♪ >> friends goes for change with le pen and macron taking the honors. jumps to theea highest since november. >> asia-pacific markets expected to rise as experts bet macron will be france's next leader. >> we have the world covered

"daybreak asia" as we get early market reaction from sydney and shanghai. >> the latest cues from the ecb and boj ahead of their policy decisions. liveis is "daybreak asia" from bloomberg's u.s. and asian headquarters. it is just after 7:00 p.m. sunday. >> it is just after 7:00 a.m. in hong kong. great to see you. ee are on course for that thl pen-macron runoff. how long lasting with these moves be? -yen pulling back. >> it is. also the equity futures market. futures up 1%, still around that

level, that momentum faded quickly. this is a headline driven market. the time wey by meet again, we will be talking about something else, not the french election. you never know. cron to our top story, ma face le pen for the presidency of france. .e topped sunday's first round fillon came third. good cross over to paris to see you. what a dramatic today, dramatic night, but is this result surprising in any way? . it is and isn't.

this is largely in line with what the pollsters were saying before. it is a surprise in and of itself being that pollsters got the victory of donald trump and brexit wrong. if you look at this from a longer-term perspective, nobody in france expected this kind of result six months ago. fillon was seen as a shoe in to the second round of the presidential election alongside marine le pen. instead, we have macron versus le pen in two weeks time. >> are we putting too much faith in these polls that say macron will be the favorite to win, and not le pen? probably not.

if we look at the pollsters come as i say, in the first round , whichrgely got it right is a surprise, it is clear that macron is in the driver's seat, suggesting 62% of the vote if the election were to take place today. so marine le pen -- marine le pen is facing more challenges than macron. it is important to underline has emmanuel macron received the endorsement of several defeated candidates, including fillon, saying it would be too dangerous if if le pen the pen -- were to win. >> thank you so much.

you will be staying with us with the continuing results from the election. let's see how the markets are reacting in asia. emmanuel macron markets sophie: markets breathing a sigh of relief. take a look at how it is faring over all. today's trading range above the 200 day moving average, which short termmore players, although light volume ahead of the open. take a look at how the euro is faring against the yen, the pair is seen as a key gauge of sentiment within the currency market, putting downside pressure on the yen. let's pull up this chart,

because that is back on the slipping.en assets u.s. treasury futures fell to its lowest since april, equities pointing higher. asian stocks, a weaker open there. lastly, our editor's are areting out that treasuries back in the picture, capping lower, the bull run from mid-march could be under threat then the correlations as dollar-yen moves with treasury yields. >> we will see if that correlation sticks. let's get to first word news now with ramy inocencio. ramy: first, europe and the ecb may be willing to move towards a exi faster than we thought.

tno policy change expected, but respond and say mario draghi will revise guidance in june, six months sooner than an earlier poll had projected. wasarch, he said tapering not on the agenda and the strengthening eurozone economy is seen as changing a strategy. meanwhile, the white house expects to offer an outline of its tax reform plan this week, although specifics may not be ready until june. president trump told his twitter followers "big tax reform and tax reduction will be announced on wednesday." budget director mick mulvaney said they were layout the principles, but the full plan would not be ready for a couple of months. the u.s. treasury secretary steven mnuchin says the imf outlook is "a little conservative." he repeated the administration's goal of 3% or more. the fun reiterated its forecast that the u.s. would grow at 2.3%, but mnuchin says the u.s. is positioned to expand faster

and help the wider global economy. >> soothe sustained economic growth is good for global growth. if we can grow the u.s. economy, that is not just good for the u.s. worker, that is good for international growth and creates opportunities, so that is what we are focused on, and if we do a good job, it will carry over in the spillover. north korea may be suffering a fuel shortage. unusually long queues are seen that gas stations in pyongyang, where signs and say supplies a restricted to diplomats or international organizations. prices are said to be rising rapidly. on china forelies fuel, and china has cut supplies.

global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. looking ahead, the cofounder of app is puttingg in the leg work to leave competitors behind. >> this is bloomberg. ♪

is "daybreak asia" in new york. >> the conglomerate best known for his jewelry stores will pay about $3 billion for alinta. li ka-shing purchase

on friday. >> the u.s. accusing indian i.t. companies of dominating entry visas. a smalle house says number of outsourcing companies floods the system with applications. >> reports from japan say mitsubishi motors plans to build an engine plant in china. the facility-based in hunan province will be a joint venture . supply suvswill built locally and construction of the $90 billion plant by the end of the year with production to start by december 2018. jumping the most

since december, yen retreating, equities likely to see gains, gold dropping, 10-year treasury futures falling to the lowest since april 11, so it looks like thatthese election results it is risk on. sydney, one of cind the most well-known bond managers and australia. whatme your reaction to the reporter said earlier, a surprise that the polls were actually pretty spot on here. yes, i think that is a good way of capturing it. the markets had a little risk off priced income and that has been unwound as the pacific markets are opening up this morning. and it is interesting

if you look at this chart here, which is the spread between the one month and one week yea euro -dollar m client, #7706. it shows you the spike going into this election and how worried people word that marine le pen was going to in fact clinch or at least secure a large lead, so how did the markets get so nervous ahead of this? well i guess coming on the back of brexit and then the trump election, anything was wereble, and the polls starting to narrow again, so there was nervousness because and it turnst know out the base case has played out. >> it has played out. in some of the notes i was reading, you are saying that it

was going to be this earthquake that the markets were in plying. this will give a chance for china to ascend on the global stage. do you still think this we given -- elections today to mark today? . balancede back to a view of the rise of populism. there is a change that has been demanded from the electorate, that is a more balanced view, and i think that is good for markets. less progrowth, protectionist slant, and for china to continue to make its mark in the global order. we kind of no given brexit and the u.s. election, the initial knee-jerk reactions and how long lasting can be. they don't really last that long. how stable are these moves in the market, especially there is

