♪ macron sews a new chapter begins now. >> marine le pen accepts defeat. we will be live in paris. >> the euro picks of strength, a boost for the european union, a blow for populism. >> asia-pacific market set to rise on the election to japan gets back to business after a three-day break.

we have the world covered here on "bloomberg markets: asia." we go live for a reaction to the french election. >> another country headed to the polls, south korea. we will be live to look ahead to the presidential vote. markets will be looking for the latest trade data out of china. we will have those details from beijing. this is "daybreak asia" coming to live from bloomberg's u.s. and asian headquarters. man.am yvonne a stunning victory for macron after his emphatic defeat of marine le pen. he won with 65% of the vote. was seen as a blues for the european union and a blow to rising nationalism. marine le pen accepted the loss and called the result of massive

success for the far right. now the attention turns to the parliamentary elections next macron prepares to name his government. >> from tonight for the next five years, i will take on that responsibility to serve the country in your behalf. long live the republic. long live france. the interesting part of all of this is just how right the polls were, and whether or not it signifies, have we reached peak populism, at least when it comes to europe? events in the u.k. and in the u.s., this may be more reassurance for those investors in europe. mind that we have a lot of potential obstacles with the at time of election as well,

but we have seen this risk on sentiment filled towards the end of last week. can it continue now that this political risk has faded somewhat? let's cross over to paris and get to our correspondent life right now. it was a decisive victory for cron, but will the far right be pleased with the showing? marine le pen is trying to build this as a success. she says this is a massive win, even though she lost against emmanuel macron. why? marine le pen got 10.5 million votes, 2.5 million more than the anyt round, and much more nationalist candidate and has been able to pull together in previous elections.

father onlyn's manage to get 18% of the vote, so with marine le pen at 35%, she has doubled his score, and that is the reason why the national front is trying to build this as a success. that being said, we need to remember the national front leadership before today's election said that a score of 40% or so would be a success for the national front, so it is probably fair to say this is seen as a disappointment at the national front, the score. >> indeed. to revive the french economy, so does this give him the capital and the mandate to stimulate growth. difficult to determine that ahead of the

legislative elections here in , coming up on june 11 and 18. as you say, emmanuel macron has pledged to revive france and revive the french economy, but it is clear he is facing a lot of challenges. the first of which is to heal france and to bring a divided country together. the turnout rate for instance in the second election round was a% or so, which from historical perspective in france is seen as very low, and that seemed to highlight the fact that a lot of people in france have really become disappointed with politicians over the past few years, and with the so-called political establishment, and that is something that emmanuel macron will have to fight with. , legislativection election, will be a key test for emmanuel macron, his political movement.

it has only been in existence for just over a year, and it will be a tough challenge to muster enough votes in order to get a majority. it is a majority needed for emmanuel macron in order to be able to carry through all of the reforms he has pledged, labor market reforms, also loosening up of france's 35 hour work week, and a cut to corporation taxes. unions is what he will have to contend with. looking at the outcome of this overall, was it considered a defeat of populism? what does this mean for marine le pen looking forward? >> as i said, the national front party coming they are trying to hail this as a success, even though it is a disappointment. it is a fairly low score, a lower score than what they were hoping for. pen being said, marine le

has made it perfectly clear that she is not going anywhere. in the united states, french presidential candidates can come back time and time again in late two presidential -- and later presidential mitterrand tried three times before he was elected come as of this is a political force that will stick around for sure. they are looking ahead to the legislative elections as well and hoping to become the second force in the french parliament after en marche. >> thank you for joining us. it has been a long, long day, but as mentioned, with this mandate almost, this stunning victory which was not so stunning for the markets, certainly there is this mandate to continue on and france, and that is leading the markets

higher. let's get more market reaction with sophie kamaruddin. losing a little bit after those gains. their: as traders get to desk this monday, we are seeing reaction muted. 110 afterr back below pushing above that level since november. volatility has also subsided. when it comes to euro-dollar tols, that will be a level watch. the earlier gains made on the macron our modest compared to the 2% jump in the first 15 minutes after the first round of polls, traders largely pricing in the sunday vote. prior to that election that we should not expect fireworks, but those elections are seen as an upside for the eurozone. emmanuel macron has pledged to

strengthen the common currency. as markets pointed out, we also have german elections on the horizon. reactions the market going to look like through the asian session? below the the euro 110 handle. is there still more upside? focusing anda forecasting a rise to 115. there could be more momentum on a flow perspective as money was waiting on the sidelines. further upside for the euro may come down to what the ecb may do and what macron may do when it comes to the parliamentary elections. jp morgan does not see him obtaining a majority there. we have to look to french bonds as well when they start trading on money for a gauge of that risk on sentiment. he saw the gap between the

french and german 10 year yields narrowing in the lead up to the vote. that premium really falling to a 2017 low ahead of that, but that narrowing may slope it when it comes to asian reaction, we have japan coming back online. we may get more of a sense given that liquidity will come into the picture. japanese markets looking at a stronger start after that break, but shares in south korea at looking at a weaker open. we are on the eve of their presidential election on tuesday. >> quite a bit of catching up to do for japan. thank you. let's look at first word news. rosalind: chancellor angela merkel's christian democrats have defeated the income and social democrat in northern germany. is gaininghe momentum ahead of the election. the victory also gives the cdu a lift in germany's most populist state. it is seen as the main

bellwether before the national vote. exchangesreign increase is tighter capital controls and easing currency pressure kept money from flung out. by pboc says holdings rose $20 billion to end april at $3.03 trillion a memorial than estimated by economists surveyed by bloomberg. westpac has reported first half cash profit of over just over 4 billion aussie dollar's. the bank also announced an , again in lined with analyst forecast. westpac says it sees resilience and good prospects for the strahan economy and expects house price growth in the biggest cities too slow. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg.

