paul: welcome to daybreak australia. i am paul allen. shery: i am shery ahn. kamaruddin. sophie we are counting down to asia's major market open. paul: here are the top stories we are covering. the dollar strengthens as scott morrison cools off the win. they are seem as the better economic bit. thes in india, suggesting

ruling party could get a majority. a rare rebuke, toyota criticizes president trump on auto tariffs saying its massive investment isn't welcome in america. you looking att the markets, we saw u.s. stocks falling for a second consecutive week. the s&p 500 falling for the first time in four days, tech stocks taking the brunt of the selling last week as we continued to see trade tensions around china and huawei. we have chipmakers feeling the pressure. the nasdaq was down 1% as we see headlines around the band of why way into the u.s., not to mention steelmakers were feeling the downside pressure as the president removed his steel and aluminum tariffs on canada and mexico. look at what wti is doing, in the last session falling toward $62 a barrel. crude is greening -- gaining

ground. we did hear from saudi arabia and other opec allies that they are committed to continuing to restrain supplies for the rest of the year although it is less where russia stands in all of this. u.s. futures are higher by .1%. let's see how we are setting up for asian markets as we have some closed today. not a full set of markets but futures pointing to a mixed start. japanese stocks could inch higher on gdp data day. and in sydney that victory could see miners and builders among sectors that dress rally with policy uncertainty removed from the picture. and we could also see a risk on mode sentiment. this one will likely support miners in fortescue surged 7%, a 2008 hi.ains to

looking at the aussie dollar, it did jump in early trading above $69, rising from the january at low but paring gains as traders reload short positions. next up the speech on tuesday will be key for that currency as a remains sensitive to easing bets and trade risks. paul: let's get to first word news. polls start with the exit in india which suggest narendra modi is heading for victory and his bjp may even when the outright majority. in alliance could take 350 seats, well over the 700 and 22 -- well over the level. it was suggested they would win in 2004 and they underestimated the size of the congress victory in 2009.

in china it has warned the u.s. negotiating on equal terms is the only way to solve trade issues. the foreign minister spoke to mike pompeo over the weekend saying washington has a harm to beijing with words and actions, restricting people with normal business operations. china is prepared to negotiate but will only defend its interests. jeremy corbyn is moving closer to backing a second brexit referendum, saying the public should be given a choice on any deal to leave the european union. theresa may's government broke up without an agreement with each side blaming the other. the prime minister still hopes to put her brexit bill through parliament next month before stepping down. the japanese government is losing majority over its planned sales tax hike. two thirds of people surveyed by

kyoto news said they opposed the move and they support the race of prop -- the prime minister. shinzo abe has already that already backtracked twice on the move amid fears of a weakening economy. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. thanks for that. let's get back to our top story, australia's center-right government is getting back to business after its surprise election victory, going to pass signature tax cuts to shore up the economy. our editor has the details. the polls had them short in the lead. all went sideways. no one saw that coming.

reporter: it was a huge surprise on the night and it transformed scott morrison who has only been at the helm since august into a hero. saysfront-page newspaper messiah from the shire and has him on the [indiscernible] yesterday afternoon waiting to well-wishers. he did an incredible job during the campaign tearing down the most progressive policy agenda the party put up in decades. clearly the negative campaign strategy worked for him. australia we talk about them not having a recession in 27 years with envy but we see this detailed acceleration in the economy. momentum.s have lost presidential price index in the

red now, the bottom panel right there. what are the challenges the primacy will face? ed: scott morrison does have economic challenges looming. nation is saddled with record amounts of debt. wage growth has been stagnant, and the economy is slowing. the rba is increasing pressure -- is under increasing pressure to cut rates. paul: ed johnson, thank you. at --we can take a look let's bring in another expert australian in politics. we have this lecturer in politics at the australian national university. she joins us from canberra. let's deal with the result. even liberal party strategists were admitting thought they were gone. scott morrison calling it a

miracle, but it is not an understatement. >> absolutely not. i was in a room with a handful of liberal party politicians and staffers, and the mood lifted noticeably at the end of the night as it went on. and it was an incredible shock. paul: a number of areas where the labour party thought it would pick up seats, they really didn't. empty in up almost queens land. did the message on the economy from scott morrison resonate or is there something else at play? inreally what it tells us australia it is hard to craft a message that speaks to the whole country at once. decelerationmic but it is happening at different stages across the country. a fault ofecessarily