the second element of the second round in french election? think it is not a dead certainty, but markets are certainly more balanced, and for me, i'm looking back towards the , the u.s. tax policy this week, inflation in australia, and inflation read in europe, and that is really important now. i think the markets are seeing the french election and the have anod that we will upper team for the end of this year. when perhaps more rhetoric the ecb meets this week. you have seen this one quite a bit i'm sure, the french and german split when it comes to

the ten-year bond spreads it we have seen them blow out a bit leading up to this election. what would be fair value for you now? can we returned back to what levels? i think that it will contract certainly on the open of the european markets. not back to its narrowest, because we still have to clear the second round, but you think it would come back on the order of 15-20 basis points over the coming days. what about peripheral spreads? we have seen those blowout as well. which pairs would you be watching closely? certain the the italian markets, because we still look , sords an election in italy

that continues to be another element of political uncertainty . the french-a tying spread it's a better way of playing that view if you want the long french, short italy, but generally there would be a slight narrowing of spreads that have up until now widened. >> just real quickly, you referenced lots of other risks happening here in the u.s. markets in terms of bond investing. one of those is the government, possible government shutdown. is that an opportunity for this treasuries rallied to the reignited again? particularlys, and getting some more definition of round the potential tax policy and how they fund it. rally. treasury bonds towards 2%, that is a good

opportunity to be setting up shorts in the u.s. treasury market for the coming months, looking ahead towards another to bring fed tightening's this year. >> what does the chance of this? how are investors pricing this risk in? is at the think it margin. we have seen the shutdowns before, so the markets generally move through them without too much trouble. for importantly, looking what trump will deliver around his tax policy, we have seen steven mnuchin talking stronger growth, but just how it all comes together and the timing, that will keep the u.s. treasuries a little bit down in the coming weeks. it is interesting, because we

have seen this correlation. , want to throw up this chart #799 six, which shows this correlation between where 10 ear yields and dollar-yen were going. can the correlation stick? can the 10 year yield follow now? think the u.s. strength that had been there following the election obviously has dissipated a little bit, but overall we still see the u.s. ,conomy strengthening continuing to be strong, so that should continue to be supportive of u.s. strength and a longer-term cents. sense. >> we will be discussing what is

next for france, the eu, and the markets over the next hour, joined by rik spooner from cmc markets, and later, we look at the latest investment opportunities with fidelity. at 9:40 a.m.ergy hong kong time: 9:40 p.m. if you are watching in new york. coming up next, north korea celebrates the birth of the nation this week, and some observers expect it will be sending a message to the world. this is bloomberg. ♪

york.m betty liu in new

this is "daybreak asia." big stories. we will cover them here on "daybreak asia." north korea's celebrating the 85th anniversary of its founding. are faring pyongyang may celebrate by launching another ballistic missile are testing a nuclear weapon, so geopolitical risks is still in the markets this week. decisionay, watching ecb.or the boj and it is widely expected they will keep monetary easing unchanged. we heard that signaled from governor kuroda last week when he says he plans to maintain the current pace of asset purchases despite the fact inflation remains well below the central bank 2% target.

core cpi very much well below the 2% target as well, as we have talked about many times before. governor kuroda. speaking about that target, saying they don't expected to change anytime soon, however, the tailwinds of this reflation has weaken, particularly when it comes to the yen. the yen has strengthened 7% this inflation the 2% inflation goal harder to reach as well. we will see what we hear from the boj, but governor kuroda exit strategynd of is still a ways away. >> that strengthening yen not helping things that all, certainly events like north korea not helping in terms of

yen declines. in the u.s., watching economic and political offense, as well s voting fargo, share over that account scandal resulting and a $185 million settlement and resignation of john stumpf. in the u.s., they reported sluggish economic start to the aar, analysts forecasting 1.2% rise in gdp in the first three months when it releases first-quarter numbers on friday. this will be our first look at these numbers. bring up this chart that shows you historically has a signaled by these yellow circles that the first quarter of most years in have been softer than the rest of the quarters, and there are a couple of reasons. one might be that we are coming

off seasonal highs in the prior quarter. it is also the winter months, therefore that first-quarter tens to be a little bit more sluggish, so i don't want to say it is a throw quarter, but there is a big asterisk every time that number comes out. likely to be something the markets will die just to see whether or not there is in fact any justification for more rate hikes this year. right, and we have talked about the gdp figures and janet yellen as welker at she said the first quarter numbers are pretty noisy. of course, alliance to look into in those numbers this week coming up next, the french election. what that might mean for policy. this is bloomberg. ♪

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anchor:; 30 this morning. we are meant away from asia's first major art get -- major market open. betty: a glorious day today. market as we saw on friday closing lower, but s&p futures rebounding quite nicely on the back of the results of the french elections. on betty liu in new york. i am yvonnean -- man in hong kong. first word news with ramy inocencio. : first, we hadmy to france and emmanuel macron is through to the second round.

projections saying he won the opening rounds. the interior history suggests he won -- at 22 le pen second percent. the euro jumped, touching its highest since november. >> i would like to say that i realize what my responsibility is and if i am full of joy, i know full well what it means and i will carry on with optimism, enthusiasm, and faith in our country and europe. your china's diesel for exports surged to a record in march as refiners rush to fill shipment quotas. bloomberg calculates china shipped up 31%. gas shipments up 21% from a year earlier. the philippines central bank governors says the outlook for global growth continues to brighten, but concerns remain about u.s. trade policy.

