♪ >> china's latest hong kong connect started today. giving access to the $10 trillion bond market. betty: what is next for slowing inflation? what is on the back burner. confusionertainty and as they attempt the nationwide sales tax. india, andw dawn in

singapore thinks the people see the prime minister's family feud is damaging the city. haidi: hello where it is just past 8:00 a.m. this is a break australia. we are two hours away from the open of the first major markets. betty: it is past 6:00 p.m. in new york. we will look at all of wall street on friday and how it will play into the asia-pacific trading day. kind of an unwelcome gift was given to investors right before the long holiday weekend. the selloff in tech shares really dragging down the index, speaking the markets at the beginning -- spooking the markets. we are passed july 1. let's take a look at the second half of the year. will we see is global stocks that we have have been the best-performing asset class out

of all of the others, gold, the euro, dollar. we will see if the technology shares volatility continues. we will see if that is the same for the second half. and i think we are having problems with your sound. in the meantime, look at how u.s. stocks have ended on friday. let's pull up the board. up 62p up 0.1%, the dow points, the nasdaq trading, ending as flat as i mentioned. technology shares taking a beating friday, dragging down all of the indexes. kind of nice to know i was talking to myself. in asia, let's look at how the asian stocks are going to trade. you can see the mbi 50 up about 0.1%. pretty much know movement in the

kiwi. -- no movement in the kiwi. up 0.4%.tures the aussie looking so flat. global stocks are the biggest and best asset class. gold futures not ranking too far behind. gold futures trading flat. crude oil prices are rising. you can see the others are slightly down. get to first word news with rosalind chin. rosalind: the japanese prime minister shinzo abe faces one of partyggest tests of his as they were beaten in an election in tokyo. they could have the lowest number of seats ever in the capital. the opponent could take 50 seats.

executives have called an emergency meeting monday morning. president trump is calling leaders in japan and china to address north korea's nuclear ambitions. he will speak to xi jinping and shinzo abe ahead of the meeting in hamburg. they have become a strident about china's need to raise its efforts as well as trade imbalances with japan and south korea. calling on germany's g-20 partiers -- partners to seek win-win solutions instead. they should forge common policies that benefit the global economy. she also warned one-sided goals can leave irreconcilable consequences. india has gone for a week of confusion. they are attempting to navigate the new national sales tax.

marched 29 states and 1.3 billion people in a single market for the first time. many shops were closed, as shoppers stayed away, deterred by the price changes and uncertainty over how the tax will work. this australian company pulled out of the sale after tpp capital with withdrawing. fairfax is expected to tell the affect it ended the equity process and will proceed with its own strategy. they were valued as $2.5 billion. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am rosalind chin. this is bloomberg. ♪ haidi: thanks for that. it is lift off for the china-hong kong connect to a gram. let's get to the chief asian correspondent.

more details on this. this comes on the edge of a weekend of commemoration of the 20th anniversary of the hong kong handover. in terms of timing and significance, what are we looking at? it is long-awaited and significant, another step in china's opening up and integration. it is something that had been in the works for quite some time. it coincided with xi jinping's visit here over the weekend. it is hard to believe it has been 20 years, but it is, now it is awkward and upward. we will get to geopolitics in a second. this is the economics side of the visit. china's bond market is number three in the world, $10 trillion of worth. only less than 2% are held by

foreigners now, so this will initially open up china's big bond market to overseas investors through the platforms here in hong kong. goldman sachs, they estimate more than $1 trillion, u.s. dollars, in the global fixed income investment, it could be advocated to chinese domestic bonds, because the next decade. .hese are a bit of baby steps we don't know how fast this will go, but over the next decade, there is an estimate of $1 trillion global fixed income investment. as foreigners look at the bond market, they have had limited access for the foreign investor programs and the rtp, the renminbi jim nominated -- denominated. they had access for a limited number of reasons, like china kept control of their capital markets. there are also corporate

government stuff, ratings agencies. they are very different than the west, not as much transparency on the issue. there is still lots of concerns. and up until today and beyond, issues about repatriating their promise as well. a lot of issues that need to be resolved and give confidence to foreign institutional investors. it will be a slow process. launch it, then solve the issues after it has been launched. so the executive and some pretty strong words from xi jinping when he was here. some of for us will be heard. -- sum up what we heard? stephen: you could say the iron fist, because he offered promises of great prosperity in hong kong, the line and also cozies up to the motherland.

he also used words like red line. the red line that is impermissible to cross. that basically means any kind of undermining of china's rule of hong kong. he was quite firm in that way. he also talked as well about the challenges. people'sof the young is thesfaction inequalities, the wealth disparity in asia, and hong kong. xi jinping talked about building political consensus. good luck with that. the five new economic drivers. baking --to go beyond banking. they wanted to be a technology hub, but addressing sorry home prices.- soaring home there are a lot of challenges.

heartong is always in his , but also there is a redline. betty: sort of towing both lines. thank you so much, stephen engle on the new bond connect and handover commemoration over the weekend. we will have more analysis on the bond connects later. we will be joined by pine bridge's andrew lau. markets, weberg have this person. staying in the u.s., let's get it preview of what to look out for. what to watch. ramy: even though it is a shortened week we have a lot of stuff. let's look at monday with regards to the equities on the radar. social media, something that has

gone with our viewers in australia. patent toa grant or start peer-to-peer payments. this will be interesting in terms of how it impacts the big four banks. the $1 billionst or so. potential impacts with trading. we will be seeing what happens with facebook shares when those start trading in the u.s. -- wynn, macau, this is because of macau gambling revenue. #btv 7382. on the right-hand side, the green bar chart is 29.9% in terms of a rise in gaming revenue. that is the highest since 2014,

but the estimate was found 30% rise. a lot of people are optimistic this will keep going especially after the last few years. asia,en it is monday in wrapping up the weekend. got to look at the box office. three, -- using the first or second? betty: i have not. ramy: it is the number one right now. $75.4 million in north america. sounds good but misses estimates. it is doing very well, especially internationally. something that will be a kick internationally as pirates of the caribbean. we have been talking about this for a few weeks, cross $700 million. i have lost track. maybe five or six? was $230ction budget

million. i hear this is actually better. they have been getting international milestones, $9 million in japan for the first few days. haidi: sounds like you need a movie night. it is a shortened week because of july 4, but fair amount of data. ramy: let me walk you through this in terms of a timeline. monday july 3, it is a shortened trading day with the new york stock exchange ending at 1:00 p.m., but we have june pmi, estimated to come in at the same pace as may, 51.2%. sales, have june auto expected to fall. not good news. july 4, the stock exchanges in the bond exchanges are closed. then looking at wednesday, the

fed releases minutes for the fomc. we get interest rates. you can follow that on tliv . here.oming possibly 175,000 jobs. a lot of stuff to look forward to, but with the big data, it is coming either at where we have been or at least a little bit better. haidi: thank you so much. as theemains defined deadline looms to meet saudi arabia's demands. what it means for energy markets. this is bloomberg. ♪

♪ haidi: i am haidi lun in sydney. betty: you are watching daybreak australia. qatari stocks fell the most in

the middle east as the rift with gulf neighbors shows no sign ahead of easing. qatar says it is not willing to concede to any of the neighbor'' 13 demands. we have more from dubai. >> the region is holding its breath as they try to comply with the demand listed by the saudi's. the minister has chimed into the debates once again, and understand qatar will not be making demands but interfere with the sovereignty. they also pointed out there is a list of demands that are designed to be rejected. that raises the stakes and also the question as to what happens now? what kind of additional sanctions can we see from the saudi-led alliance? we see the uk's biggest banks

have stopped dealing with qatari money. this is coming off the back of projects, but they have not identified a supplier. seeing in terms of loading when it comes to this, that is still operational and normally. haidi: that was the latest on qatar. multiple signs that prices are easing. the metals had a late june rally. let's look at the prospects. here is the senior commodity strategist. great to have you. because it with oil feels like this will not happen.

u.s. shale.mined by >> it is playing out. the high inventory, it means a lot of work has to be done. clearly the markets are impatient with the rebalancing. part of the fact of the lower prices i think over the last marketr two has been the letting everyone know they are not happy with the rebalancing. they need pressure on the parts u.s. shaleet the produces to slow down the response they are seeing at the moment. they hope those inventories come down. haidi: we had that sort of collapse in oil price at the start of the peak season. there were some concerns the data was mixed early on.

i suppose that added to the concerns of high-volume inventories, but we have seen positive data coming through. havee gasoline inventories come down aggressively. we have also seen other data, particularly supply-side in the u.s., showing we are starting to see that growth that we are experienced in the past two months to ease back a little bit. haidi: where are we heading? we have gone back to all market. if the demand side that strong? daniel: the market is torn between the longer-term and the concerns around weakening demand, but in the shorter term, infrastructure led fiscal spending in china is right boosting short-term demand. it is finding the point where

that starts to slow down enough to weaken the market, but at the moment we are seeing prices , we are0 a time -- ton ok in the short-term to keep the high cost material in the market to supply that. betty: do you see any change at all in chinese consumption of iron ore, of inventory, iron ore inventories? it is interesting the dynamic around the inventory ports in particular. we suspect a lot of the material that has found its way there is grade.ely low some of the indian stuff reemerging in the past few months but some of the domestic as well. that brings to question whether all of the inventory is really

wanted by the market. you could argue the higher quality of iron ore that would be sitting in the ports is significantly lower than what inventories are. that could present a much tighter picture as the market does not want to purchase or have available everything that clearly is at the ports at the moment. it is a tad higher than what the industries etc. just. -- inventories suggests. bring upwant to another chart. if we can go back to oil prices and where it is headed in the second half, this is g #btv 582 on my terminal. this is oil from a technical perspective. just showing how we have the same phenomenon back in 2015 where the 100 day moving average which is the green line is falling slightly below the 200 day moving average.

people who are looking at this say, that could be the start of another slump in oil prices that you saw in 2015. do you think conditions are the same as 2015? probably not. we are on a downward trajectory. everything looked failure -- family negative. we have a broadly positive background. granted -- good growth, developed markets, emerging markets in china. we are still seeing positive growth there as well. i think the environment is slightly different. but clearly the technical, the issues that were -- we are delving with, the inventory, stockpile still has to be dealt with. you cannot rule out a further

dip lower. looking at the markets try to find that pressure point, certainly on the downside. the environment is different from what we saw in 2015. betty: do you think any of this can be alleviated by the u.s. pulling back on an even number of rigs that it had or shutting down the shale. are they getting too much output out of each one, that story is going now? i think it is still very important. we saw the first decline in the after abouthe u.s. 23 weeks of consecutive games g --ains. -- gains. and they revised oil production. it looks like it is starting to

react certainly. pickup inlot of the u.s. market was want protection from anything else. these prices are having impact. mark: thank you so much. senior banking group commodity strategist. much more ahead. this is bloomberg. ♪

haidi: a quick check of the business flash headlines. a sentimentnlisting industry. deal may be made this week, but toshiba is discussing whether the straight sale would be preferable. have been held with several potential buyers including goldman sachs and canada's next group.

people have pleaded not guilty related to the fukushima disaster. the former chairman and several others apologize for the disaster but don't bear criminal

haidi: it is a: 30 a.m. in sydney. futures showing upside in the trading week. they are trying to recover from the 1.7% decline on friday. i am haidi lun in sydney. betty: i have betty liu in new york. you are watching daybreak australia. let's go to first word news. the stock market fell on its return to trade after they would not accept any demand proposed. monday is the deadline for the 13 pacific demands which include and al ties with iran

jazeera tv network. they say they are not afraid and are prepared to face any consequences. i will plan a deal to develop the biggest gas field -- iran will plan a big deal for the biggest gas field. they will control 61% of the project while the other group will have 30% and another one 19.9%. iran's section of the world biggest gas deposit which shares with qatar. the trump administration is considering separating the repeal and replace components of abolishing obamacare. the president wants to pass the bill soon and is trying to convince the public. mitch mcconnell pulled the senate health care bill from consideration facing opposition from conservative and moderate republicans. the u.s. navy has sent a guided missile destroyer to an island

in the south china sea in what some see as an indication of displeasure at failure to rein in north korea. kilometersithin 20 of land claimed by china and vietnam. trump will meet xi jinping in hamburg. macau missedes in estimates. the city sought 11 straight months of increasing revenue, up 20% to $2.5 billion, but economists want to a 30% rise. gaming stocks rallied 30% this year through friday. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am rosalind chin, this is bloomberg. haidi: thank you so much. let's get an update on the markets as we set up for the brand-new trading week.

looking at trading, it is up about 0.1%. futures in australia shaping up for a bit more positive after the real estate selloff in the friday session going into the rba meeting on tuesday. we are seeing the dollar hold at 76.92. policymakers have been concerned by the expectations we will see downward pressure on the aussie dollar. rate hikes have not materialized. we will get more with adam, but pretty strong moves when it comes to dollar-yen and euro-yen. weekend elections, been looking at sterling. the u.s. 10 year, 3%. we are a little bit. some data coming through with the u.s., the s&p 500 closing 0.1% up.

trading in asia, we look at adam haigh. talking about the moves in the yen, some political moves we are seeing in japan. yeah, it is all about the assembly in tokyo, and this is one of the latest hurdles shinzo abe has got to clear. a lot of turmoil he is building around him. assemblyre this election, there was talk with you would need to redo his cabinet. people have been making predictions that will happen in august or september, so we are seeing strength in the yen-dollar, but it has come back a bit. so don't go too overboard on the move. storyis an interesting where the advisor to shinzo abe,

his indication that he thinks doernor kuroda should not another term. but some of the pressure the economy faces. japan trying to find inflation somewhere. it has been a tough year .or any dollar bull history tells us it will get even worse. it does. this, 697, it shows us the picture of how poor performing the dollar has seemed this year. this is tracking the dollar against the economic surprise index which we know report after report just disappointed investors. it has been flowing. history suggests the dollar will continue in a tough run for the

rest of this year. we have heard lots of doom and gloom in the context of people's relative failure to places like the euro and what is the broadening of the recovery. some are still keeping faith, j.p. morgan is in that camp. they see the market is underpricing, a chance of another fed rate hike this year. we have a fairly quiet start to the week with the closure of the fourth of july holiday tuesday and plenty of people taking the day off. then we go up to fight a payrolls the monthly jobs report in the u.s. there is a little bit of grappling in the immediate short-term, but going into the payroll, that will be pretty huge. thank you so much. adam haigh looking at the

markets. the conservative bank has been at the forefront when it comes to ending monetary stimulus. but can janet yellen stay in the lead if inflation keeps slowing her? kathleen hays with more, inflation dropping. kathleen: it increases the conundrum, they say, because unemployment is low, the economy has gotten stronger. not only is it not getting closer to target, it has fallen the past three months. consumer spending also looking on the weak side. here is a chart. if you give me a second -- there we go. because -- 2589. this was the personal spending and income, these are the numbers that watches closely. -- the fed watches closely. the turquoise line is down to 1.5. they got down the first time in

five years. , but not as abrupt steadily lower in the core inflation rate. , the odds of a rate hike are also coming down pretty substantially from where they were earlier. what we have now is the world interest rate projection. expected inno hike july, no press conference, but september, gress what -- guess what we see the bonds have already declined. the odds were down 16%. september here, just over a one into chance. that is a coin toss. not reallyis believing this. one thing you have to keep in mind, what this is telling you, people see the fed starting the

balance sheet unwind in the second half. jim bowler takes it makes sense to discuss it when there is september. this moves stimulus. a that is one reason that if we hike, we don't in september, but the third is in september. 14thinutes of the june 13, meeting, we will see a lot of debates unfolding. betty: that is right, we need to find with the fed is using to justify raising rates and inflation. all of the voters were saying, it does not move higher, that is an issue. one thing, it is a detail, but important, people with three hikes say one of the reasons that inflation is so low, a few months ago there was a change

with mobile phone contracts. people are paying less for data. it was not just a one-month effect. that is supposed to persist. the other one, unemployment lows . when employment gets low, inflation goes up. that is another thing they are counting on. but another thing that came out of that spending and income reporting, income jumped. hopefully that will boost inflation, but returned from the news story will show something interesting. a lot of the jump in income came from a big jump in dividends. one analyst said cost levels and dividend payout, 4.8. see that orange? they are so tiny. dividends don't change that much. 14% jump. the turquoise's wages. in the month of may, that was

0.1% increase. a big jump in dividends. usually it is wealthier people. people that live paycheck to paycheck, wages and salaries, that is not doing much. so maybe spending will have a problem, but another thing to put doubt on, the fed's confidence will rise. raimi talked about this, looking at the average hourly earnings will be interesting. haidi: also very interesting, developments politically with shinzo abe and what it means for abenomics. we would get the survey from the boj what are we looking at? kathleen: it is very important of large manufacturers and large services. here is a list. coming out in 7:00 from daybreak asia, there will be the survey

that talks to all large manufacturing and nonmanufacturing firms, stimulus expecting more. this will boost the numbers for all of these opponents. spending planste are in focus because there is concern about recovery is sustainable. the bank of japan meets july 19 and 20. they will develop their monetary policy plans. stories over the weekend and a suggesting they lowered their inflation target. people wonder how the forecast for getting the inflation target, they may stretch that out. people are calling this optimistic, saying it will be more realistic when it comes to mapping that out. but the focus in asia. haidi: not more pessimistic.

you.een, thank you can get a roundup of the top stories you need to know in today's edition of daybreak. abe in crisis following the upset in tokyo elections. this is no for natural elections. to get to this, subscribers can go to dayb . settingslso customize you only get the news on industries and assets you care about. this is bloomberg. ♪

♪ i am haidi lun in sydney. betty: you are watching daybreak australia. fairfax media expected to press pause, expected to tell the australian stock exchange it has decided not to proceed with an offer for the company.

brett foley has been tracking this from melbourne. why have the management call off the sale? reporter: thanks. gave both private , access to thes books. the fairfax manager so they were unsolicited, they came in from ppg and alan friedman. they decided it was not good enough to allow access to the books. they have had six weeks to access books, and when it came to the deadline on friday, they ,ad not submitted a formal bid and the fairfax management setting up disruptions. they have a strategy and management they have to continue to run out. we are gone for the benefit of

our investors. betty: what about private buyers? it looked like a competitive auction. .rett: it certainly did that is a good question. we don't know too much as to the real reasons either of the bidders have put forward for the company. they are both resource companies, they look at lots of opportunities around the world. fairfax investors will be hoping that there was not something that i looked at in the due diligence process. they can give examples to decide to not submit a formal bid. fairfax has that across print, radio, a new real estate website , listing the business domain. businesses are varied. what they pulled out for, we don't know. we could see the impact on the

share price, it is dropping away. haidi: where does this leavehaidi: fairfax's business? brett: it is a good question. outlets aremedia facing pressures. they are facing competition from digital media and elsewhere. and fairfax has gone around job cuts in the last three or four years, cutting journalists and costs. the main blanket strategy is the domain real estate business. it is a growth engine for the company, and decided they would and maintain unit ownership of some of it. rerate's that company and creates value. it will create earnings to some of the newspaper assets and

radio assets. it is a tough advertising climate. only time will tell where fairfax management can pull off that strategy. haidi: only time will tell, thank you so much. let's get a quick check of the business flash headlines. the australian financial review said facebook has been trying to get payments by the messenger service. acrosss, it was filed second markets. a of part comment whether they will launch payments and the australian markets. betty: alphabet said the e.u. entry test -- antitrust fine will cut profit by $2 billion. this will expect net incomes of 5.8 alien dollars. -- $5.8 billion.

google is pushing its own shopping services. the third installment in universal's despicable me series topped the box office. it was not impressive for what forbeen a series of duds hollywood. he missed expectations. they had expected to take $89 million. baby driver was second. still ahead, singapore's prime minister in parliament with the family feud over who damaged the city state's reputation.

♪ betty: good morning. i am betty liu. haidi: i'm haidi lun. you are watching daybreak

australia. the prime minister will talk to the parliament after the quarrels been in the public sphere. he has been accused of abusing his position to advance a personal agenda. our chief international correspondent for southeast asia has the details. it is unusual for singapore. what is it all about? clausea: at issue is the in the will. if stipulated the family home be demolished after his death. the younger son and daughter say the prime minister is trying to block all move to exploit their families legacy. the prime minister has denied all allegations and has apologized to the public, also set up a cabinet committee to consider options for the house. he will address parliament's. this started a few weeks ago.

his younger brother and sister issued a joint six-page letter saying they lost confidence in their brother. they accused him of using their father's legacy for political gain, and he had political ambitions again. are dispute.laims i have been simmering since the death three years ago. bad for singapore, but what about the financial market? have we seen any impact? haslinda: it has not. this is most unusual, unprecedented for a country that places a lot of care in preserving stability and incorruptible face. there has been little reaction to the threat. say there is a drop in confidence in the leadership,

but it will be not affected immediately. the ruling faction boosted its grip on power in 2015. it secured 83 of 89 seats up for grabs. no threat of that happening. thank you so much, and we will watch how this unfolds in singapore. haslinda amin. let's go to south korea. the south korean exports rising to the eighth month in june, helped by the surge in demand for semiconductors, shearing. 16% from a year earlier. 16.9%.ian estimate was seoul is one of the first to report trade each month, showing global demand. we just saw mr. moon meeting with president trump and a lot

of questions between them on what to do with north korea. seemedwhile a big topic, to be a sort of a second seat. is 8394.t it shows you despite the south korean won rising in the last few years, exports have continued to rise, increasing the trade deficit with the u.s. it is a big issue for that united states, not as big as north korea. haidi: certainly, there is a sense in his currency manipulation. you have the inverse correlation won and thekorean surge. that is almost it.

betty and yvonne are up next with daybreak osha -- asia. we are counting down portions of the summit in hamburg for the g-20 as they meet. it will be one of the most contentious meetings among the g-20 nations after president trump sidelined himself from the rest of the g7 a few weeks ago. they are focusing on north korea as well. president xi and president abe will talk with trump is worth asian tensions rise. betty: also we will get more on the tankan survery affecting the quarter, out in less than an hour's time from now. has beenee what happening with the manufacturing and nonmanufacturing sectors. also the acute labor shortage and what that means for wages. haidi: we are watching the bond

connecting to hong kong and china. we will speak to someone from whoooo. you're searching for something. like the perfect deal... ...on the perfect hotel. so wouldn't it be perfect if there was a single site where you could find the right hotel for you at the best price? there is. because tripadvisor now compares prices from over 200 booking sites... ...to save you up to 30%... ...on the hotel you want. trust this bird's words. tripadvisor. the latest reviews. the lowest prices.

♪ >> stock futures signaling gains in the asia-pacific. japan in the spotlight after shinzo abe's tokyo drubbing. winning, thee worst ever performance for the ruling party in the capital. >> china's latest hong kong connect starts today, new access to its $10 trillion debt market. what is next for the fed? slowing