>> looking ahead, institutional and consumer banking. we dig into the bank's latest results coming up. >> next, a emmanuel macron victory, the next challenge is winning support for his reform agenda, the likely impact on eurozone assets. this is bloomberg. ♪

and is is "daybreak asia" am betty liu in new york. man in hongvonne kong. the french election result may provide a boost for traders this morning. our next guest says the biggest challenge for the president-elect will be finding legislative support for his reform agenda. great to have you. the marketok at

response, quite marginal. a lot of this has been priced in. despite the fact this was larger than expected in terms of the victory and margin in the vote , was this a macron boat on the eu are the market betting on someone that was not marine le pen? >> there is an element of not le pen about it, but macron came out with a sufficient amount of rhetoric throughout the campaign europeansted that political environment is moving away from the populist rhetoric we became accustomed to last year. there are a number of things going on. .ertainly le pen was important it does not necessarily mean that populism in europe is on the back foot, but i think the extreme rhetoric the national front and france has come out with for a number of years, a huge turnoff for a large portion of that population. the fact that macron is a fresh face, centrist face, offers

something that the french havedents in recent years not offered, a third way of looking at french politics. there is an element of both, not le pen, but macron was attracted to a lot of voters as well. of reform ase type well. we have seen this risk on sentiment held last -- build last week. this french-german spread is quite interesting. we have come down, yields suppress come up 40 basis points good will that be fair level? >> it is not far away from the historical average. bond markets are the asset class to look at here to the extent that the euro has been factoring in a macron victory. equities and friends have also upside come and

again on the expectation of a positive outcome. where you probably see a miss price is the bond market. that was slow to react to the possibility of a macron victory. now that we have had a macron, spreads will start to compress, narrow, but again, a limited amount to squeeze out of this. the main point to take out of this election is that in a way it is steady as she goes in terms the risk on trade again. we have not had an adverse risk shock, so markets and volatility have been low and markets trending upwards in terms of risk. that will probably continue. it is a good outcome for risk generally. >> that's right. risk on for sure. anticipating maybe not a huge flood of money, but some money was on the sidelines going into european markets. what markets might they find themselves in? one.rope is an interesting

when you talk to people over the last couple of years, there has becauseght skepticism of this hangover from the debt crisis we had a few years ago, and there has been a certain reluctance. during that time, we have had within the eurozone, northern europe, the macro numbers have been strong, the german number strong come us of concerns about peripheral issues have taken a backseat with greece off the headlines compared to recent months, but what you will probably see is just money generally moving back into areas which will profit from the continuation of liquidity provision within the eurozone, which is still ongoing, and a stronger macro numbers and you look at something like equities within the eurozone, probably offering a pretty good that in this environment am a predicting now if you have a french president who will be more reformist. that is contingent on what happens with the legislative elections next month, but it is

likely you will see risk on money being put back into europe. that would imply a booster to european equities. >> what does that mean for the euro? is mario draghi breathing a big sigh of relief? what does that mean for him? >> it means that as far as the euro is concerned, we are not far away from where it should be trading. towards 110 a move post first round. i would not expected to go higher from here. the good news is priced in. if you look at it from a dollar perspective come you have to look at it as a bilateral currency against the dollar, so that is another part of the equation. as far as mario draghi is concerned come at the numbers in the eurozone have been stronger, inflation numbers stronger in the last few years, but it does not imply the ecb has to do

anything in the near term. in other words, if this implies a far better environment for the eurozone and a stronger foreption for the eurozone investors, then realistically if the numbers continue to strengthen and improve, then mario draghi does not have to do anything in the near term. of now, the continuation liquidity provisions will ensure this sign of a stronger eurozone economy continues and the ecb can continue to effectively implement policy, and liquidity provisions, that supports the continuation of the macro rally in the eurozone. given the political risks that have faded, political risks, could the ecb tweak things in terms of reducing asset purchases before raising rates? >> they could. the issue the ecb has is france is not the eurozone, and we

still have general elections in the third quarter. there is an element of risk is still about that, although reduced now compared with a few months ago on the back of populism. this is just the first step as far as france's concern. nextegislative elections month are a big thing because the president by himself has very limited powers in france. it is parliament and the legislative parliamentary system that is dominated -- >> do think it makes a difference? >> it makes a difference in terms of how reformist policies are pushed through. that is something that is a positive first step in terms of politics, but there are still potential hurdles ahead. >> great to have you. state street global markets. coming up, we go live to seoul, korea to talk about another election, south koreans count down to that outcome. what will it mean for trade,

security, and the country's corporate giants? this is bloomberg. ♪

is "daybreak asia" and i am yvonne man in hong kong. newouth korea electing a president tuesday, south korean stocks resilient amid tensions and corporate scandals. is innk shery ahn is in seoul, korea for us. will it change the potential outcome much? a lot hangs on the line. the election takes place in less than 24 hours. the campaigning effort is at its

peak behind me, supporters of the conservative candidate of the liberty korea party campaigning here. this was the epicenter of months and months of protests for an against the ouster of the president. corruption scandal brought conglomerate reforms to the forefront of this election, so a lot hangs on the line in terms of what will happen to these own 27% ofes that i all business assets in south korea. the race is currently dominated by the liberal of the democratic party of korea, and a centrist of the people's party, and supporters who you can see behind me of the liberty party of korea. it is going to be

conglomerate reform at the forefront come the domestic economy as well, but you can't ignore the national security risks as well in south korea. do you think this election might change south korea's approach to pyongyang? candidate who is a liberal of the democratic party of korea is known for his more open approach to north korea, which would be a massive u-turn of nine years of conservative rule where we had a hard stance against the north. a lot of people compare his sunshine policy of 1998-2008 under the liberal administrations, not surprising given that he was also involved in crafting that policy to your peon gang. ts, the candidate is differentiating himself by

taking a tougher approach towards pyongyang and emphasizing ties with the u.s.. the conservative candidate once a tougher stance against north korea, but a lot will hang on what happens to the u.s. antimissile system. china has been strongly opposed to this missile system that is and partly running on a golf course south of south korea. when candidate has been opposed to the appointment of that, whether he will remove it if he becomes president is a different story great how he deals with north korea, china, and other foreign issues will be key. >> thank you. we will get back to an a couple of minutes for more on the south korean election. mura, we will have no

stay tuned for that. the boj is convinced it will hit its inflation

♪ betty: 8:30 a.m. monday. a beautiful weekend that we had here in the city. we are moments away from the first major market open. betty: i wish i could say the same, it was kind of chilly and wet in new york. it is not like the sweating we saw on friday read it is a nice sunday. there were like rivers here. the market closed higher on the back of that jobs report showing robust job growth here in the u.s.. i am betty liu in new york. yvonne: i am yvonne man in hong kong. now first word news with rosalind chin. rosalind: san francisco's fed president stands by outlook's for three or four rate hikes

this year. to have seen signs of expanding beyond rates, operating above potential. the latest data showed 211 thousand new jobs in april and the jobless rate falling to 2.4%. >> economic data we have been seeing has been consistent with a steadily improving economy, an economy in full shade. maybe the employment is a look -- beyond a sustainable level of employment, and in placement indicators, it is moving in the right direction. rishaad: western -- yvonne: western australia to benefit from a road and rail incentive. they will be announced in the budget where half of the money goes to the real project and the rest for roads and bridges. western australia was hard hit by the downturn in mining. they say it will be good for jobs.