what it is still unclear path president trump will take, one has said the risk has said the risk is not dissipated. on the domestic front, he says the targets within range. there is no need to adjust monetary policy. saudi arabia has cut back yesterday program that lowered bonuses and allowances for state employees and sparked criticism from people accustomed to generous state handouts. the government said they restore the parks because higher-than-expected revenue boosted stocks. donald trump's administration continues its push for a vote this week to replace obamacare. that would come at a time when congress is focusing on a spending told to keep the federal government funded after april 28. budget director mick mulvaney says the at sees "no structural reason why a vote could not

happen at the same time. failure to agree on a spending bill could see a partial government shutdown joy global news, 20 four hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. thank you. we are kind of down on some of the major market opens in the asia-pacific. for more, let us go do adam haigh, joining us from sydney. saw the initial knee-jerk reaction. risk on after the french elections. what are going to be the main things in asian trading today? adam: yeah, absolutely, yvonne. risk on. you are seeing the euro higher against all the major peers and so we should be seeing some really fairly sizable all positive moves from an equity perspective as the risks come back in. we remove some of the uncertainty as we have gone through the first round of the french election, but investors now are already looking beyond

the ultimate result as well and saying that if macron is that far ahead in the polls, you are happy to believe the polls and place bets behind that, then advise him in the next french president, so certainly, risk coming back in from an equity's perspective. gold has been selling off aggressively as you would expect. met currency perspective, plenty of strength in the euro, so we should be looking for sectors like financials. that areors like that closely correlated with the market. as we get into that europe open, we should be looking for gains at two to 3% for the cac 40 in paris and the banks finding favor again. allor: gold bugs are going in. they are increasing their wage on a further rally. where are they positioning them don't -- positioning themselves?

adam: this is a really interesting one and if you dive into the bloomberg, look at the chart we have got here with shows you the net long positions in the gold etf that trades on the new york stock exchange. they are back up to levels that you have not seen since the tail end of last year. i think that just reflects some of the geopolitical uncertainty we have seen in the last few weeks and people really wanted to, you know, on some of these assets that are still going to be doing it relatively well over the next few years and a global portfolio. ith gold down this morning, will be interesting to see her next week's figures come out on this and whether people pair back a little bit those positions. gold down heavily this morning. the long weeks to go. we are still with plenty of worries. it is interesting to see. the dollar has been pulling back thoroughly significantly as we

have gone through this year and the dollar is bad to levels we have not seen since kind of november, so gold has been relatively well in that environment. the next move, that gets pared back a little bit. betty: all right, adam. thank you so much. adam haigh on the markets, and particularly on gold. news right now where the french interior minister continues to count the number of votes. this represents about 96% of the voters. 23.6% threeg in at le pen coming in at 21.47%. these numbers coming out from the french interior ministry at 1:30 a.m. over in france. what does this mean for the ecb thursday?meet on and at the same time, we have the bank of japan meeting as well, so we have policy meetings to watch out carefully -- watch for carefully. kathleen hays is our local

economic and policy editor. she is covering the boj meeting. first of ecb, and what you think mario draghi and company are thinking, looking at these results. were all while, they set, yvonne, to go full speed ahead. the european central bank, on patience. waiting to see how these pan out with an exit strategy. there was hope that if the results of the election do not , do notthe markets create some kind of tension that could affect the banking system, it might speed up mario draghi's past-due normalization a little bit. the head of the national bank of austria, the member of the ecb's board, had set out to reassure markets if there are any issues, we have the tools to back up the banks. the central bank

says in advance to keep everyone calm. the real question is, will a stronger euro area economy, which we have seen recently, will this lead mario draghi the head of the central bank? something to the bloomberg and look at #1131 because you have got gdp rising. inflation has definitely risen from the lows. for a while, it looks like it was approaching the 2% target. the ecb a little more room to wait. putting the french election behind it, one way or the other, we clear the path to see how well the economy is doing, and when it is time to signal the market. that is what will be closely watched on thursday. anchor: since you are i tokyo, what do you think we kuroda?t out of

it seems like the focus will be on the latest outlook when it comes to inflation and birth. kathleen: absolutely. the question is, will they tweak either of those a little bit? boost inflation forecast for a couple of our bloomberg news teams? anchor: bottom line here is what they are watching. again, patience. bloomberg intelligence says no change in the gdp or inflation forecast and actually, you can be pretty sure better job .utlook is aiding the move the 2% inflation target is still a long ways away. home theth driving point rid #7942 on the bloomberg. targets.hree you take out fresh food prices and that is the core, the boj's may number. that is one of the reasons governor kuroda has been optimistic. energy prices of course are another factor that will affect

the boj's drive to get the inflation of the higher. peers had this to say on bloomberg television a couple of days ago. confidente more because they shifted from worrying about having to reflate the whole economy to just worrying about inflation executions. they have a more limited job now, so governor kuroda and his colleagues feel they are on the stuff they can handle consider being responsible for the whole thing. betty: of course, all policymakers in japan watching what will happen with trade deal, bilateral trade deal, u.s. and japan. a finance minister saying last week there is no guarantee they will not be able to get as good a deal on a bilateral agreement with the u.s. as they would for the tpp. this is an important part of how that plays out. u.s.r: kathleen, the big question this week, so surprisingly, not about the fed. it is about whether trump can

get a budget passed fast enough to prevent the government shutdown. one other markets saying about this? what are you seeing? kathleen: for one thing, i think the markets could be watching every word out of paul ryan's mouth. you know, the republican in the house of representatives leading this battle. he thinks he can get a deal. in time to avert that shut down. it is a complicated question. as you were talking about earlier, the shutdown bets are driving down bond yields. let us take a look at #7997. you can see we have been in a year where a lot of bond bears were saying we were going to break above 2.6% and that would open the door to a bear market. you get something like this. the reflation trade that trump was going to bring in since the doubt are there and if you cannot get the bill passed, that complicates things on the more, even if it is a temporary oven. on friday, first quarter gdp.