labor's strategy to come out with this policy, i think they didn't craft the message very effectively to different parts of the country. queens land, you have got an industry that is reliant on coal, a lot of employees have wholeired plants and industry generally. they are not interested in your positive messages about climate change. this will be a problem for both parties going forward, not just for the labour party but scott morrison faces this as well. shery: wage growth decelerating, unemployment picked up, this chart showing the economy from the outside may look ok but we have seen gdp per capita slowing dramatically since the modesty boom when it comes to australia in blue.

how do australians feel about the state of the economy when they look at their wallets? how big of an issue was this in this election? >> real wage growth is a huge problem. what we know about australian elections is when we are thinking about the economy we tend to prefer the coalition as economic managers. this seems to have changed where we have been talking about the economy even though it is not going so well. it has come back in the coalition's favor which labor will be scratching their heads this morning that they couldn't get that message that the economy is not doing well. when you look at housing affordability, stagnant wage growth and the cost of living, these issues should have gone in labor's favor and they have not at all. shery: president trump was

pleasantly surprised. regulations to scott on a great win. -- congratulations to scott on a great win. scott once called trump barking mad. what will this mean as we keep the status quote in australia for u.s. relations? it is important to remember we have nagy very centrist parties in australia, not much will change. we have a small -- strong bicameral system. labor and the greens will have a majority in the senate so they won't be able to -- the coalition won't be able to pass any major reforms without serious negotiations. relations with the u.s. i don't think will change. we will see continuity as we always tend to, but that would not have been any different if the other had been elected. paul: one thing that will happen

now is the end of the revolving door of prime minister's not only with how both parties changing the rules on how they can be replaced but scott morrison enjoys legend status in the liberal party now. what does it mean for policy certainty going forward? first of all, we will see how -- i don'tmorrison know if they are quite as united as they appeared saturday night. during the campaign no ministers appeared with scott morrison, as he was in their home electorate. this isn't a team that is strongly united on policies generally for political strategy. i think scott morrison will face the same problems previous prime ministers have faced over the last few years. already divided and party with strong socially conservative

divided andparty party with strong socially conservative elements. keen to see more social progressive policies when they are united -- policies. they are united on economic policy. during the campaign scott morrison announced a policy on housing affordability that wasn't well-received by most parts of the media and i suspect most of his colleagues. he will face huge problems once the gloss wears off. shery: thank you so much for insights. we will get more reaction on the australian election later today. we will be joined by evolution mining chairman j klein. if you are watching from hong kong it is 8:40 a.m. back withta fights

president trump's declaration that imported cars threaten u.s. national security. shery: driving stockpile growers. this is bloomberg. ♪ erg. ♪

paul: we have sydney futures pointing modestly higher after the sensational electoral victory for the coalition government in australia over the weekend. let's see how the futures progress as the sun rises over sydney herbert. i am paul allen in sydney. shery: i am shery ahn. oil prices are likely to be a focal point in the week ahead on wall street. saudi arabia and other key opec producers signaled their intention to keep oil supply constraint for the rest of the year. russianot quite sure how

views all of this but right now it seems oil is responding well. su: we have had a lot of opec plus nations meet in saudi arabia. saudi arabia's minister coming out supporting keeping the course or staying the course, russia indicating they need more time. check out how oil performed last week. new york westpac intermediate, a wild ride but it managed to post gains, very interesting to see if this would affect uncertainty or the support for the rollover of current policy. let's listen to what the nigerian minister said about what it takes to keep it in place. unfortunately we have technical difficulty but i believe what he was saying was what it takes to support the rollover will be a group decisions they want to

keep prices where they are. very interesting to look at the price of oil, west texas intermediate to date and it is -- year to date and it is still up 38%. what the saudi and esther said was they need to stay the course not just for weeks but months to come and are not buying the fact the $71 oil price in brent, crude in london reflects the current market. they believe the market is fragile. west texas is up 38%. there is continuing to be support. unravel,is were to russia may have the cards on this which would change the direction of oil for the short term. paul: let's take a look at what themes may dominate the headlines, president trump, trade, latest earnings, give us a preview. su: those are big ones.

we will hear from the fed, jay powell speaking monday morning when he addresses a seminar in atlanta and also getting a release of fed minutes. i want to take a look at the way the market ended the week. oil is ticking up as she mentioned. it is currently trading, reflects positive reactions to what we are hearing from saudi arabia. futures are slightly higher. let's look at the earnings coming our way. it is a large group of earnings. a lot of them are in the retail sector, lows targeting retailers into a software company, , theynic, ship stocks took a huge hit last week because huawei in the crosshairs of the trade dispute, all of these are somehow connected to huawei either in the similar industry or directly supplying or in neoplatonic, docked 15%,

they get a huge chunk of revenue directly from huawei. those will be in focus. paul: all right, thank you. you can get a roundup of stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers can go to dayb on their terminals. it is available on the mobile anywhere app. customized local settings so you only get the news on industries and assets you care about. this is bloomberg. ♪ is is bloomberg. ♪

paul: i am paul allen in sydney. shery: i am shery ahn. you are watching daybreak australia. reports that google has suspended business ties with huawei. reuters that google will not

engage in areas that require the transfer, hardware, software except in links covered by open source licenses. the next version of wally smartphones out by china removes access to a popular app and services including the gmail app. novo is denying speculation it stopped offering products to huawei. supply is proceeding as normal and huawei will receive goods and services based on local regulations where lenovo operates. they say while huawei is an important client for their service sectors, anyone spreading false rumors may face legal action. 16ry: saudi arabia fined institutions for responsible finance principles. they enclosed this -- imposed this multi-to meet the needs of society are those facing fines including emirates here.

the central bank hasn't disclosed the size of the fine. paul: president trump delayed for six months new tariffs on vehicles imported from the european union, japan and other nations, but he said they represent a threat to u.s. national security. that didn't sit well with toyota. in an unusual statement the largest oil -- automaker said this sends a message to toyota that our investments are not welcomed and the contributions from each of our employees across america are not valued. editor ros krasny joins us from washington. how are things shaking out in the aftermath? very interesting there. we haven't heard much from other automakers. toyota is out on its own. it statement was quite significant because so many companies are shy of taking on president trump. they don't want to be the

subject of a twitter rant. but i think it kind of telegraphs the tactic companies may use in pushing back against of the idea of import closures, and there will be hearings and consideration of what to do. so i think toyota is getting out in front of the metrics they mentioned in their statement, $1 billion in philanthropic constitution -- contributions, a strong dealer network, trying to show president trump and his administration they are part of the fabric of the united states. nothing in response from the trump administration and his trade officials over the weekend but interesting to see tomorrow if there isthe week more pushback on this topic. and china have yet to set a date for the next round of talks but it seems they continue to have discussions.

mike pompeo and his chinese counterpart speaking over the phone on the weekend. what came out of that? ros: it kind of came out of nowhere. initiated thewho call. the other thing is we got an extensive readout from the chinese side where from the secretary of state office we got a terse one sentence statement to be honest. with the trade talks, nothing on the agenda except perhaps president trump may be meeting with china's resident later this month or later in june. interesting china took this kind of beyond the trade official level and up to the top diplomat of the country. they are also looking to press the u.s. on what has been happening with huawei and the and really upset

about u.s. actions as i said beyond the trade talks level and to a whole kind of national sovereignty sort of higher level. president trump is active on twitter now. in the last hour he said if iran wants to fight, that will be the end of iran. never threatened the u.s. again so the tensions not really easing. ros: they are not. we had some reporting late last week trump in his heart of hearts doesn't want to go to iowa -- war with iran, not in his playbook but what you mentioned, it was very bellicose. it seems like this could be a rerun of the fire and the fury from north korea 2017. maybe trump thinks by being bellicose he can get iran back to the table.

shery: thank you so much for that, our bloomberg news editor. escaped then economic boom? we will look at the numbers later in this hour. this is bloomberg. ♪ this is bloomberg. ♪

sydney. is 8:30 a.m. in futures are pointing modestly higher after that very impressive election win for scott morrison's coalition government over the weekend. weaker close at the u.s., futures are higher. i am paul allen in sydney. shery: i am shery ahn. let's get to first word news. su: we start with the aussie dollar which strengthened in early trading after scott unexpected victory.

the liberal national coalition defeated what the prime minister called a miracle. 6868 -- the aussie dollar was 68.68 last week. since the lowest level january. >> i have always believed in miracles. [applause] and tonight we have been delivered another one. good is australia? plus, saudi arabia and other top oil producers are signaling their intention to keep supplies restricted for the rest of the year while pledging to resort -- pledging against shortages. after talks in the kingdom over the weekend it is not clear how much russia shares that view with the energy minister talking

about potentially relaxing the opec output curves. the group must stay united. >> my recommendation to my to guides will be things down gently. to stay on trajectory of bringing inventories down to a normal level. it is why i am making sure no customer or refinery is left without a requirement for crude oil. 16 people have been wounded in a bomb attack on a tour bus. it is the latest attack on egypt's crucial tourism industry which has struggled in the .ftermath of the 2011 uprising no group admitted carrying out the attack. in december 3 tourists and a local guide were killed by

blasts in the same area. tensions are rising in the middle east as the u.s. navy conducts battle group exercises in the arabian sea to counter an alleged threat from iran. the senior military commander in n is not afraid of war but is not looking for confrontation. they say they will not hesitate to defend themselves against the u.s. a meeting of arab leaders called. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. what to watch in australian markets as they get underway in about an hour and a half, here is sophie. we have seen an early reaction to the election results

and with stock market winners, call miners and oil producers may rally with the coalitions that seem to be more friendly to the fossil fuel industry which might have been hit with tougher rules if labor had one. renewable will get less support from morrison's government. and there could be a threat to tax breaks. property investors -- there will be no change to a negative [indiscernible] which would have weighed on march -- mortgage demand. it could be a smart -- small relief value for property stocks. private health insurers may rise if they no longer have to deal , which woulde cap have dented margins and impacted private hospital operators. shouldestpac notes, this have a sustained impact on the stock market. but some of that gloss may win off -- where off once the election below wanes.

ar off once the election glow wanes. shery: how much -- paul: how much relief can we see the -- for the market? futures are not so strong. the lastyou look at half hours, the aussie was higher, which was a decent gain that much of that is already fizzled, half of it or so, only the moment. that speaks to the struggle that remains behind people wanting to get long the aussie dollar. it goes back to the economy, we are through the election uncertainty and investors are familiar with this government and know-how it operates and -- operates.t there arey significant worries around the australian economy. when we get into the governor's

speech tomorrow from the rba, we will hear more about that and the way the rba is reacting, whether or not they will give the market any more fodder for the people expecting a rate cut or more than one. that is really where we are. are out of the way but a lot of worries around the economy still remain. elections also over in india. it seems the prime minister could be riding to victory. we could see bonds, stocks and the rupee also rally. is this baked into prices or is there really room for further upside? a starting point is this is still exit poll territory. we don't get the votes counted until thursday. it is a few days until we really ind out what is happening the indian election. and the range of opinion is

still very wide, so there is a lot of people expecting a majority victory for modi and the bjp but there is still a range of outcomes. if it was a low end of forecasted 270 seats, it is different from a situation should it prevail working gets , as many as 350 seats. and then his economic reform agenda over that parliamentary term would be different because a lot of investors we spoke to going into this election and since voting has started speak to this economic reform agenda that remains quite fragile depending on the result and how much power the bjp will have to get through the reforms the economy needs. equities have had it very good this year. we have tapered off some of those gains in april and may, but the expectations are already

very high going into this. it remains uncertain the last few days until we get to the counting when we should get a decision on thursday. , thank you.haigh you can find his charts on the gtv library on the bloomberg. unexpected drop in japan's first quarter growth rates that could raise doubts over the controversial sales tax hike topped the agenda this week and the trade war darkened prospects for the export driven economy. kathleen hays is here with the preview of this and the rest of the week ahead. how bad could this be? tohleen: it is not expected be big, and the like a third quarter contraction when it fell notbut this is important just for the bank of japan but for prime minister modi -- prime minister abe. we have a lot of prime

minister's in play this week. let's look at the report, what is expected. gdp, jump in the library with me. according to our tracker, going to be negative, the question is how much. the tracker says more than 1%. our team is looking for a quarterly decline of 4.1%. you can see this quarter where we had the natural disasters, trade war tensions hit gdp hard, hit gdp hard,d then it bounced back in the quarter following first quarter. first quarter is a big question. two things are causing this negative gdp in weaker business investment, businesses are uncertain, not surprising they are not investing, consumer spending is negative, and trade, it is supposed to boost the gdp, but it is doing the boosting for the wrong reasons. exports fell but imports fell

even more. imports mean less demand. not to add to trade but the sense of a strong growing economy. bloomberg economics makes this point if we get this gdp, it will bring fiscal stimulus in to play. thation if you can hike tax in october if you are in the middle of a trade war, this is the question. let's explore that more. if the gdp print comes in negative, that is pretty much it for the sales tax hike. not necessarily. it could be if it is negative, the debate gets more intense among prime minister abe and the members of his cabinet and team. there is the upper house election in parliament. if he will backtrack, he has already backtracked twice, so will he again? that is a point we are watching

closely. japan needs to rein in its debt. bloomberg economics think they want to do this. it is the risk. you want to pile on something negative for the economy, that is a consumption tax hike at the same time trade war, higher tariffs, uncertainty if there is no deal on the table, that could affect japan's economy, exports and that is another reason for prime minister abe to say we are pausing only because there is this force we can't control. we will get back to it when we can. we have to watch trade headlines, not to mention jay .owell speaking tomorrow what should investors be paying attention to? kathleen: i want to call attention to the bank of japan governor haruhiko kuroda saying the global economy is weakening for doesn't expect it to get

worse. rob kaplan from the dallas fed said he is watching the impact on growth. soon to judge on inflation, but central bankers are watching this. fed chair powell speaking on monday about financial stability . in the minutes from the last meeting, it will be closely scoured on wednesday. the head of the ecb speaking on tuesday. the head of the bank of england mark carney also speaking. we will hear what he has to say about the impact of the endless brexit drama of the bank of england. investors, watching india's election results and the rba rate cut. everyone thought it could have cut its key rate if there wasn't an election pending. now we will see how markets react and what economists say, a lot going on. right, kathleen hays,

thank you. coming up next, video scandal has shaken austria's ruling coalition. the chancellor is going for broke in snap elections. we will update you on the political showdown. this is bloomberg. ♪ g. ♪

allen in sydney. .hery: i am shery ahn you are watching daybreak australia. as investors weighed the implications in australia and india, another on the watchlist is austria. austria is in political chaos ahead of the elections. in the u.k., opposition leader jeremy corbyn moved to fully backing a second brexit referendum. fellow,us is the senior jacob kierkegaard.

always great to have you with us. let's start with austria because this seems to bring new hope for moderates not only in the country but also europe. how significant are these developments? jacob: this is a bombshell for austria. no moreand i have information than anyone else but i find it peculiar you have a video that is clearly created and has been created for several years ago, filled with these bombshell revelations about the far right austrian freedom party, then it comes out one week before the european election in a german newspaper. somebody clearly thought very hard about how to release this video to do maximum damage, not just the austrian freedom party but probably the similar minded far right movements across europe. shery: of course.

mention to the european parliament elections, the key issue, the u.k. heading for that fall with nigel farage to give the bigger party the hammering. jacob: i think it is extremely important not only for the u.k.. it is clear nigel farage's end goal is not just to have the u.k. leave the e.u. but rather also a significant force in british trust in politics. for him coming off a big victory in the european elections is probably the best possible platform for him to enter british domestic politics, which to me suggests whoever replaces theresa may has conservative leader and prime minister ahead of the next election may have to actually endorse a no deal brexit to prevent nigel farage

from having a political breakthrough. on the one hand we have the potential of a hard brexit on the conservative side, but what about on the other side? we are starting to face down a binary choice. jacob: it is completely binary because jeremy corbyn can read coding as well. what we can see his liberal democrats, which have the or brexits bust slogan, they are positioning themselves as the principal remain party in british politics and are taking a lot of votes from labor, which leaves jeremy corbyn, even though he probably -- may prefer to leave the e.u. but politically he doesn't have a choice. he needs to endorse likely a second referendum. as we move closer to the 31, you mayoctober

have the european union telling the u.k., if you want another extension of the article 50, we will only give it to you if you promise to hold a second referendum to break this. it is very binary. paul: let's move from one seemingly difficult situation to another. when women -- will we see talks resume between china and the u.s. on trade? jacob: right now it is clear that xi jinping and the chinese leadership gave a thumbs down to the deal that the premier had negotiated. they wanted a different deal. trump projected that different deal, and you know obviously had added more tariffs on to chinese motion event in

more tariffs to come in the future. the so i am quite skeptical actually about a deal in the short-term. the one chance we have motion en more is for a personal meeting between president xi and president trump on the side of the g20 in japan a few weeks from now. but beyond that, i think in the mind of the chinese government, it has to be, trump is less than 18 months away from a potential electoral defeat. why not wait? why not wait and see? if we have to accept a painful compromise and concessions, only do it if donald trump is reelected or we will start from scratch with whoever replaces him. this also coming out a time when trump has to deal with the e.u., not to mention japan negotiations.

how much leverage does this give him or much less if he doesn't find consensus with these other regions? jacob: it is very clear for an american president heading into a tough reelection race, it is clear on one hand being tough on china has brought bipartisan consensus in washington. but starting a major trade war will notpe and japan have any support even in the republican party where there is many senators that have japanese and european car plants and other inward investment, jobs depended on these countries. i think if you are the chinese, you are thinking the more front that trump goes to war on, the less leverage he can bring to bear on us. seems a veryme it

strategic, puzzling move on the one hand you make peace canada andith mexico, but at the same time you are looking to start potentially even more damaging trade wars with some of your other close allies. in mysn't bode well opinion on the solution of any of these in the near term. as a footnote, i want to get your thoughts on what is happening with huawei. the u.s. manufacturers will be impacted by that. can you say the worst of that story is out of the way, or is there more trouble ahead? it is a big question hanging over the cfo who is still in, still in custody in canada. that is one additional further deterioration but basically trump has made sort of official what has been unofficial for

quite some time, that the united -- the government of the united states wishes to freeze out huawei from not just the u.s. market but from the sort of vanguard of technological progress by blocking or wanting to certifies technology sales. i will say given how poorly trump has done, not the least in any european countries with his campaign to isolate huawei, you have to question whether or not this is not too little, too late , and this isn't going to block huawei from becoming a leading -- the leading supplier of 5g communications networks across the world. so it can only really be seen in my opinion as another sort of reflection of the increasing, if

you like great power rivalry between china and the united states and the trump administration's attempts at severing as many economic ties between the two as possible. i don't think it is going to work. shery: always great having your perspective. -- jacobinstitute of jeffery gardner. we have breaking news of the -- jacob kierkegaard. we are hearing from sprint that they are planning to announce commitments to the u.s. government including access sales and service guarantees to help secure regulatory approval. this could be announced as early as this week. the merger has concerns of reduce the petition in the wireless industry. sources telling bloomberg promises would include the sale of one of their brands, a three-year buildout of the 5g

network andwireless industry. sources telling reiterating a pe not to raise prices while the network is being constructed your this is the latest attempt of that t-mobile, sprint $20 billion merger. we will have more ahead on daybreak australia. this is bloomberg. ♪

paul: let's get a quick check of business flash headlines. toyota has strongly rebuked declarationump's that their cars threaten national security, saying it sends a message that their $60 billion of investments is not welcome. there is a declining share for u.s. carmakers, but this could force consumers to pay more and hurt the economy. shery: china's top security regulator is under the rest and has turned himself in. the china securities regulatory commission -- three years before being replaced in january.

is cooperatinghe with the investigation. plenty more still ahead in the next hour. jupiter asset management will join us. this is bloomberg. ♪ is is bloomberg. ♪

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paul: good morning, we are under an hour away from the australia's market open. sophie: welcome to "daybreak asia." paul: top stories this monday, scott morrison pulls off a miracle win. it is seen as a bitter economic bid. having early gains. exit polls