iran's oil minister says they will go along with whatever opec decides. they have all indications there would be an extension of that started in january. they are rebuilding sanctions. crude lost all of its gains since opec agreed to cut in november. goldman sachs and citigroup see opportunities in the oil market. goldman says stockpiles will decline if higher prices make extended production cuts beyond jim. oil is a five-month lows, driven by technical trading. the head of commodities research said oil is a good buy. >> i suspect it is a great buying opportunity here at them like -- the market is tightening up here we will see more robust draws when that happens. it will be a shift in financial sentiment, and it will boost the

price going forward. we are expecting a big price jumps for the end of the year. rosalind: global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ betty: we are counting down to some of the major market open here in the asia-pacific. let's get to aid them -- adam haigh joining us live from sydney. you are watching the euro after the election results in france. they have a race to the gains after the result, 10985 right now. how will that play a for the rest of the asian session today? adam: good morning. we are seeing that in the s&p ,00 feature, they opened higher now flattened out. the point about asian markets is more from an equities perspective, there is followthrough from right is rally in the u.s. -- friday's rally in the u.s..

as wes still sentiment get started, and commodities last week, they eased off a little bit, so we should he gains in the resourceful stocks in asia. japan is back at the desk this morning, equity traders have three days off, no trading since last tuesday. stocks have increased around the world in that time. the yen has not really strengthened, so that should offer support to tokyo traders. in china we expect trade data to come out with the latest piece of information really to gauge just how the deleveraging in chinese credit markets is really flowing through to the economy and how that is shaping up for manufacturing and growth, and we have a couple of fed speakers later on. they will both be speaking today. those comments will be watched closely. betty: that is right, for any

clues in the economy. bloomberg reporters have been examining how much china is leveraging and costing investors. the mentality, and how much more pain can they stomach on this? joining you are just bloomberg, look at this chart. this shows you how painful it has been for both stocks and the pay -- fixed income investments. there has been a rout in the equity market, the bond market hit pretty hard as well as a shakeout in financial markets rolls through. the numbers are getting pretty big. billion for $453 the mainland of chinese shares. billioneen about $21 worth of canceled debt sales, and the pboc injected almost $50 billion u.s. worth of liquidity into the money market recently.

it is fairly sizable. we will probably expect regulators to continue on this path at the moment. investors are not expecting any change in direction. the folks at j.p. morgan asset management were pretty clear that stocks or the yuan will have to fall 10% before you see any change in direction from regulators in china. i think we will continue to see pressure here. longer-term, investors are happy to be buying these. these moves have been welcomed by the lack -- likes of fidelity. we should expect a bit of the shakeout continue. i think you will see some buying from the longer-term investors if we move further down especially in the equity market. betty: thank you so much, adam. looking ahead in asia. the spotlight at the start of the week as we just discussed, from france to korea, central

bank. also boosting inflation in a world where prices are stubbornly low. kathleen hays is in tokyo. nobody knows that better than the japanese. , he hasgovernor kuroda been boosting inflation for years, looking for the reflation , but he is confident he got it right. does he have it right for your kathleen: he is moving in the right direction. the development bank continued over the weekend. sundayome saturday and trying to power monetary policy. policy bank meeting on saturday. there is the favorite of the next head of the philippines. a greatmmenters and panel. governor kuroda basically said, i thought it was interesting,

when he was describing lessons from the bank of japan and if they apply to the rest of asia. it is hard to say, but he is doing his best effort to boost inflation to that 2% target. he is acknowledging how tough the battle is. and again, both sides of the story, jumping and bloomberg to look at #7942, you see the progress and how far he has left to go. you can see the headline inflation in the 0.2. 0.2, andhe crude at taking out energy, that is back to negative territory. the most important line is the yellow line in the middle. it is harder, but so much of that was energy prices. they felt come a that is one reason why inflation came back down. people say he has not made any progress, it will now be aimed for abenomics or fiscal policy,

but governor kuroda feels that by the end of fiscal year 2018, which could be march 2019, he will have that target. he will have the inflation rate up to 2%. it was interesting when he was asked what is more exciting, the head of the bank of japan or the adp? he said adp is more exciting, but central banking is more complex and more difficult. it is a tough job, but he is sure he will make it. betty: certainly a tough job for him. the boj is in a bind. let us look at the rebounding u.s. payrolls. his june done? kathleen: if you ask the markets, it is, the fed says the same. they were up to 11,000. then it was only 79,000. it did not look quite impressive, but 79,000 is more of an outlier.

4.4%, a 10t down to year low, not since before the great financial crisis have we seen it. president in san francisco said over the weekend he sees three or four hikes coming. let's jump into the bloomberg and look at interest rate projections. you will see how those odds have moved up to just what the fed wants to see, 100% on of the fed moving in june. that is when the futures market is suggesting. it is interesting that wages are kind of stuck at 2.4%, which you cannot see on this chart, but at 2.7%, there is no acceleration. that seems to be looking past this, but donald trump and his team are not. here is what gary coleman said on friday and why donald trump is not satisfied with the lack of growth. news isess encouraging the weight inflation.

you are not seeing wage inflation in the united states. we are seeing wages grow 2.5% year-over-year with core cbi 2.4%. you are not creating purchasing power. we want to create purchasing power for american citizens. kathleen: in this interview, gary cohn said that what donald trump us to do is read into jobs, trade, the whole future more broadly. since they are looking past status wage growth and determined to raise rates, two or three more times this year, it would be interesting to see if this lack of wage growth turns into an impasse between administration and the fed is the administration starts to say wait a minute, why are you waiting -- raising wages? let's see if that will happen, but clearly from the white house they want to see american paychecks get fatter. betty: all right.