this is the number so many people will be looking at to gauge how far the first quarter gdp is from something like 1.5% to 2% or even more, with a lot of fed officials are looking for to keep going on interest-rate hikes. a lot of happening not only this week, but on friday. excitinga to that very boj meeting or to the press conference on thursday. betty: thank you so much, kathleen hays there in tokyo. be theup, that ipo could biggest in 2010. what is with all these video makers? this is bloomberg. ♪

yvonne: this is daybreak asia. i'm yvonne man in hong kong. betty: i'm betty liu in new york. south korea preparing for its

biggest listing in seven years. model has priced its ipo at the rvelof its targeted -- ma has priced its ipo at the top of its targeted range. talk to us about that model -- netmarble. why are they enthusiastic about this? it is goingere for to be the biggest ipo in korea since 2010. it is seeking to raise as much as 2.3 billion dollars. that is a lot of money for a company that started in 2000 with about $100,000. to buy aot enough garage in korea. still, with the internet becoming faster here in korea, there is a lot of demand for online games, and netmarble basically capitalized on that demand. betty: it seems many are getting

there right at the right time. how does it make money? where is the earnings coming from? guest: so far, there have been many blockbuster games for netmarble, but the latest one is revolution."ge 2: it was originally developed by a competitor, but they bought the rights for the game and they are developing it into a game that is making huge money right now. if you look at the app store in korea for iphone, it has the biggest revenue so far. it has only been a few months since they released the game. the company used to focus on the korean market, but over the last several years, it has been expanding into overseas markets including china and the u.s.. it has been buying -- a bought a sopany in the u.s. last year right now, half of the sales for the company are from the overseas markets. so what can we expect

from netmarble after this ipo? well, the ceo of the company did say last -- a couple of weeks ago that the company wants to buy more game developers, perform more acquisitions abroad. the company has been mostly based in korea, but for the company to expand overseas, it needs personnel and the knowledge needed to do well, to do successfully in other markets, including in china and the u.s.. the ceo did say they might be buying -- they might be on a buying spree worth tr 5,000,000,000,001. that is a lot of money. -- 5 trillion won. that is a lot of money. tencent playsaid a role in helping them expand into the chinese market. sam: that is right.

tencent is a big backer of this company. they have not given a list of the companies they would like to buy, but they did say they are not considering specific deals at the moment. mostlyow, they are concentrating on getting the ipo's successful, but with that, after that is over, it is very likely that they are going to quickly try to, you know, come up with a list of companies abroad, probably in the u.s. and europe, to acquire. right, sam joining us live from seoul. let us look at the gains. the latest business flash headlines read pressure from hedge fund oasis management has post pattern of -- has pushed panasonic. 54% and willown offer ¥1200 bert share --

per share. the original offer undervalued the homebuilder by more than 50%. >> universal led to north american box office ahead of the five new releases. the eighth addition of the motor action franchise earned another $39 million, beating estimates. it's at a global opening record and two more films in the works. disney's "born in china," a documentary about pandas, opened up a highest number taking in $5 billion. who doesn't want to watch pandas? yvonne: no, you can't go wrong. alibaba's chairman said the company will have to prepare for decades of pain as the internet disrupt the economy. the world must change education systems and establish how to work with robots in order to deal with automation and the internet economy.

he hit out at traditional banking, saying lending must be made available to more people. anchor: chinese bike sharing app plans to expand into 20 different countries. the cofounder told bloomberg that local laws and policies will determine how quickly they can grow. he also explained how alibaba's financial arm is helping to develop the business. what we value the most from the companyion with is the education they have in mobile payment service, credit system, and the data. therefore, we hope to boost the development of the bike sharing business with our ample experience in these areas. we also hope that the convenient mobile payment system will help facilitate the process of our overseas expansion. >> can you give us an update on your expansion plans? >> we set our target for 2017 to

enter 20 different countries in the world and infiltrate 200 cities in china. policies are the deciding factors in terms of how fast we can bring our bikes into a new foreign market. now, we have at least 10 competitors, billions of dollars being piled into this part of the economy. is there a risk of a bubble in the bike sharing sector? >> i think there are definitely bubbles and the bike sharing market. there are three bing phases for the players in this is to evolve. fighting to put more bikes on the street, competing to make bikes easier to ride, and battling to have a better maintenance system. almost all the bike sharing companies are at the first days this moment. that is why we see bubbles. >> what are the risks of the changing regulatory environment for bike sharing. governmentse local

are having an impact. how much is that a risk in terms of regulations for the business going forward? >> the only thing that will kill our company is that customers do not like to use our bikes anymore. not be government regulations or controls. it is inevitable to develop the government when you do business in china. we want to be in a romantic relationship with the government instead of marrying the government. we are actually very happy to work with the authorities together to set regulations for a long-term healthy development of the bike sharing industry. betty: that was again ofo co-founder zhang. you can get around roundup of these stories and many more as you get your day going on this bloomberg daybreak: europe bloomberg subscribers go to dayb on your terminal. mobilelso available on

in the bloomberg anywhere at you can customize your settings so you only get this news on the industry is an asset -- industries and assets you care about. this is bloomberg. ♪

anchor: a chinese company looking for overseas acquisitions, increasingly turning to offshore dollar funds as capital controls answer their ability to finance deals. tom mackenzie. >> for many of the chinese players, they certainly are having issues now that the foreign exchange control is a lot more stringent. i think of the government as doing the right thing, though, rationales ill the imagine about companies who want to buy international companies, see farnt yield to, you

more acquisitions not the much based on that. it was more based on capital market multiple -- you see people bidding out the prices in the international market. prices that the local minister will not pay. it is not a strong rationale for wasting the foreign exchange reserve. theuropean elections on way. you had brexit of course and the u.k. elections, german elections. how much of that is factored into your strategy? how much of that is impacting the choices of chinese investors? seen aave not really huge backlash against foreign investment. for example. brexit has not made much of a dent in foreign investment. the british government so welcomes foreign investment as well, and in some ways, i do not

that happening in france or germany, so we are looking at those opportunities. tohink what is of concern us is probably in the u.s.. in the last month or so, that concern has been used somewhat. potential of a trade war obviously is deeply concerning. us bringll right, let in sophie kamaruddin with more on all the market reactions, the french elections, and looking ahead to all the eco-data coming out this week. sophie. sophie: hey, buddy, it is risk on this morning after the french election. taking a look at stocks we are focusing on today, toshiba on the backs of reports that companies could be making a joint bid for operations. they will be announcing the results today. director saying shareholders should reject the offer. iron or a key theme for the markets.

a key theme ore, for the market street a higher open in here following the french elections. that is what we will be watching when trading gets

he ♪ ♪ and le penmacron winning. >> the election threatens to shape politics for years to come. >> asian markets expected to rise as investors bet macron will be the next leader. the imf former chief economist says the european union needs an image change. this is the second hour of

"daybreak asia" coming to you live. our top story today, first time independent candidate emmanuel macron is to face anti-immigrant leader marine le pen. we are almost near fall count. full count. cross over to paris. it has been a long night for markets and many others during these elections. >> still hanging in there. >> glad to hear. >> you mentioned something earlier, the most surprising part of the result is that the

polls did get it right. >> absolutely. one of the things we can takeaway is that pollsters are back in fashion. the figures they were projecting before the first voting round came true with emmanuel macron in the 23% vicinity and marine le pen below that. ifwe look ahead, we will see the next poll is right. a snap survey suggests emmanuel macron would get 62% of the vote in the second round, where as marine le pen would trail behind that 38%. it is clear that marine le pen would be facing an uphill battle

in the next two weeks or so. that.'s talk about how high of a hurdle is it for le pen to win here? >> there is always the possibility. that is something we have learned in the past year after brexit and donald trump. as i say, she is facing an uphill battle. we have heard from several other candidates this evening that includes the republican candidate and the socialist party, both have come out to endorse emmanuel macron in the second voting round. it is clear that marine le pen is facing difficulty when it comes to reaching across the party divide. even though she may have , she is asupporters divisive figure. for her to essentially attract

millions of voters, which you would have to do, that looks like a tall order. it seems like this is a rejection of french establishment, but also a rejection of french populism. any political to course change for france? >> this will be the question looking ahead. seen as ancron is insider and an outsider. he was the economic minister in france for more than two years. he is an outsider and his political movement was founded last year. when the second voting round is done and dusted and emmanuel macron is the winner, we will look ahead to the legislative elections in france in june. would need aon

majority in the national assembly to get things done from here on in, to get the economic reform that emmanuel macron has envisioned. that too looks like a tall order for him to get that majority in parliament, so the question is will he have to rely on those old traditional parties, the republicans, the socialist party? a lot of questions going ahead when it comes to french politics. getting that backing from others, already a good start on that front. great work. thank you for staying with this. themarket opens in asia, first to react, and a strong reaction when it comes to fx markets, no surprise given the lack of liquidity in the asian trading session, pronounced moves in the yen and euro sophie:-yen. we are seeing a strong reaction.

the yen comes down .8% as safe haven appeal very much waning as markets are pricing in a macron victory in may. it is paring its earlier rise of 2%, where it was above the one of nine level. we are seeing the dollar index below its 200 day moving average for the first time since october. let's look at how bonds are playing out today, jgb sand aussie yields tracking the moves when it comes to the way treasuries have been performing, and in the commodities space as well. $50. last week, crude fell 7%, the worst performance in a month. to lend support

to the aussie dollar this week. this risk on rally, i want to show their currencies base. -- currency space. again in peripheral currencies along with the euro given that safe havens have taken a backseat, gold, yen declining. safed see outflows from haven assets start early last week, and we could see more tailwinds for the safe haven the tax trump announces reform proposals this wednesday. we may see this french vote way somewhat as the focus shifts to that potential is event risk. >> thank you. as you have been seeing, 97% of the vote counted according to the french interior ministry. 23.87%, marine le pen

with 21.4%. no policy changes are expected at thursday's meeting at the ecb, but most respondents eight mario draghi will provide guidance in june, six months sooner than projected. in march, he said tapering was not on the agenda, but the strengthening eurozone economy is changing his strategy. house expects to offer an outline of tax plans this week, although the specifics may not be ready until june. president trump told his 28 million twitter followers, "big reform and tax reduction announced wednesday t." fallmulvaney admitted the

plan would not be ready for a couple of months. mnuchin says the imf's outlook for the economy is conservative as he repeated the administration's goal of 3% growth or more. the fund reiterated its forecast that the u.s. would go to 3% this year. steven mnuchin said it will expand faster and help the global economy. >> sustained u.s. economic growth is good for global growth , so if we can grow the u.s. economy, that is not just good for the u.s. worker, that is international growth as well and creates opportunities, are focusedhat we on, and i think if we do a good job, it will carry over in the spillover. hong kong-based child thai

tai fook to buy alinta for $3 billion. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> still ahead, shadow banking a key challenge for china's government and regulators. we will discuss that with the as gainager whose fund 99% over the past three years. >> the french election will be a mild positive for eckersley -- equities. that is next. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg.

>> this is "daybreak asia."

>> a quick check of the business flash headlines. sony gaining in tokyo after preliminary operating profit beat its previous forecast. sun expecting a 2.6 pain dollar profit this fiscal year come a 19% more than its last estimate. sony see strong performance across most businesses, also benefiting from cost savings in its chip unit. >> wall street betting that sprint and t-mobile will revive talks on a merger, but a surge in demand for wireless assets has softbank exploring other paths to value. in spectrum off into a separate company. japan saysfrom mitsubishi motors is planning to build an engine plant in china. venture.be a joint

,he engines will supply suvs and construction expected by the end of the year with production to start by december 2018. >> pressure from oasis management has pushed panasonic. panasonic already owns 54% and will now offer ¥1200 for the rest of the company, buying the offer at $847 million. oasis had argued the original offer undervalued the homebuilder by 50%. >> as you mentioned, markets underway, a lot of major markets, including the japanese 1.3%,, japanese stocks up going along with that risk on feeling straight from the french thetion, in south korea,

.3%i up .4%, sydney gaining . for now, a nice rally shaping up. up next, how a potential u.s. government shutdown will affect markets. maybe that rally will be short-lived. this is bloomberg. ♪

>> this is "daybreak asia." >> the week ahead on wall street likely to be overshadowed i developments in washington, where a government shutdown is possible if congress is unable to pass a spending bill. let's take a look at futures. we are still holding on, but not by as much as earlier when it opened a couple of hours ago,

still holding on to gains though. following along with what we are seeing from investors, pretty much applauding the results of the french election as market friendly to the bulls. numbers, the french elections might take a backseat. >> the applause for the french may turn into cheers for u.s. lawmakers -- jeers for u.s. lawmakers. spendingon't have the bill by thursday, the government could shut down. bill.an pass a stopgap the war of words has already begun. sharpct you have divisions, unparalleled, between the democrats and republicans could take this even higher. president trump has talked tough on the wall funding. if there is no wall funding, there won't be funding for the obamacare budget.

it will he pass a budget if there is no wall funding? that is a big question. it is inconceivable that he would veto it and shut it down, but that is a scenario we could be looking at. the end of this week is the traditional white house correspondents dinner. this year, president trump will not be there and has informed his staff not to be there either. a standoff across all fronts. >> we will have to see if the jokes are still come through from some of the comedians. getting a fresh round of economic data, including gdp. >> we heard kathleen hays weigh in on gdp. it will be an area of market focus later in the week. on the weaked to be side as we typically see with first-quarter numbers. we are ready know that american consumers bought fewer autos and spending trends are lower, so

this is a number that will be looked at heavily. also, durable good orders expected, expected to continue a trend and rebound and expansion. >> thank you so much. a lot to watch for. jumping the most in five months, the yen retreating. emmanuel macron and marine le pen winning the first round. futures falling the most since march. joining us now is the chief market analyst at cmc markets. is this going to be short-lived as well? is a headline-driven market, so how much weight do you put right now into the rally we are seeing? >> i think probably relatively short-lived. is seen as a positive

by markets. i think the market will go most of the way to assuming he will win the second round of the election, given how large is polling margin seems to be, and of course he is seen as a pro-stability, pro-business, pro-euro. i don't think we will see a he because up, first we did not sell off in advance of his election. equities arefar as concerned, they are fairly riskd, and because we have , positive,ront of us but not getting carried away. >> i'm curious. often times i'm curious about what has changed, going from declines, the reflation trade off, to today, risk on and we

might be back up if we get reforms through, back with the reflation trade. has anything fundamentally changed in your view given these election results? definitely. i think if we allow ourselves to wins, then that is risk avoided. a couple of other candidates represented real threats, real economic threats, policies that were very unfriendly towards markets and economies, and they really did want to set about the business of leaving the euro with all the potential unknowns that that implies, so yes, mr. is a preferable,

stability candidate, and we can put that one to bed so to speak if he does win this election. >> one thing we can't put to bed is what happens in the u.s. i want to pull up a chart that shows you how some believe this could be an opportunity to reignite this treasuries rally in the u.s. as we get towards closer to this question about whether or not donald trump can get his budget passed, are we going to face this government shutdown? some bond investors say this may be an opportunity to buy into treasuries. do you believe that as well, and if so, what does that mean for the equities markets? no, i don't. i have been around this game long enough never to be absolute on anything, but generally opposite this is the

come an opportunity to sell treasuries. to treasuries have lived in the level bond yields have this counts the trump reflation scenario. the u.s. economy is doing fine without reflation. we will see the fed increase rates. we will see the fed begin to wind back asset purchases, and i think we will see inflation hold around the 2% level, give or take. all of that i think is a scenario where 10 year bond yields that 2.25% is not sustainable, and we will see bond yields rise. towardse any move , that willitiatives reinforce or turbocharge the selloff in bonds. is if we did see

a big government shutdown or major problems arising in north korea or the middle east. that would be potentially some thing that is bullish or for bonds. >> we can at some other factors, inflation expectations falling, economic surprise index is dropping. the odds of a fed rate hike, 50-50 for june. that's right. well, i think, look, the likely scenario is that even with inflation around current levels, we will see the fed move twice this year and begin to unwind asset purchases. that leaves them on track broadly for the aim of roundabout 3% of the fed funds of 2019, and we

will not see bond yields a 2.25% if that is the case. they will be are, at least 3% to 3.5%. >> sure. it is interesting, you mentioned the asymmetric risks leading up to this french vote. this relief rally could be moderate at best, so where does that leave the euro? can it still rally? think -- i doubt there will be too much of a relief rally for the euro in the macron factor. the immediate future, what we have been talking about, the general attitude of the fed and the fact they will be moving at a moderate pace, bullish u.s.

dollar, and bearish euro for a little while. ofwe move towards the end the year, i think markets will focus on the ecb itself starting to taper is asset purchase program, and that will ultimately lead to support at at that -- for the euro stage. >> now that this political uncertainty has been reduced, is the economic are story -- economic recovery story going to be more pronounced in europe? market, thehink the leave a little bit up its sleeve for the second round of the election, even though polls are suggesting a pronounced win for macron.

markets are skeptical of polls, so a little bit of residual nervousness. >> we will leave it there. thank you. next, how the french election is playing out in the markets. this is bloomberg. ♪

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an hour away from the opening of trading in singapore. >> you are watching "daybreak asia." let's get to first word news with paul allen. paul: the independent centrist emmanuel macron through to the second round of the french election, projection saying he won the opening round. the interior ministry suggest he 123.8% of the vote. marine of the pen in second at 22%. survey suggest that macron will win the second round. jumped, the

highest since september. >> i realize my responsibility and i know full well what it means. i will carry on with optimism, enthusiasm, and faith in our country and europe. exportsina's diesel surged as refiners drained commercial stockpiles and rushed to fill shipment quotas. china shipped almost 460,000 barrels a day, up 31% from a month earlier. gasoline shipments up 25% from a year earlier. fuel exporters have to meet a certain amount of fines before receiving new allotments. north korea may be suffering a fuel shortage. long queues are being seen a gas stations in pyongyang, where signs say supplies are restricted to diplomats or international organizations. be rising rapidly. north korea relies on was completely on china for fuel, and beijing has reportedly cut aimedries under sanctions

at persuading pyongyang to drop its nuclear program. the philippine central bank governor says the outlook for global growth continues to brighten come although concerns remain about u.s. trade policy. unclear what path president trump will take come the risk has not completely dissipated. on the domestic front, inflation is within the sutra banks target range and there is no need to adjust monetary policy. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> risk back on the table after the french election. the latest on the markets was sophie kamaruddin. all, i want tof show you the equity space before reaction to the french election. surge givenny earnings beats, and expected was

potentially when it comes to profitability. upgrading to stop to overweight from neutral, so a pop of 6.9%. french election, this chart shows you aussie-yen one-month risk reversal, a paring down of risk aversion that has been building up. as you can see from the chart, a victory,ecures options could revert to neutral levels back to mid-march levels. the euro advance could be a signal for emerging currency strength come but event risks do remain. north korea to celebrate the creation of its army on tuesday, an earlier the relief rally we are seeing in the euro could lose some steam. >> thank you so much. landscape after

the french election, it is round to coming in two weeks to what does that mean for the ecb as policy makers meet on thursday? kathleen hays is in tokyo this week covering the boj meeting on thursday. let's get right to the ecb first and reaction we will likely get from mario draghi. will they make any comments on this? that is interesting. certainly the press conference after the meeting, mario draghi will be asked all kinds of questions, and there is no doubt he will be asked questions like that. makers debatecy what they will be deciding in a few days, they are probably breathing a sigh of relief, no shock waves around the french election, and this may open the a strategysidering

for exiting their current policy of bond purchases. --will see if the giving they are giving a signal they are headed in that direction. of june, butahead it is not too early for some signals. no policy change is expected on thursday. here is what the ecb will be looking at, because it is all about the economy and inflation this week. 1131, three quarters of steadily rising gdp in the euro area is an encouragement to the ecb to say we don't need to provide much stimulus. 2%,ation rising, closer to pull back a bit, another reason why they might not be an a rush to say anything to definite. round ofe second elections coming up. a bloomberg survey showed that

the people we surveyed are saying that if marine le pen were to win, it would send the euro below parity versus the u.s. dollar, a 15 year low, so this week, a sigh of relief, maybe a hint of what will happen investors have to wait for the final outcome to make sure they cannot be concerned about the euro having a big move. the boj also breathing a sigh of relief, the dollar-yen about to break 110 against the dollar. what are we expecting under the boj this week? patients on inflation has paid off for governor kuroda, making steady progress in that direction. let's look at what the boj is watching. bloomberg intelligence in tokyo saying no change in their gdp .orecast

the report on the economy as they do every other meeting will be released. stronger escorts, better reduction, strong labor market helping inflation, but still far from 2%. let's look at another bloomberg #7940 2, 3 main lines, the top one at 0.3% year over year, national cpi, 0.2% is the one ,overnor kuroda is applauding taking up fresh food prices. the final line takes out energy as well, then you below zero. boj's job is getting a little bit easier. >> they are more confident because they have shifted from worrying about how to reflate the whole economy to just whirring about inflation expectations. job have a more limited now, so governor kuroda and his colleagues feel they can handle it.

policy makers at the boj have no control over trade policy. the finance ministers think he cannot aaron t the japanese people that up by lateral deal will be as strong as tpp would have been. everyone is watching closely because trade is so important to the japanese economy. >> thank you. for more on the french election, the imf says european governments cannot keep blaming brussels. a senior fellow at the peterson institute is with us. governments have played it that way, and they are largely responsible for this. they would blame brussels. wrestless people blame , brussels has to change its

image. it has to come with the help of the government, which has to say do something good. taking the easy road earlier and paying for it now. that is an issue in many countries. in the u.k. for example for brexit, it was essential from a may be as important as immigration. in france, it is too easy to pick on brussels. >> how much of what we are seeing is a lack of growth? if people were getting more money in their paychecks, they would it these so dissatisfied. is there any result in this french elections that would give more growth to the french economy? >> growth is good, but i don't realistic- if you are and you take structural measures 1%, that would make some difference, but not a

big difference. it is the fact that some people feel excluded from the labor unskillede young, the . that is where we have to work. it is more important, clearly everybody wants more growth, but it is more important that the kids get a job, get a better job. that to me is the central issue. >> how can eurozone countries implement any fiscal plan when they still have to do reform and have the overall the you rules -- the eu rules when down on them. >> many have pushed the notion that more public investment, more investment in education would be good, even if there is a deficit. anything that could treat growth should be treated differently from the usual public spending that does not. i wish there was less on that front, but there are many things you can do within the budget. it is clearly harder, but you

can't just blame brussels and say we can't do anything because we can't spend more. there aree good and some areas where can be done, but blaming brussels and fiscal austerity goes too far. >> that was the former i met chief economist olivier blanchard. ignore china's credit risks at her own peril, a warning from one top upon manager who says lots of people are eight the risks. we will hear from the man himself next to this is bloomberg. ♪

>> this is "daybreak asia." >> a quick check of the business flash headlines, the u.s. accusing indian i.t. companies of unfairly dominating h-1b these this.

the white house says outsourcing companies flood the system with applications. they were named by the administration has the top three recipients of h-1b workpieces. to overtakeut germany and become the fourth largest economy. the imf says annual growth of 9.9% will propel india from its current six place. the u.s., china, japan, india, and germany will be the world's top five economies. service ofo sharing plans to expand to 200 cities this year. the founder says he sees bubbles in the industry, but thinks his business has the scale to survive. 3 million bicycles and

has raised $615 million since inception. he says the industry is still in its infancy. are definitely bubbles in the bike sharing market. there are three phases for the funding toevolve, put bicycles on the street, competing to make bicycles easier to ride, and battling to have better maintenance systems. almost all of the bike sharing companies are still at the first phase of the moment. that is why we see bubbles. one of china's top bond manager says investors are not paying enough attention to the country's credit risks. seven companies have defaulted on a total of 10 on shore bonds, comparing to 29 for all of last year. the benchmark 10 year yield is the highest in more than a year as government debt becomes more attractive.

we have seen this uptick in defaults and heard analysts say this is a good sign coming from the pboc. the economy has stabilized and now they have embarked on this de-leveraging program. what are we missing now? >> thank you for the introduction. very glad to be here. >> can you hear me? you, not veryar clear. i copy that. i was mentioning this uptick in defaults. this isanalysts saying a good sign from the pboc that they are de-leveraging and alleviating pressure on these chinese companies. what do you think is missing at

this picture now? china has 20 years experience in interbank loan market which was -- in 2014. shows there were only six defaults in 2014, and the following year, this number increased to 23, and speeded up 2016, so defaults are accelerating for the past general chinaut defaults only account for 0.5%, so compared with the rates of bonds in the u.s., 3% to 5%, so we are under control and there

are no systemic risks. the right way to solve the problem. >> they are solving the problem, but in light of what we were talking about, all these companies are unable to sell bond and can't finance issuance, and in turn has ty ofibuted to the populari wealth managers fueling the shadow banking sector. what is the endgame for this right now? we have seen the government crackdown, but activity ramps up. asking about the sovereign debt in china? >> i was talking about the shadow banking system, shadow banking system in china. >> shadow banking, this is a good question. we have talked a lot about shadow banking the past few years.

deleveraging and strict supervision of shadow banking, that is the government job. three reasons why they happen, economy is cooling in china, financials are overheating, and this will increase the risk of stability in shadow banking risks. the second is the asset bubble because of leverage high-level shadow banking will affected instability of financials. the third one will be policy arbitrage or arbitrage to expand and liabilities in a radical way. so government regulations notice the problems and are doing great efforts to control the channel,

the leverage, the shutter banking risks. are introducing behavior to adjust assets and liabilities, we are onappy to say her way apart from shadow banking risks now. >> before we go, isn't it a bright sign or good sign we are seeing higher defaults because it means the chinese government is letting the markets perhaps to weed out lower quality companies? this is the way markets function, companies do defaults. a great sign of that one, ok? that is what i mean. >> thank you so much for joining us.

you can get a round of the top stories you need to know to get your day going in today's ,"ition of "daybreak asia also available on mobile and you can customize your setting so you only get news on industries and assets you care about. this is bloomberg. ♪

>> this "daybreak asia."

has urgedd of tcl president trump to allow him make acquisitions in the u.s. he said he was in the final stages of making an investment in a u.s. tech firm that could be worth this much has $300 million. the american government has not approved the deal, but they haven't formally rejected it either. we signed an agreement with the company six months ago and have submitted this deal to the regulatory body, however, just when the deal was about to be approved, trump got elected. issued an order to suspend all acquisitions in the technology sector that were waiting for approval. on isoject we are working a completely civilian project that does not touch upon any military or other sensitive areas.

it is reasonable but it is so difficult to get an approval for this kind of project. hurdle you faced with this deal, does it make you reassess your appetite for potential acquisitions in the u.s.? i believe that ultimately the u.s. government will support the deals benefiting both countries. we will continue to invest in the u.s.. newact, we are looking at a material project with the value of $200 million to $300 million in the u.s. at the moment. they are relevant to what tcl does. if we decide to make this investment, i truly hope the u.s. government will not reject it. come i would take my team to go to israel begin. in previous trips, we have seen a few potential acquisition have had a few

rounds of discussion, server the help we can make some decisions this time. >> have you had discussions with apple about providing oled panels for their iphones? not done any actual business with apple at the moment, but hope we can become an apple supplier soon. know, apple holds high standards on suppliers. they want to commit any orders with a company that has been successfully making the product for 2-3 years. patient and wait. we are confident that the quality of our products will meet the standard of all our clients, including apple. tclhat was the chairman of speaking to tom mackenzie. let's take a quick check of the markets and play. quite a bit of a risk on sentiment given that dollar-yen moves overnight.

we are close to breaking above dollar-yen, positive for equities, the nikkei two to five up 1.3%. 200 up, oilhe asx doing a rebound with wti and brent crude up. take a look at this, we have seen the won rally. when politically sensitive it comes to events we have seen. up .4%.i singapore starts trading in 15 minutes. we will see political uncertainty perhaps reduced after this french runoff in two weeks. that is all from us on "daybreak asia."

coming up, rish, you are focusing on france. rishaad: fidelity telling us from the implications investor's perspective, seeing moves when it comes to the gold price, the euro, and the treasury market as well. that is what we have at the moment. there we go. rish, tell us some of the other big guess you have coming up. >> oil of course in focus. fge will join us in 45 minutes. ♪

haidi: 9:00 a.m. in hong kong, 11:00 em in sydney, 9:00 p.m. in new york. i am haidi lun. am rishaad salamat from bloomberg's asian headquarters. this is "bloomberg markets: asia." ♪ france kicks out the establishment with le pen and macron winning round one. to aad: pushing the euro five-month high, threatening to ship politics for years to come. hai: