule of law and sense of government is not as strong. we parted been -- always been able to find good companies. i think the main issue has been of a nation which has always and getting full or. -- fuller. emerging markets and well in the first quarter increasingly moves from the fed. -- what an dudley

saying it looks like they risk around growth and affliction -- i think it depends on how things play out. oftainly, significant amount $ is probably challenging for those markets. rising rates put pressure on some of those economies. if you are seeing reasonably strong demand, i think that is positive. i think everyone would say the normalization of monetary policy in the developed world would be on balance helpful for the global economy. i think certainly within but if the reasons are -- behind that are a recovering economy, i think that

is positive and we have seen that reflected in the first part of the year. two more hikes from the fed, would that be your expectation? >> i think the u.s. and tesla story is a little bit more challenging. stocks are expensive and the economy is further through the cycle than other markets. a picture that is somewhat line. you are only starting to see the signs of recovery while the american economy has moving ahead at a visible rate for four or five years. thank you. when we comeore

back. up next, glass half-full. reasons to the optimistic about europe.

♪ anna: welcome back. very sunny over the brandenburg gate. we saw momentum building for negatives trading day. with gone to the session. let's get the bloomberg business latch --/. manufacturing increased to 51.8. estimates ofest increasing momentum. japan has registered its first back-to-back inflation rise since 2015.

meanwhile, the unemployment rate 2.8% in february. intoba shares have jumped report that and a its business may be sold for around $17.8 billion. for -- nge earnings reports this week from icbc, china construction bank and chose bad losses on loans stabilize last year. the lenders have been contending with loan defaults, narrow margins and tighter regulations. china's top three airlines have reported their biggest profits

in five years. bloomberg spoke to air china's cfo about the plan to hedge oil prices. >> i don't think now is a good time for oil hedging given the uncertainty in the market. firstly, it remains clear whether opec will extend their production cuts in the u.s. she'll gas producers are very active, significantly ramping up their output. 30, great uncertainty surrounding the u.s. government. frenchow with the presidential votes looming -- two years of acrimonious brexit negotiations. despite the little cool -- this -- despite the political risk.

reasons to be cheerful about european assets. as we move into 2017, you've got to dynamics. on the one hand you have political risk and the other the underlying economy and i think it is how those things will play out. partly because political concerns are not new -- ultimately anna: plenty of other stories to invest on. -- stoxx 600.stop oil andesting to see gas right there at the bottom.

bottom.gas on the it has been since 2015. is this a sector you would go for? i think we've send it to have more value-added sectors. we like companies that service or provide products into the market. i think that kind of company has the opportunity to make 20% to 30% margins. that's what we have looked into to invest in. i see financial services a percent or so in the past quarter. increasingly becoming

more positive on base. markat an issue question >> not so much. there are still some who need to show a. i think that is quite challenging because the reason isn't necessarily structural growth. that is the kind of thing that makes us interesting. again, maybe something like us to bank. see some you to failure. minutes -- common sense lower than those

economies that do better. >> i think we've had a really challenging time over the last five or six years. you are only going to see something that might be positive. i think we are seeing an estimated rate of economic growth. some of theng at things you do. you are still cautious about the u.k. consumer. cei.is u.k. what does that mean for the types of companies that you want to get involved with?

more broadwe prefer businesses. chart, iok at that think it is summed up pretty nicely. trader see the fall and -- reverse intarted to 20 -- june 2016, you see a come back. i think chart is good as far as what is going on. we are always sing better opportunities elsewhere. when you combine this kind of the evaluation is starting to look at traffic -- attractive. which read the lyon. it is always wind-up that violation against expects

opportunities. european open is up next. we will have plenty more. this is bloomberg.

guy: good morning. welcome. this is "bloomberg markets." your first trade coming up shortly. i am guy johnson. matt miller, off today. what are we watching? the south african currency takes a hit after president zuma versus finance minister. is it done great inevitable? we take you live to johannesburg. to e.u.'s donald tusk is set distribute