the u.n., and focus on the week ahead. joining us, the chief strategist here. this is bloomberg. ♪

♪ betty: this is daybreak asia. rishaad: -- yvonne: let's do a look on the business flash headlines. this group has bid for fairfax media property advertising domain. fairfax shareholders will get 95 australian cents a share, and the company is holding its remaining assets for the regional newspapers and looking at interesting streaming ventures. the proposal may not boost shareholder value. behind a sale in

state charter. it is less than week after the aviation conglomerate increased its position in deutsche bank. it is now the biggest shareholder in europe's largest advertisement -- investment. yvonne: results coming in at $26.6 million on tuesday. it will make jews, and that will reflect a drop in japan after the company rigged fuel economy ratings. they altered quarter revenue and may have fallen 15% in vehicle sales, sliding told percent. -- 12%. betty: we will break down economic numbers about inflation, and we have sales that will be very important. they are due on friday. the skit the outlook with the last -- let's get the outlook.

you are one of the most bearish on the street right now. after seeing the elections in france, do you feel any better? >> you are referring to 2015. it is interesting because i was still living up here where we finished 2016 out. betty: i am the only one that the you with the target. >> i was on of the most bullish for the last five years. everyone was on that, 2300, 2350 him a right around taking it up to 2500 and so on. i will not do that just yet. we are still the fourth inning of the game here as well as third inning. there is a lot to be said. one thing that has to be realdered is there is two risks to the border equity, one with theis

inflationary scenario, it will not be be phenomenal, if we get higher inflation, higher wage pressure to the discussion we were having with your colleagues about the jobs reports, if we start seeing more wage pressure, that will be good for a segment of the workers, but it will start eating away at harper profitability as well. it has that -- it will be interesting. if we to get a bonds selloff, higher rates, the cost of equity thetal will go up, meaning future of the s&p 500 should go down. so in that context, i am pe multiple already quite stressed not to go any higher, probably to come down. another factor about why i am

not yet upgrading forecast, simply that a lot of the excitement coming out of november was about corporate tax relief. i am not sure at this juncture whether we are any closer than we were two months ago or three months ago. there is a lot between the white and at theongress very least, whatever does get done, it could be water down. there is a big difference between proposing it and getting it through congress as we have seen so many times. glad you brought that up because the budget director said, look, we are willing to risk a government shutdown to get what we need. i will play for you what he said on television this morning. >> this president is willing to think outside the box and do things differently around here, and we will change washington. if it comes to a shutdown in september -- so be it.

betty: are you pricing that in? michael: government shutdown -- betty: we have been there. michael: it was like a speed bump in the markets and no -- it was statement such as that. but what is revealing when you hear that kind of commentary is how inherently conflicted a lot of the agenda out of different parts of the white house is. if you are trump and you want to lose fiscal policy, you want to build infrastructure, you want to build corporate tax relief that is not revenue neutral or slow in the near term, you go against a severe buzz it -- budget discipline. how does that square off? it is something the market does not understand because the white house is not really articulated a clear strategy. when you hear comments like that, it is hard to know what to

do with it. so you have the white house, who will be more powerful? betty: like a little flag. michael: but ultimately gets resolved over the broader term, my instincts tell me trump likes to build. he wants to spend. it would be inherently inflationary and so forth. it will not be easy because even without that quote, he has to spend more than he spends in strongs and negotiate a group of fiscal hawks. yvonne: and in asia, we are watching a possible relief and commodities that we saw on friday. the bleeding has been stopped for now, but a large part of the debate has been the agenda to find demand, or if there is a

question on the inflation trend moving forward. i want to talk with a chart that speaks of this. you look at the index go, it gdp goes ashere the well. you look at trade numbers out of china later on this morning, if it is the latter, are we in for more weakness ahead? is this a debt cap balance? question,hat is a key something i have been focused on. the rebalance story is getting more and more nuanced, and what we have been seeing last few weeks here is the euro is the reflationinner of the story. you look at the metrics. then you look at forward inflation in germany, those expectations search to the most since september 8 and have retained the most of those gains were the other metrics you can look at have come back.

when you are starting to see is the u.s. and china are more late to that respect. oil does not recover here. he gets back to the 200 day average and stays there. that will weigh on a lot of inflation metrics, inspected -- expected and what shows up in the next several months. and of course china as well for that question. yvonne: great to have you on a sunday evening. the chief of -- we have plenty more to come on bloomberg. you are watching daybreak asia. ♪

♪ this is daybreak asia. i betty liu in new york. yvonne: i am yvonne man in hong kong. banksc, the left of the

report. let's get the numbers from paul allen joining us live from sydney. the numbers looking reasonably solid. yes, it is in line with expectations. up 3%.sold $0.2 billion, net income $3.91 billion. it is a 6% for the first half. 2.0 7%.interest margin, in that respect, facing the same issues we saw with a.m. said -- amz. --o getting squeezed, script credit growth is falling. creditct household growth to ease and house prices slow. in new zealand we have seen shares going -- showing reasonable gains. and the australian bank reacts. the market starts at the top of the hour.

there is an insurance dividend of $.94. yvonne: thank you so much, paul allen in sydney. plenty more still to come with asia's first major market open moments away. we are watching quite a bit, korean come up and the elections. what we should be watching now. we do have japanese markets coming online for the first time since the last tuesday. there is a lot of catching up to do. we are watching automakers like mitsubishi, releasing earnings and sales updates. japanese cars made in the state surpassed 5 million for the first time. and cable stocks ahead of those selections. carmakers in the spotlight as they saw a drop in chinese sales for april. in facing economic retaliations for the thaad missile system in south korea. we will see if investors like

westpac's report. take a look at asian equity futures, all higher on friday's rallies in the u.s. in europe -- and europe and reaction from macron's win. asian traders get a first chance to react to the trade data. gainat japanese futures, a of over 1% as the thing is trading the lowest in seven weeks, but signaling weakness on the eve of the presidential elections in korea. looks like a positive monday for aussie stocks after the commodity story fell. pick up in the week of a brutal selloff and oil coming back above $46 a barrel after dropping to a near six-month low last week, $44. that helped push the bloomberg index higher by the most in a month. that reflects. we are watching australia,

japan, and korea. moments from now, a lot to look at monday morning as we kick it off this week. a lot of elections to look out

♪ >> a new era starts now, macron wins the french election and promises to heal divisions. defeat butxcepts says the vote was a success for the far right. muted reaction in the markets, traders had already priced in the result, the euro gives up gains. turn in thekorea's

election dominated by scandal. ofthis is the second hour "daybreak asia" coming to you live. it is a little bit like déjà vu, right? the french elections, preliminaries earlier, and that helped to speed the markets up. we are still seeing positive reaction, but muted. >> that political risks subsiding. not surprising what we are seeing this morning. china trade coming out this morning. let's look at the markets. sophie: little to draw the bears out. take a look at equity markets in asia. the nikkei 225 surging 1.4%

after that three day holiday. the yen trading near seven-week lows, 112.71 against the dollar. still looking resilient on the kospi as we head into south korean elections. the won up .5% against the greenback. the kospi rising for a third day. aussie stocks in the green, snapping a four-day drop. aat else is moving, the euro key focus following the win. againstw dropping .3% the dollar after earlier gaining enough to push it above the 110 level, which we have not seen since november 9. it seems like a muted reaction 's win.on bonds moving in tandem with treasuries, the 10 year yield

back in that 2.3 percent zone. in the commodities space, oil on the front foot, wti jumping 1.5% after last week's rout. gainsding to friday's after sliding to $44. --k at gold, just higher let's move onto the next thing. space, the asian benchmark on a downtrend because of the commodities selloff, the index is looking ok going by this fibonacci diagram. abovendex is holding just the line that represents about 76.4% of its fall from in april 2015 hi to of february 2016 low. the blue line represents the 26 week exponential moving average,

pretending an uptrend. >> thank you so much. she described that muted reaction in the market, but 's, nothing muted about it. it was priced into the market. bring in our correspondent who has been on the air all day long. it was a decisive, commanding victory by macron. the far right are still pleased with the results, right? pen has been hailing this result as a success, a massive success even. this that she got 10.6 million votes in the second round of the french presidential election. million more votes than she got from the first round of the election, and also the highest backing that the front national has seen in any easyh election, so it is to see why marine le pen would be so pleased.

this willing translate into higher support for her and her party and the legislative elections in june. emmanuel macron, even though he won a decisive victory this time around, may not be getting such an easy ride in the legislative elections. >> right, and that will be the next test, how much he can take this victory and capitalize on that momentum. what about capitalizing on the momentum in order to be able to implement some of these stimulatory measures he promised voters? a tall order. once again, i direct you towards the legislative elections in june. emmanuel macron will need a majority in the french national assembly in order to push through the reforms that he has promised, including labor market reforms, a loosening of france's 35 hour work week, and includes a cut and corporation taxes from 33% to 25%.

without that majority in the french parliament, that will be a tall order for emmanuel macron and his political movement. marche is just over one year old so it does not have the same thenizational capabilities traditional parties have in france, such as the socialists, republicans, and the national front, so it will be difficult. when it comes to the legislative fromions, it was good news their perspective. rche expected to get 240-to 60 seats in the french national assembly. that would fall short of the 290 seats they need for that majority. so possibly a refreshing start for france, but what will

be the first challenges that macron will have to tackle? >> a divided nation is going to first toel macron's challenge. the turnout for this election was just 74% or thereabouts, which from a historic perspective in france is quite low, although in some other countries that would be quite e french as i say, this s people being disillusioned with rememberlitics, unemployment remains near 10%, which is also a historic high. growth in the past few years has been low, and youth unemployment double the overall unemployment, so somewhere near the 20% mark. those are just some of the challenges that emmanuel macron will now have to grapple with. once again, the legislative elections will determine whether

he will be able to push through his reform agenda. if he does not get that majority come he will have to turn to other parties and have to look for support in the french labor movement for instance. that may be a tall order for the new french president. >> absolutely. thank you. joining us live from paris with the latest out of the french election. we look ahead to another big election this week, south korea's presidential election and the possible fallout for the y's conglomerates. merkel's christian democrats have defeated the incumbent social democrat. it is assigned she is gaining momentum ahead of the federal election. a left gives the cdu ahead of next weakens election and germany's most populous state. a stronghold and as seen

as a bellwether before the national vote. china's foreign exchange reserves increase for a third month as tighter capital controls and easing currency pressure cap money from flowing out. by pboc says holdings rose $20 billion to end april at $3.03 trillion, more than .stimated by congress our polls predicted a $3.02 trillion stockpile. westpac has reported first-half cash profit of just over 4 billion aussie dollars. the bank also announced an interim dividend of $.94 a share in line with forecasts. in a statement, westpac says it sees resilience and good prospects for the australian economy and expects house price growth in the biggest cities to slow. hasoup led by a biofarma bid for a domain and its top three newspapers. 95 and aers would get

share in the company holding remaining assets including regional newspapers and radio entertainment ventures. fairfax says it is reviewing the proposal. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> still ahead, china's auto industry challenged as the chairman of beijing auto confirms changes to foreign ownership rules. >> obstacles to corporate reform, what a new president might mean for the conglomerates of south korea. this is bloomberg. ♪

♪ i yvonne man in hong kong. "daybreak asia." >> right at the early open in

1.5%, so nikkei 225 of confidence among investors on .hat victory by emmanuel macron the yen coming back from losses. the first time trading in japan after being off most of last week. it is positive across the board in south korea and australia. south korea electing a new president on tuesday, the kospi we are inresilient, seoul, korea for the elections. nothing new in korea, but what anything change after this vote on tuesday. line: a lot hangs on the in this presidential election. after thenterest

historic ouster of president park. the south korean election commission saying that we have seen a record 26% of south koreans head to the polls in early voting, about 11 million people of eligible voters. in the placending where at all started, months and months of protests for the ouster of president park, some against the ouster as well. ashas been a divided nation president park was ousted from office. the top candidates right now are in a tight race. a liberal, centrist, and conservative are fine for the president. competing for the

president. they are divided when it comes to dealing with north korea, relationships with united states and china, but also how to deal with reform of conglomerates that own about 27% of south korean business assets. geopolitical issues overshadowed the efforts for conglomerate reform? what has been done so far? geopolitical tensions have always been there, but different this time around, the u.s. foreign-policy is creating uncertainty. president trump signaled he would be honored to meet with the north korean leader last changeo that has been a for south koreans looking at

foreign policy when it comes to the u.s. and north korea. when it comes to conglomerate reform, that has been out there for decades and decades. whether or not they will come through on that is another issue. there are dozens of reform bill sitting in parliament at the moment, but a lot of people saying we may not see huge , may be easy one such as allowing electronic voting to pass. those we could see after the our election, but the hard one such as restricting treasury shares when it comes to large majority shareholders trying to consolidate their power in conglomerates, well, they are saying those could be trickier the past. -- to pass. >> great stuff. let's bring in james rooney. he joins us live. great to have you. inn does korea stand to gain

the selection, and does it include conglomerate reform? >> i'm not sure that korea stands to gain a great deal unfortunately in the selection it. let me caveat that by saying i don't do politics, but i do focus on the economy. has been selling for a number of years to the point where it is growing more slowly than the global economy. the is the real issue at heart of things, but nobody is focusing on it. only natural is resources and human talent and reenter to rising and retraining that talent is the most critical task, but not when you hear being discussed in the political arena. >> it seems like this economic policies have been a must nonexistent in this election. i want to look at a chart that speaks to the outlook for gdp. we have hovered around 2%, but growth.away from 3%, 4%

how big of a problem is that? securitylike national issues, north korea, conglomerate reform has overshadowed the fundamentals of this economy right now. korea over 20 years ago when the economic growth rate was still 8% per annum. korea has let itself down significantly by falling to barely a few points above zero. this is not the korea that it's people are proud of, and therefore the issue is leadership. hasa is an economy that help always been led from the top, a ismand economy, and it ironic that people want to dwell on conglomerate reform because this is not a narrowly defined issue. it is a structural issue about the nature of the korean economy where the government decides the direction. the academics lay out the plans how to get there. the bureaucrats that the

regulations and rules and do the commands as to who will get to do what and that new economy. then the corporate's are simply following orders by and large, which means they lack entrepreneurship, leadership, and there is an integral aspect this system which is what we call the corruption you see in bringing down president park. >> that corruption contribute to that korean discount and markets. i want to pull up this chart, one i am sure you are familiar with. band come of the the yellow band, stocks and korea have not done all that much. they have been stuck in a range, but recently it looks as if the records not only hitting highs, but about to break out from this range, and i wonder for those of us who have watched

korea try to reform and not reform, maybe we are discounting that this could be a new era perhaps, investors are seeing something a little bit different that we are not commit may be too cynical about what is going on in south korea right now? >> so certainly we could indulge in such wishful thinking, but when i came to korea, the kospi had been range found around 1000 and i could see very clearly from its economic growth and economic potential that the in,i had a direction to go which took it through 2000 well into the 3000 level, but 20 years later, it is now range found at 1000 instead of seeing that 3000 i could visualize, so is not a goodspi marker for the progress of the korean economy, and the reason for that is the accounting practices, the corporate , don'tes and so on

necessarily translate economic growth into corporate profits that arrive at the doorstep of shareholders, so that has always been a problem for korea and enforcing will continue to be a problem, although the kospi could be lifted by standout performance by the likes of samsung electronics. some of those core business practices that have and choking beenh, one of them has shareholding could how much progress of the been on this front? >> there has been progress over the last 15 years, much talked about after the imf crisis in 1998, and a lot was promised, a little bit delivered, but let me point us in the slightly different direction. , the conglomerates are not the most entrepreneurial

corporations, the likes of which we see in perhaps the united states, but the heart of this economy is the small and medium enterprises, and the problem for them is that them get attention, support, access to resources, and the majority of the corporate assets and career are held by a small group of large conglomerates, which -- >> i'm going to ask you to answer this quickly. this on thewhy ground almost populist movement that remove the president and put the vice-chairman of samsung in jail, why doesn't that get translated into the presidential when we might see a brexit moment in south korea? >> the very simple answer is some not sure there is the that is going to change things. , i'mrms of a brexit model

not sure there is an option there. this is a society that does not like being divided, although by nature is divided. i hope we will have a unifying force in the future president, but again, the danger is we indulge in wishful thinking rather than pragmatic observation. >> james rennie, the vice-chairman at seoul financial. plenty more to come on bloomberg television. ♪

." this is "daybreak asia" has won u.s. approval for its medication to treat als. it is the first new drug for the condition in 20 years. it is only the second approved

option for sufferers. the disease causes loss of control the muscles for breathing, talking, and eating. in 24sing $5 billion hours in the first biggest ever capital raising, elliott management said it wants the cash to take advantage of potential market opportunities. warren buffett says his that on ibm should not discourage tech investment. ibm shares fell on friday after the billionaire said he cut a third of his stake. he also said he "blew it" by not investing early on in google. about thaten talking fx reserves number out of china. it is stabilizing for a third straight month thanks to capital controls and this pressure on the currency that has eased somewhat, but it is too quiet on the currency front? that is a key question.

is stability in the yuan reminiscent of what we saw about before thato unexpected currency to violation. we are seeing that one year employed volatility drop close to 5%, so from a percent at the beginning of the year. should investors be worried about this? is this the start of some kind of trigger for more volatility ahead? >> i think investors have a little ptsd when they think about 2015. they are worried things are too good, too stable, so they are worried about that. we asked one foreign-exchange analyst a couple of hours ago who said they are not pricing in that risk at all. they don't see that happening, so you never know in these markets. is anyill see if there

not gone effect as we saw back in 2015. plenty more to come here. we check out the road ahead with beijing auto next. ♪

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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. singapore, half an hour away from the open of trading in the lion city. >> not as bright as it was. .ou are watching "daybreak asia" " let's get to first word news with rosalind chin. emmanuel macron is the new president of france. macron one more than 66% of the vote in what is seen as a boost for the european union and a blow to nationalism. ,arine le pen accepted the loss

but also called it a massive success for the far right. prepares to name his government ahead of parliamentary elections next month. in the nexttonight five years, i will take on that responsibility with the termination to serve the country on your behalf. republic.the long live france. >> the french people have chosen a new president of the republic. they have voted. i have called mr. macron to congratulate him on his victory and because i wish the best for our country. i wish him well. the premiere of taiwan is eyeing opportunities in china even as the administration looks to boost trade links with united states and southeast asia. in his first interview with foreign media, he said he is not opposed to cross trade economic links and called china a market

that should not be pushed away. the san francisco fed president says he stands behind 3-4 fed rate hike this year, sang the labor market is showing signs of expanding beyond its sustainable rate and operating above potential. employers added 211,000 new jobs in april and the jobless rate fell to 4.4%. we haveconomic data been seeing for the last few months has been consistent with a steadily improving economy and an economy in good shape, at full employment and beyond maximum employment and beyond maximum employment in terms of a sustainable level of unemployment, and inflation is moving in the right direction. warren buffett has assured shareholders there will be fine after he is gone. he said if i die tonight, the stock would go up tomorrow. he said the commission about a

breakup would be a good wall street story. there has been speculation about who would be the next leader. he hopes that person will already be very rich. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> let's look at asian markets. they have cleared this big hurdle with the french election, in asia, focusing on china trade. sophie: that will be in focus. we also have korean electionswen tuesday. the nikkei surging 1.5%, the dollar-yen also looking little changed after climbing back since113, the highest

march 17. the yen is in recovery mode, at least when it comes to the euro, after hitting a one year low, so markets taking on a cooler head s win.macron' further gains for japanese shares, the topix above its 50 and 100 day moving averages. momentum thanks to the boj standing by its accommodative stance. let's look at what is moving the rising tokyo, the topix the most in three months, all sectors in the green, energy shares leading that rise in oil, developers on the up as profits are expected to rise on office demand. , plenty ofrs earnings drivers to consider. i want to draw your attention to mitsubishi, shares jumping as much as 13%, the highest in over

a year after the u.s. fda approved its als drug. deutsche bank cut the stock to , olympus as full-year forecast trail estimates. that is what we are looking forward to give coming back online today. reserves rose for a third straight month in april. tighter capital controls, reduced outflows, and the again stable for the month. also, trade data this morning expected to show a slowdown in exports. let's get to tom mackenzie joining us live from beijing. start with fx reserves. how sustainable is this recent increase? question,swer that you need to look at the factors that have led into this, three

straight months in the fx 3.03ve file -- pile to trillion u.s. dollars for april, and these include capital controls put in place at the end of 2016, early 2017, clearly having an effect on reducing outflows. stabilityhat yuan versus the u.s. dollar so far this year, then of course you have the growth picture. of had that last quarter 2016, positive growth picture quarter then the first for 2017 also beating expectations. then you have the questions over this growth picture in the second half. you have questions led by those pmi data points we got out last bloomberguggestions intelligence saying we could see peak growth in china in the second half of the year, then slowing down. that questions with the pboc can

do to raise rates to match the fed. if growth slows, they may be reluctant to do that and the two more pressure on the yuan and outflows, so that questions the fx reserves sustainability. they are still the largest fx reserves in the world, $4 trillion in 2014, reduced by 25%, but is the growth picture looking forward in the trade data later this morning. >> speaking about that trade data, what are we likely to expect out of those numbers? the onexport number, most people focus on, expected to increase around 11.3% for april, which would be down from an increase of 16.4% growth in exports for march. that is a year on year number in u.s. dollar terms. bloomberg intelligence pointed out that there is a valuation or comparison affect, a lopez from

the previous year, so it could surprise to the upside. in line withmes forecasts, it would show robust , particularlynd from u.s. households. areerms of imports, they expected to increase in april by 18%, coming down from the previous month, which was about 20% increase in imports. the trade data is expected to break at 10:00 hong kong time. a number of indicators feeding into this have a mixed. have seen this weaker pmi numbers and export numbers, so that data due at 10:00 hong kong time. be watching for those. tom mackenzie in beijing. let's stay on china, beijing auto confirming the government is planning to scrap the current

requirement with foreign automakers. the group makes mercedes-benz and hyundai cars in china. the chairman says reform of state owned enterprises is the number one challenge. as one of china's leading auto companies, the biggest ic are the smea reforms. the chinese government has put reform high on the agenda and time is pressing. as the chairman of a traditional as so eat, my biggest pressure comes from this front. the 50-50 joint venture arrangement, i think the policy will get changed and scrapped for sure. the door will be opened for sure. c, this is not a huge challenge. maybe a few years ago this would have been a big difficulty because of that time china's homegrown brands were in their infancy. oflight of the fast growth

china's own auto brands, lifting the restrictions on the 50-50 joint venture structure will not be a direct threat to us. >> what do you have to do to stay ahead of planned or proposed or possible changes to the ownership structure with these joint ventures? do have to be number one in new energy vehicles, number one or at the top in autonomous driving vehicles, what needs to be the priority if a 50-50 joint -- what you have to do for the next 10 years at the landscape is changing? >> we counter the threat with her strengths, technology, our trump card. the global auto industry is investing in intelligence. autonomous driving, connectivity, and electric and lighter weight vehicles. inna has absolute advantages two of these four trends, intelligence and internet. the scrapping of the 50-50 jv

arrangement will not happen overnight. soon, domestic chinese cars will make up more than half of china's auto sales. with strengths like these, why should i be afraid? >> i know there are lots of rumors in the market, and i will allow you to maybe address them if you want to, ok? can i talk to about new energy vehicle possible ipo, and is there any progress, any truth to the rumors about fiat chrysler joint venture? vehicleng electric company has been developing very soundly in recent years we have round ofleted a b profit financing. after this, we expect to list the company and a short amount of time, and that is all i will say today. that was the beijing automated group chairman with stephen engle. in u.s. job numbers

pointing to another rate hike sooner rather than later? the details are next. this is bloomberg. ♪

are big stories coming up this week. he will cover them all here on "daybreak asia" ♪ ." tuesday is budget day in australia. increase infrastructure spending will be the key element to watch. we will be watching warnings in earnings in japan, the carmakers in particular. toyota reporting on wednesday. analysts are pretty bearish, predicting profits for toyota to fall 13% last quarter, u.s. a sale slowing since the start of the year.

they have also struggled with the stronger yen. take a look at this terminal chart, you can see this competition they have had with volkswagen to be the number one global automaker. it has had volkswagen coming off of this emissions scandal and rebounding significantly. the market cap has been normalized between volkswagen and toyota. thereof analysts saying is not a lot of good or positive for the fourth quarter of and at the fourth quarter for turkey at it was a miss. the company has made an increasing focus on quality, so tour yoda may be a difficult one -- toyota may be difficult to offset that yen. we also have rising rates in the u.s., the cost of raw materials have gone up, and continued risk from fx rates, not to mention uncertainty between the u.s. and japan and where trade goes from here. >> that plays into the retail

numbers we will get later this week. watching disney's earnings, the company cautioning about a softness from higher sports costs and tough film comparisons. everyone will be this singing to what bob iger -- will be listening to what bob iger has to say about espn. talk of interest in netflix and twitter, content being king these days. we were also watch economic numbers on friday. retail sales over all likely climbed by .6% in april, the most this year, adding to signs that consumer spending may be rebounding after that dismal first quarter. , a's bring up this chart that wast-quarter driven somewhat by the lower sales we saw in february and

march. you can see it deeply in the red. we know the first quarter is generally softer for the u.s. economy, so it is likely we will see this rebound in april. if we don't, that might be another sign for investors to worry whether or not if we will get to rate hikes or three by next year. that debate might get revived again when we see those numbers. >> how transitory was the data in the first quarter, that is the key question. thanks. the retail data comes out of that u.s. a jobs payroll number on friday, which rebounded in april. let's get the latest from kathleen hays who joins us live from tokyo. this report gives more credence to the fact, who shrugged off the first quarter as a blip. does this mean smooth sailing for fed rate hikes? >> let's remember that one of the reasons the fed shrugged off

the first quarter gdp is they think there is some issue with the way the gdp numbers are put together. they think the first quarter for the last three years is suffering from that. was the number one report for the fed, payrolls rising 211 thousand in april, up only 79000 and march. it gets the jobs numbers back on track. unemployment falling by .1 percent to 4.4%, a 10 year low, the lowest unemployment since before the great recession and the financial crisis. the president of the san francisco fed speaking over the weekend was talking about inflation and just about rate hikes. he sees a total of three-for this year. markets are on board for a rate hike. , 100%, those are the

basis100% of that .25 hike in june. let's link this to retail sales, wages, wage growth is not budgeting, not on that chart, but wages, 2.7% year over year. that is where they are. they are not rising. that is one reason you have concern about retail sales. says the president is concerned about cap and wage growth. here is what he said bloomberg. >> less encouraging news in there is the wage inflation. we are still not seeing wage inflation in the united states. we are seeing wages grow at 2.5% year-over-year with core cpi at 2.4%. we are not creating purchasing power. we want create purchasing power for american citizens. the focus on trade, industry,

creating jobs and making america a country where everyone wants the fed keeps hiking rates more and more, if it does that this year, if at some point trump and his team will say why are you hiking rates when wages are not rising. we are not hearing anything like that yet. french elections, those results have removed one source of financial worry for banks, for ecbhere more room stimulus? question tohe big the thing with the french elections was that it was asymmetric. if marine le pen has won and france might think about leaving , that is something the ecb had to worry about. that worry is eliminated, so where does mario draghi focus now? the economic fundamentals. some of the commentary over the weekend saying that entail you

see core inflation rising, you will not see mario draghi announcing a tapering in bond purchases, certainly nothing like rate hikes. #1131 shows you gdp along the top. you can see the headline inflation on the bottom. you can see how those nice green bar suggest that growth is picking up. is alsont pmi index looking good. , one point 9%, core is only 1.4%. reason why mario draghi may want to sit tight for a while. there is probably some pressure on mario draghi to take his foot off the accelerator. >> you were at a monetary policy on saturday. the governor, governor kuroda, spoke about inflation and got a

good laugh at the same time. he even laughed at himself in his remarks to the people assembled at this high level panel. he said i am doing my best to push inflation to 2%, but japan periodcaped a 20 year inflation. by 2018. how far does he have to go? #7492, the yellow line, that is the core cpi for japan and takes out food prices. it is 0.2%. most economists i have spoken to say that may not happen for many, many years, but the point is that governor kuroda says inflation expectations are sending a signal and we will not stop until we get there.

prime ministers shinzo hobby has a step up on the fiscal side, and that is were a group come to boost that inflation rate higher. one of the most optimistic central bankers out there. thank you. let's do a quick check on the japanese markets, catch-up rally in japan after coming back from that three day holiday. we are above 1.3% for the nikkei, 1.8% for the topix as we ye 20,000 for the nikkei 225. the yen recovering from a one-year low against the euro after the french election. more to come on bloomberg television. ♪

>> i am betty liu in new york. this is "daybreak asia." >> time for a look at what is coming up on bloomberg markets. , we are past the hurdle on the french elections. china trade. we will be looking at the french elections as well. a former deputy governor of the

bank of ireland coming to join us. we will look at what is going on , the pressures on eu, france. that's about 45 minutes from now. >> you will be watching the win in fax from the france, but also china trade numbers as well, right? rishaad: that's right. theill be looking at figures coming out a route 10:00. reliable as as those ones in terms of timing. that is between 10:00 and 11:00. we are expecting 35.2 billion in terms of this trait surplus, april trade figures. expect april activity to anerate it is should be

indication of notches how the domestic economy is doing, but when you look at export numbers, how the global economy is doing as well. >> that's right. we are watching some big macro events, the budget tomorrow in australia and the results in korea. >> looking at what that means in terms of ratings. we will talk about that election in south korea. looking perhaps at this long-term impact of the french election and the australian budget as well in the mix. that is all to come. ♪

haidi: i am haidi lun in hong kong. rishaad: i am rishaad salamat going to from bloomberg's headquarters in asia. this is "bloomberg markets: asia." ♪ asia-pacific stocks climbing, japan hitting a 16 month high, investors positive about global growth. rishaad: china's foreign exchange reserves strengthening for a third straight month. haidi: