paul: welcome to bloomberg markets, asia. counting down to asia's major market open. ♪ here are the top stories we are covering. oil faces a price war as top producers fallout. opec is free to pump at will as russia says further output curbs are a gift to the u.s. the virus in italy, 16 million people under virtual home detention. moved by the world's top bank to

end coal financing being undermined by new credit from china and japan. let's take a look at the markets now. looks like very much like the past couple of weeks although potentially more so. >> very volatile, s&p 500 futures have begun to trade and we automatically have begun to see a decline of 2.8%. we saw last week a gain in the u.s. -- the s&p but the average move was three points. .olatility is still reigning sustaining stocks losses for a second day. the safe even been coming back coming-- safe haven bid back strong. the u.s. -- the yen is strongest since the 2016 election in the u.s. a rough day, $41 a barrel for

oil. now investors are expecting more. let's take a longer look at wti crude. not even -- not only did the meeting in vienna not result in agreement, but saudi arabia has initiated an all-out price war saying they will pump 10 million barrels a day next month. some analysts are expecting $30 oil prices again, near the lowest level over the past two decades. one analyst said he sees potential for us to see some of the lowest prices over the last two decades, implying a drop to below $20 a barrel. that is all the way to one end of the spectrum and it would give you an idea how this prices would be compared to history. paul: thank you. saudi arabia's planned production -- joining us to assess the impact of as the cofounder

consulting firm sandhill strategy in washington. opec plus apparently at war with itself. where do you see oil prices heading from here? it is at war with itself, going to war with u.s. shale, something they have avoided 2016.since i think the floor is up for grabs because what the market is trying to figure out now is how low do crude prices have to fall to discourage u.s. producers from pumping more oil. we haven't found the floor since 2008. the question will be is $20 low enough? i have seen analyst commentary in the $20 to $30 range. that is taking us back to where we were in the first half of 2016 that was a major shock to the markets. it did not lead the market to directly cut production.

it is a dire situation the market to try to work out of a major oversupply with them demand uncertain as well. question, thathe is one. dure? ng will it en isour primary climate group the investor committee. for that audience you are seeing some a different pressures and risks not only on the supply side now with saudi arabia increasing production but also on the demand side. no one really knows how severe the impact from coronavirus is likely to be on global economic output. the last major uncertainty is the u.s. presidential election. we can't as of recently joe biden maybe the front runner on the democratic side but bernie sanders is right up there. the whole keep it in the ground

side of the political spectrum and this progressive focus on climate change is out there. when you look at where oil markets are and what commodity prices are trying to tell you, in a lot of ways prices can be a sort of confidence in an industry. with commodity prices low and plunging further, likely later today, that is a good signal that the market is not confident and energy rules long-term. very optimistic. paul: was there a sense of complacency heading into the opec talks? we got used to the brinkmanship, russia would extract something and then the cuts would be on again? were surprised? >> maybe the market was -- were you surprised? >> maybe the market was overconfident that russia would fail the industry out. i agree with you that that has

become a foregone conclusion which underestimates the political capital involved to keep that coalition together. beyond that, to get saudi arabia reacting the way they have so far by cutting prices, benchmark prices into europe and asia more they haven't test than they have in 20 years and signaling they could increase reduction up to 12 million barrels a day, both of those moves -- increase production up to 12 million barrels a day, both of those moves suggest saudi arabia has total control and the political leadership has total control and all of the dynamics around opec have taken a strain on saudi arabia as well. they are actually reacting to the situation foisted upon them in a rather impulsive way. one of the matter -- major takeaways is a crumbling of this

cartel that's power has been built on oil, as oil loses significance in the mobile becomesnd as demand very brittle around the risks of the virus. brent justve got starting treating now, going towards the more dire of $33 ans, off by 24% barrel. [speaking simultaneously] >> that has got to be the biggest move in a decade. paul: it is a huge move. who is going to bring first here? russia has this big rainy day fund. it is set to tough this out for some time. so who breaks first? russia or u.s. shale? >> starting with shale, the issue has been u.s. shale is not a single actor.

there are thousands of individual actors who have to reach decisions around what their production goals will be. we have seen many of the major u.s. producers signaling that they will dialback production or growth plans which has been healthy, but it is clearly not the dramatic moves the market needs to stabilize price. on russia's side, we are relatively clear where they are. as you said, they can whether through someather the diverse prices. saudi arabia is in a position somef trying to instigate pressure on their fellow opec nations, remind everyone else in the cartel and maybe even russia how important it is these countries which can plan production work together.

saudi arabia has been the since 2016. opec there is not so many other countries in the opec cartel that can agree to cut production , venezuela, libya, so many of these countries have come under political pressure and have a lot of destabilizing elements. there is not a lot of other figures behind its -- besides saudi arabia that can agree to lower production. it is a bit of an impasse but i would not be surprised to see be surprised to see emergency sort of opec sessions later this second-quarter especially if the virus-infected -- impacted still is still accelerating. paul: that is another complexity, holding a meeting in the environment. who are some of the other winners and losers? is the happy with this.

the saudi aramco not so much. rosneft and alexander knew going into the meeting they were going to say no to the present cuts. then you going in this was going to at least lead to the crumbling if not dissolution of the opec plus group. they had to be prepared for some kind of reaction. what i have been working with our clients on and we have been focusing on is looking within the boundaries of north america, looking for value opportunities that are focused on catalysts which are not contingent upon global macro issues like coronavirus and like opec. looking at -- we have seen the marsalis drillers, the gas drillers outperform because of the presumption that less associated gas production will take the heat off of low natural gas prices.

looking at groups like that, companies with lots of existing infrastructure and cash flows, there is some overlooked spaces in energy that have gotten beaten up with the rest of the complex, energy overall, friday down 40% in 2020. that is incredible, the only factor in a bull market. this is an environment where kind of everything is getting beaten up area that is not rational. there are pockets of value especially for companies that have existing production or capacity. you forl right, thank joining us on what is one of the big macro stories of the day. we will have more analysis on the energy sector. i am joined by a new guest. to recap some of the big moves we are seeing in the oil markets

now, we have brent off of more $34 a0%, currently barrel. west texas also off. $31 a barrel. sachsg at the goldman recalibrated second-quarter forecast of $30 a barrel, huge moves in oil markets this morning. let's get on to the other macro factor. that would be coronavirus screen we have the u.s. state department -- coronavirus. we have u.s. state department morning citizens with health issues to avoid cruise ship spirit that is adolor from the u.s. state department -- cruise ships. that is an alert, u.s. state department. in italy the virus is surging as well. let's get over to man. the situation in italy is starting to deteriorate. yvonne: perhaps that is why we saw the big locked down over the weekend. when it comes to the number of

the biggest numbers outside of china and even surpassing south korea, the 366 deaths reported in italy and cases topping 7300. that is why we are seeing 17 million people in 14 provinces under lockdown. talking big cities like milan, venice and much of the country industry, that is under quarantine. now we are seeing this spread across europe with health officials in france saying large galleries or banned -- gatherings are banned. there are first cases in the u.k., greece, the netherlands. we are monitoring the situation with the grand princess cruise ship with more than 20 crew members and passengers that tested positive. that is set to dock monday in oakland. sunday, talking about half of

the world's countries have seen cases of covid-19 and the death toll outside of china beyond 700. china export numbers out, plunging more than expected in january. some seasonal factors but what are those numbers telling us about the virus? yvonne: this is the first two months of the year. usually they are quite volatile with the lunar new year but now you see this start from the coronavirus outbreak, the effect from this virus. it was pretty bad. exports for january and february falling 17.2%, imports not as big of a blow but still contracting 4%. that could be a lag when it comes to imports now. we saw a surprise and swing in the trade balance to a deficit of $7 billion. perhaps the trade to visit is a -- trade deficit is a temporary

one. businesses in china could start toresume work and come back capacity and exports could rebound in the coming months. given the fact this virus has spread to china's trading partners, the external demand outlook looks dicey. thank you for keeping an eye on that for us. we will be speaking with the later onresentative today. he will give us an update on the spreads as reported cases slow sharply from the epicenter. don't miss that interview. let's check in on first word news with karina mitchell. >> oil traded in london lunch dust plunge the most since 2008 as opec and other leaders' talks collapse. ministers left vietnam without agreement. the cartel is free to pump with saudi it -- saudi arabia expected to flood the market with additional supplies.

russia said the two american shale producers. china's exports fell more than expected in the first two months of the year as the coronavirus led to an extended lunar new year break. it disrupted transport and supply chains. incoming shipments fell by more than 17% in dollar terms from a year earlier. that left a trade deficit of $7 billion for january and february. reports from riyadh reveal saudi authorities have begun releasing royal family members and others detained amid security clampdown's. as was ordered by the crown prince mohammed bin salman and included a brother and nephew of his father. at least two of the dt -- detainees were accused of treatment -- treason. this is concern for challenge within the family. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. paul: thank you.

we are going to be joined by sarah hunter of expert economics to discuss the -- oxford economics to discuss the week ahead and oil moves on the global monetary policy. let's get a quick check on the oil prices. 20% for brentthan crude and west texas, already plunging towards $30 a barrel. this is bloomberg. ♪

paul: if the coronavirus was imposing enoughraders, now we have huge moves in the oil price to contend with. it appears opec plus now at war with itself and u.s. shale drillers failing to reach an curbs.nt on we are seeing a huge downward move in the oil price in early

trading to get the week doing. we are better -- where better to start than with the chief australian economist from oxford economics. superseded, this on top of everything else. what impact is this going to have on the macro picture? it is printing out into the financial position in the macro. it continues for a while and we don't get any media blink from fromide -- immediate blink one side to the other. from a macro picture, it is generally supportive buffer and that -- producers but this can be helpful. how hopeful it is in the near-term remains to be seen given coronavirus is going to restrict activity no matter what the oil price is. doesn't help if you are on lockdown. if we saw this continuing into the second half of this year,

potentially supportive in terms of activity. not great for inflation, but this is the right kind of miss, if you like. it is a fast-moving thing. we will have to see. paul: president trump always said he wanted cheap oil and sheep money. he is now getting both but not in the circumstances that -- >> no, indeed. it willu mentioned create tailwinds for some emerging economies but others that are net energy exporters, this could be calamitous. >> just starting in australia, lng exports, they are tied to the. oil price moves, that is damaging. but across the region, this is going to be a real struggle. the government will have to manage that area in the context of lower revenues and wanting to to offsetscal support

coronavirus, tough decisions to be made for some economies in the coming months. paul: we had bets that central banks would ease further around the world. we have a chart on the bloomberg terminal which illustrates the line you see at the top, that is the fed's but other central banks are likely to follow suit. how useful is monetary easing in a situation like this? >> it is a good question. not particularly for the immediate shock. we had that from jerry powell, but rate cuts don't prevent the spread of the virus. they can't offset any of the immediate impact from the lockdown. you can't know to work, you can spend and get your economy -- can't go to work you can't get your economy going. governments want to reduce financial stress in the system as much as possible and once we get to the acute phase of the ands, the outbreak

conditions certain return to normal, there will be a platform for growth and economic normalization to occur more rapidly. for right now there are particularly -- they are particularly impotent. what would be more effective is some kind of fiscal response. times have you rewritten your forecast? >> quite a few times in the last couple of weeks. we will be looking to rewrite it again because of the announcement yesterday in italy of the lockdown there. of the thinking about, should we expect to see that response in other economies and what does it mean? it is an uncertain environment. you can come up with a wide range of ways this virus plays out. just challenging for economists like me and financial markets. you don't know which way things are going to go. it makes it hard to price anything now. we are seeing that in the market

with wild oscillations that are coming through. paul: i want to get your thoughts on fiscal stimulus. the bushfires which has prodded the government to act from the treasurer, saying he is finessing the final touches on a stimulus package. >> that is an excellent question and a key question. it has been a while since we have had one. what we can't avoid is a wetraction in output in q1. will get data in early june. we could avoid a recession so we don't get a further retraction. imports will be lower. that is not the right kind of help but it is a help for holding up the gdp number. the government will need to put in place aggressive responses and it will need to be a fairly big number in terms of where the surplus is now and certainly if we are looking at single billions similar to the bushfire response it will not be enough.

it will need to be bigger than that. much.thank you very let's get more on the big moves in oil that is coming up next. this is bloomberg. ♪

paul: i am paul allen in sydney. we are just getting some breaking news on the bloomberg terminal out of saudi arabia. it is not to do with oil. this is about the coronavirus. five between saudi arabia and nine countries are being -- andhts between saudi arabia nine countries are being suspended. they won't allow citizens from these countries, the uae, bahrain, lebanon, syria, south , italy and iraq. china on the list but saudi arabia is banning or suspending entry for citizens from those nine countries.

we do have to make mention of the oil price, huge moves seen plus, declines of 20% west texas and brent. more details in a moment. this is bloomberg. ♪ good morning!

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sydney.30 a.m. in we have got the market open 30 minutes away. futures pointing lower by 1.5%. 15 numbers due to reset in minutes time. we will keep an eye on further moves and what promises to be an exciting start to the trading week. i am paul allen. you are watching bloomberg markets. let's take a look at the markets. i mentioned futures in australia sinking lower. we have had new zealand trading for about 90 minutes and new zealand is off by 1.5%. take a look at the yen.

those are numbers we haven't seen since 2016, 104 handle for the yen. the aussie dollar holding on just above the $.66 u.s. level. the big mover on the market is oil, west texas brent crude up after the opec plus meeting ended without agreement. opec plus appears to be at war with itself and u.s. shale. we see oil sinking towards $30 a barrel. let's get over to bloomberg reporter sophie kamaruddin. it is all about the oil price. sophie: oil very much in focus. take a look at the chart on the terminal visualizing the collapse after the tumble we saw friday. brent and wti sinking towards $30 a barrel with goldman warning we could see a move into the $20 zone and that changed

the outlook for oil markets. saudi arabia's decision is sending a ripple effect through currency markets. let's look at some of the forex. we have the norwegian krone at the lowest level since 1985 against the greenback, extending losses that for the currency along with the canadian dollar and the mexican peso are in the asian session. at the here is a july hike, which may put pressure on the ecb at its thursday meeting. what about havens? yen pushingjapanese towards 104 him of the strongest level since 2016 with the dollar-yen in oversold territory. the likelihood of that easing may not see materializing for the pair. and we are seeing gold climbing towards $1700, aussie and kiwi bond yields sinking this morning. let's look at that move.

the aussie 10-year yield falling to a fresh low as the rba is being looked to for potential and conventional monetary policy while the government is discussing risks to offset the coronavirus. we have seen a big move in u.s. futures with march contracts dropping as much as 4.4%. paul: all right, thank you for that update. the u.s. state department has issued travel advisory warnings on cruise travel. let's get to ros krasny washington, dc. what are some of the biggest weekend developments we are seeing on coronavirus? it will be another busy weekend. the state department has warned americans, all americans and especially those who are medically vulnerable should avoid cruise ships. this comes at a time to credible cruise ship, somewhere off of the coast of california -- at a time where the carnival cruise

ship, somewhere off of the coast of california, it will talk in a few hours and tomorrow morning they will move all of the people on the vessel to hospitals and military bases for quarantine. quite dramatic. mike pence, the head of the coronavirus response team, met with officials from the cruise industry. that seems to be the outset of this pre-we heard from tim cook -- the offset of this. we heard from tim cook about apple employees working from home. and the stimulus in u.s. is turning to rise. we have heard many times from trump about this and other matters he would like to see the federal reserve cut rates further. the administration has been on to alow side when it talks fiscal booster there is pressure when we go along. suggested micro

measures might be enough. as the moves we are seeing in the stock market, if they are any indication, the pressure will increase in the next few days. updatesve we had any from the white house in that regard or in terms of the response? ros: not much from trump since friday when he went to go visit the headquarters of the centers for disease control in atlanta, the federal epicenter of the coronavirus response. trump went to meet with officials there. he tweeted today from his florida resort. he continues to down pedal the threat from the virus and put this in political terms. it is the fault of the democrats or the fault of the media. and other officials, notably anthony fauci, who is a political, and infectious diseases specialist who has been around through democratic and

republican administrations, he sounded more alarmed. he said the more we know, the less we like what we are seeing. so we have got that kind of bifurcated response going on. that has unnerved a lot of people. trump'saging has dinged approval among some of his staunch defenders on capitol hill. we heard from rick scott for example, a senator from florida, former governor of florida, big fan of trump. he sounded like he wasn't happy with the administration response. a lot more to happen in the next few days. it has been sort of a troubling time for many people to figure out what they should do and what they should believe. krasny, thank you for keeping an eye on developments in the u.s. let's check on first word news. reporter: italy has taken

unprecedented measures to contain the spread, shutting down the whole northern part of the country. 16 million people are in lockstep, about a quarter of the total population and this includes a financial hub in milan and the tourist city venice. there are patrols to stop people heading south. at least 20 people are feared trapped in a collapsed hotel in china that has been operating as an observation center. 48 patients have been taken from the rubble. the hotel opened two years ago and local media say the owner carried out unspecified work on the foundations before the collapse. stocks the middle east plunged as the world's biggest crude producers failed to agree on production cuts. theks fell the most since 2008 financial crisis while kuwait suspended trading and its index tumbled 8%.

the initial font from the breakdown at opec plus. airlines across the middle east are stepping up precautions against the coronavirus. the emirates team is deploying special teams to sanitize. the process takes up to -- this is going to cost airlines about $100 million. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. shery: let's check in on oil story ofy far the big the day. west texas and wti sinking more than 22% now, this after opec plus failed to reach agreements on production curbs. russia walking away from those talks.

that means war within opec plus and u.s. shale producers and we are seeing a profound impact on energy markets this morning, west texas and wti sinking towards $30 a barrel. we will have more on that story in a moment. global news 24 hours a day on air and on quicktake by bloomberg,ake by bloomberg,

allen in sydney. you are watching bloomberg markets: asia. let me get you some breaking news. we have got hong kong airlines in talks with air china and others for a potential lifeline. hong kong airlines, one of the number of airlines in asia struggling with the fallout from the virus as passenger numbers fall steeply. we have got hong kong airlines in talks with air china and others for a lifeline. we will bring you more on that story as we get the headlines.

australia's fiscal stimulus package to protect the economy from the impact of the virus could come to as much as $6.6 billion. details are expected tuesday when the cabinet meets. let's discuss that and other matters with the private bank director and portfolio manager. thank you so much for joining us. it looks like the budget surplus that was promised last year is toast. what kind of a deficit can we expect? >> that depends on the trajectory the economy expects and we have been reasonably downbeat in our expectations about the output. the shocks we have seen since the bushfires and the coronavirus means the downside risk to the australian economy has risen quite measurably. it depends on the underlying economy. i think at this time, given the facing,he economy is

positive development that we have seen begin to emerge globally is coordination between fiscal policy and monetary policy. that ensures that low interest rates can be effectively utilized by the sector of the economy that is not grouped by panic. the government can take advantage of low borrowing rates and invest in increasing and raising the capacity of the economy. that has lacked in recent years. is there a concern that is not the solution to the problem? getting on planes at the moment. people are not doing the things they normally do. does it really help? >> there are other policies that need to be implemented and rolled out. fiscal policy can move swiftly and it may need to do that. toalso needs to find a way

roll out policy measures and to inject stimulus into the economy that is proportional to the problem as it of all. one way to do that -- as it evolves. one way to do that is to give incentives to companies to retain their labor force. that can target companies that are most impacted by supply-side shocks. of numbers are we talking about? the prime minister has been drilling into us this will be scalable. when you scale this up, how could the -- convincingly larger? economy.ends on the are skewed toisks the downside and that means the on employment rate could rise sharply. the work we have done suggests that there has been a degree of -- in the australian

-- in the australian economy for a year or more. this is the result of a prolonged time of weaker domestic demand. what we have seen it labor product slump. job creation has depended more and more on part-time employment. companies have been trying to look through a patch of weakness but now they have been hit by two severe but temporary stocks -- shocks. at some point they will not look through the weakness anymore. the dam will break, labor shutting will occur. there are risks -- those are the risks the australian economy is facing and that is why fiscal aticy may not be as modest this point in time. it may be desirable and has to

respond to the circumstances. i think global economy is in a critical situation. the range of possibilities for the global economy is very wide at the moment. shery: paul: on the subject -- on the subject of unexpected shocks, north korea firing at least one unidentified projectile. one projectile, this is all the news we have at the moment. to get back to your point, unexpected events seem to be, you can expect a lot of them at the moment. australia has been without a recession for so many years i have lost count. we on the cusp of one? -- are we on the cusp of one? >> we are at risk of falling into a situation which is recessionary. it is because of the recent shocks we have had.

they have arrived at a time when the economy is weak. as a result of that the rba will move more swiftly towards quantitative easing. paul: i want to get your thoughts on the aussie 10-year. that is sinking to record lows. it has gone below -- what is your outlook for the 10-year? to .6%,pect it to fall expected it a while ago. they have gone through that area this was before the outbreak of the coronavirus and before we started to appreciate the seriousness of the supply-side shocks. it is an evolving situation. rba will have to move more quickly. we thought they would, by the end of the year, introduce an

asset purchase program. we think our forecast will play out in a much more condensed timeframe. and it also, what the quantitative easing policy looks like will depend on the underlying market conditions. but if there is a lot of volatility in financial markets, it will affect what policy looks like and what is happening to the australian economy. cut: we did have the rba this month which suggests we will go another. how long will be be at the lower bound? can you see potential for swift recovery once this collection of crisis is -- crises passes? an impacty policy has on the supply side. over the years, the shown itself to be limited in its ability to invigorate investment and out is

at the lower bound. perhaps one area that monetary policy can assist with is volatility. i am a little bit circumspect frankly because volatility we are seeing in financial markets 2011.is reminiscent of that was the euro crisis was .inancial in its origin ultimately the ecb found a set reducecies that uncertainty and provided the silver bullet for the global economy. this uncertainty related to the prospects for the global economy, large and deep at the origin is not financial. central banks may help, but they won't be able to very easily reduce the level of uncertainty around future possibilities for earnings growth and global growth and everything that affects how we price recess

gets. -- risk assets. paul: this was something about kaplan was saying -- bob was saying. he was concerned about credit markets. how closely are you watching that? >> very closely. important, are policy can direct lending a little bit more effectively like him some parts of the world. but to some degree financial markets will run ahead of policymakers as they are doing when there is uncertainty risk assets at -- doing. riskthere is uncertainty, falls. dislocations in the corporate bond markets. that is what we are seeing at the moment i think. is plenty to see.

they do so much for joining us. we are going to have more on the outlook for australia later on bloomberg markets with the tourism and transport ceo and j.p. morgan australia ceo. this is bloomberg. ♪

allen in sydney. you are watching bloomberg markets: asia. oil prices are quite a significant magnitude, 20%. we have west texas at $32, brent crude $35. this after opec plus failed to reach agreements on production curbs, russia walking away and chaos ensued. it can see the numerical form on your screen. let's get back to sophie kamaruddin. what are you watching? sophie: your keeping an eye on commodities like gold. $7,300ck price reaching an ounce. this with a move into gold, up 12% your to date. copper also under pressure with prices --

when it comes to the citi open we are looking at australian miners -- sydney open, we are looking at australian miners. and asia-pacific energy names, earnings likely to continue seeing downward pressure. an eye on that. keep an eye on that. paul: let's get a check of the business flash headlines. apple says most of its worldwide offices can work from home during the rotavirus outbreak. the ceo calling it an unprecedented event and a challenging moment. he said employees can work remotely if their job allows, apple trying to ensure on-site teams remain safe. the company is especially exposed to the virus with its global presence focus on china. hong kong's cathay pacific is

suspending flights to and from japan. , andces to tokyo's airport three other cities will shut down monday into march the 28th. flights to other reports will be halted from friday. the move comes after japan tightened quarantine rules on people arriving from hong kong. cathay pacific will report full-year earnings on wednesday great lufthansa is speak -- seeking government support a mid-what it calls the fallout from the coronavirus and possibility of job losses for -- have slashed capacity possibility of job losses. they have slashed capacity. the ceo says it will take months before stability returns. all right. that is it from this hour of bloomberg markets: asia. we have plenty more ahead. as we go to break, checking the big moves we have been seeing in the currency markets, the yen,

the biggest and now with 103 handle. that is now at levels not seen since 2016. we have got the euro putting on decent gains as well in the u.s. dollar rising against certain currency peers but not doing well against others. ♪ paul: there you seepaul: the u.s. dollar versus the canadian and the mexican dollar. the greenback putting on gains. in australia we have the australian daca -- australian dollar sinking. and we do of course of the australian holding on just above $.66. we have the market open in australia at the top of the hour. futures have reset. 4.5%.t that, declining by

it promises to be plenty of action on we get going in a couple of minutes. this is bloomberg. ♪ hi! we're glad you came in, what's on your mind?

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paul: good morning. i am paul allen in sydney. markets have already come online. will ind south korea one hour. welcome to bloomberg markets: asia. our top stories this hour, oil collapses and u.s. futures plunge has top producers fallout. brent falls 30% after russia said new output curbs will be a gift to u.s. shale. armed police in italy, the virus hitlks down the

north. 16 million people under virtual home detention. the outbreak could be slowing in china. hubei province reports the newest the -- the lowest number of new cases since the outbreak began. reporter: the asx 200 off more than 4%. last week the benchmark was down more than 13%. on the bear market watch. a ways to go but -- at the same time kiwi stocks below the 100 days moving average. nikkei futures pointing to an open below 20,000. it would be the first time in more than a year. s&p futures off more than 4%. one level to watch, 2819. cme rules don't allow a decline of more than 5% on u.s. contracts. if we were to see a decline of that level we would see trading stall out.

but the big story of the weekend and the morning is oil. let's take a look at brent crude oil prices. wti and brent off more than 20% after saudi arabia did initiate a full on price war. 20.5%.rices are off that is the longest -- largest single day decline since 1991 during the iraq war. pretty stunning the moves we are seeing. goldman sachs saying it would not be a unlikely -- it would not be unlikely to see brent prices fall to $20 a barrel. the official forecast is $30. paul: joining us for more, we have a foreign relations director. thank you so much for joining us. i want to get back to that superlative sara mentioned.

you won't be able to see this chart but it does indicate the biggest one-day drop in the oil price since the gulf war. one the1991, not the came after that. where do you see oil hitting and how sustained are these declines going to be? >> we are in uncharted waters. , it is steeped in history. people are thinking about the 1990's, the place in 1996. but the bottom line is because of coronavirus, it is unclear as , would itrt to fall actually stimulate demand anywhere? part of the problem is you have got demand destruction related to the disease and the fear of the pandemic. that is not going to go away anytime soon so we are in a freefall. what does this mean for

opec plus? who is going to blink first in terms of doing something about the freefall? >> it is hard to say. 1986 know, going back to or 1998, or earlier times like 2015, it is hard to get production around the world to shut in. you have these companies that are going to be under pressure, whether it is u.s. shale companies or canadian oilsands with fields that are high-cost. but we are going to see bankruptcies. but even when you see that, sometimes some other company takes over the acreage and takes the cash from them. who is going tell to blink first. i think russia dealt. they were in a good position. they have sort of a rainy day fund put aside. for russia this is critical

because they are a country that is connected to europe by a pipeline and that they have one to china -- and then they have one to china. they are not global like saudi arabia. defendthey needed to their market in europe from the united states exports. you're seeing in the right price were with saudi arabia even ,ropping its prices to europe extremely large amount. hard to say where this is going to go. russia have a point? it was arguing opec plus was undermining itself. so in a sense was this a crisis that opec kind of had to have an russia bought it on -- brought it on? i understand that point of view. russia, saudi arabia, opec plus, they can get this shale to shut

in temporarily. there might be companies in the united states that we are going to see go bankrupt. int doesn't actually shot the us. once you shut it in, -- it is not like a traditional reservoir. all that is going to happen is maybe a stronger player will come in very they will buy up that tract of land. the second the price of oil starts to creep up, hopefully because the virus goes on the or some other producer drops out like iraq or libya, however that comes to be, the shale will plop right back. it is like whack-a-mole. it is not clear about the strategy. it might not out a particular producer or bunch of people that invested with the producer but it is not going to permanently knocked out the shale.

-- knock out the shale. paul: can you identify any particular winners? >> it is very interesting. i think the question is first of all, a lot of u.s. hedge funds have bet against the high gilt markets for energy. i think they are going to see a big return for that. that is starting to happen. they will be in a good position in terms of like -- in the geopolitical sense, this could be bad for everyone. it is kind of hard to see what it might mean. if you take a long view, saudi arabia taking a very long view, and the long sort of investor trajectory is whether or not there is going to be a producer the has granted access, more producers that get knocked out because of any kind of extended drop in the price of

we dide less saudi oil stranded over the long-term. if you are saudi arabia, if you ther theher the -- wea media storm, you can win the long game. -- immediate storm, you can win the long game. paul: what are you looking towards potential catalysts that could bring an end to the coronavirus? would that put a floor under demand? question if we start to see some trajectory where coronavirus gets under control, he will put a floor under the market -- it will put a floor under the market for sure. ick that be a slow tak we lost a lotr 11 of travel demand internationally and it took until 2004 to go back to a growth trajectory. i think there will be some

lingering anxiety in terms of business travel and to me the real question is, we have so many interesting technologies today we did not have 10 years ago whether it is to do with business meetings by videoconference or some of the other things. will people get in the habit of not going back to the old way? amazon.comhave got delivering all of my staples to me instead of going to the store if i am concerned about coronavirus, will i continue to do that? that would not save energy because all of the truck delivers use a logistics program to minimize the amount of travel they do. they put everybody's packages together in the same truck and geographic radius. only go to the store, it is more fuel. -- when we go to the store, it

is more fuel. will people travel less? it is unclear whether we might propel a lot of new technologies. in china they are talking about going 100% robotic insert manufacturing plants. it is hard to say what is going to happen. paul: so many moving parts to keep an eye on as this story continues to unfold. energy security and climate change, thank you for joining us. we will have plenty more analysis on the energy sector when we are joined later on by at insights founder and another. let's get to the coronavirus outbreak. remember that? half of the world's countries have reported infections as global cases top 108000 and additional travel and restrictions are implemented

around the world. deaths in italy have surged 366 and that is the most recorded for a country outside of china. let's get over to yvonne man in hong kong. the situation in italy seems to be getting worse. yvonne: the death number, surging 50% over the weekend. total cases topping 7300 area these numbers are the biggest outside of china. even surpassing the likes of south korea. perhaps we saw this big lock down over the weekend, 17 million people in the northern part, 14 provinces under quarantine including milan and country's much of the industry locked down. the vatican closing museums. in france we are seeing topping cases of 1000 and health officials now banning large 1000rings of more than

people. you have fresh cases in the u.k., saudi arabia, banning citizens to travel in nine countries, 1000 people. you have fresh cases in uae, ba, lebanon, south korea, egypt, italy and iraq. they are not allowing citizens from those countries to enter saudi arabia after they made a big move to shut down schools as well. nearly half of the world's countries have had cases of covid-19. the death toll outside of china reaching beyond 700. china'st's talk about exports. they plunged in january. we were expecting a decline but it was worse than we thought. months,these first two this is where you are seeing the effect of the outbreak. you see factory output switching to a halt, lockdown, travel being disrupted, exports in

january and february falling 17.2%. imports didn't have as heavy of a blow but still contracting 4%. perhaps there is a lag effect. the first two months are always volatile but this is unusual given the outbreak of the coronavirus. tos is seen as a price swing a deficit of $7 billion. another shock to the economy. the big question is, are things going to be sustained, or is this a temporary trade deficit? perhaps it could be temporary now businesses are getting back to work. china exports can start to rebound. china trade partners are starting to deal with this outbreak, external demand pictures remain uncertain. china's trade surplus with the u.s. is shrinking. any implications for a phase one trade deal? seene: you are starting to

the start of it. if you look at the numbers and president trump looking at them might feel encouraged because the trade surplus with the u.s. in china shrank about 40%. exports fell nearly 28%. imports saw a growth of 2.5%. the growth in imports, some people pointing to the phase one of the trade deal. it is hard to see whether the first couple of months, starting to see a trend because this was signed in january i didn't come into effect until mid-february. we will have to see if this continues. given the virus outbreak, it does threaten china's ability to honor the commitments in the trade deal. a lot of questions around that. paul: all right, thank you for that. let's check in on first word news with karina mitchell. north korea is

reported to have fired more identified projectiles. these were fired over the east see in the direction of japan although it is not known how far they flew. kim jong-un has resumed missile testing after complaining about u.s. policy towards the korean peninsula. kong havehong arrested 17 people -- 12 men and five women are being held after weekend raids on 22 properties in the city. they recovered about 1.5 kilos of explosives and a large amount of chemicals. improvised expense -- 50th rocketed its recovery after releasing two to the supplies international space station. it took off friday night and is expected to arrive monday. the rocket and dragon capsule have flown on other missions to the iss. it is the 20th delivery mission for the racket -- the rocket

dating back to 2012. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am karina mitchell. this is bloomberg. by alicel be joined brown in sydney to talk about strategy for investors amid all of these global risks. this is bloomberg. ♪

paul: let's have a check on the markets now. the asx moving sharply at the open, now off just a shade under 4% with new zealand showing a lot of weakness as well, down 2%. it is expected to be fairly ugly when things get going in japan as well. nikkei futures pointing lower 3.5%. there are many micro factors

behind all of this. let's get back to the markets. investors struggling to predict the impact from the coronavirus. priceriables from the oil as well. the most prudent strategy is just to be patient. joining us is alice brown. to say it is too early return to the markets. what factors are you looking towards for reassurance? >> investors are naturally quite panicked with the selloff we have seen the last fortnight. the asx 200 is down 13.5%. if those futures are any indication, it will be a difficult start to another week. overall investors with diversified portfolios should be patient. that is the key because the whole thing with bonds and also unhedged international shares should provide caution.

where they should be looking to sort of assess current exposure is in areas like high yields, cyclical industrial commodities and also companies with higher levels of leverage when it comes to financials and operation. that would be the key area to look at. for those who are worried they don't have adequate exposure to affected areas there is time to to gold, inflation linked bonds and u.s. denominated investment. paul: the asx is off the most since -- is it better to sell into this or hold on? >> woman look at the global financial crisis, those who crystal -- when we look at the global financial crisis, those who crystallized with the collapse, it is important for investors to remember corrections are a normal part of market behavior. 20 out of the 27

past years we have seen intrauterine declines of more than 10%. declines of more than 10%. --l: you can see the s&p you low volatility was the most volatile part of the index. if you are looking to preserve capital, where you go to hide? >> we have been advocating for them to hold two years worth of cash which has been a difficult sort of proposition given the very low rates on cash deposits. that is important for those who are reliant on income for their investment to sustain and meet living expenses. regarding -- it is important for investors to hold an adequate cash buffer. the white -- week ahead will be extremely volatile. the vix is at the highest level financialglobal

crisis and adding to everything, the coronavirus issues, we have got the oil price back as well. paul: let's talk a little bit more of that. has it changed your strategies? it is very early and things are moving quickly. we know brent crude oil has come off heavily over the last couple of days. certainly it will have an impact on energy companies here and abroad. the other area i mentioned before was high-yield, high-yield credit. if we look at u.s. high-yield, 11% of issuers are energy companies. we are expecting the lower oil prices will actually impact cash flows. it is important to see how exposes some of the energy companies are. this asuld you describe a stock pickers market?

>> i would agree with that. when we look at the valuations leading up to the coronavirus crisis, valuations were quite elevated. still looking at the asx 200 it is on the high side. we are trading around 16 times earnings compared to a 20 year average of around 14 times. what we are expecting to see is energy -- opportunities at the stock level, individual share rather than the overall market. more to the point, we are looking for quality companies sheets thatbalance are not heavily exposed to these areas like exports. few brightf the spots is gold miners. they are the only three gainers we are seeing. are you in gold or looking to be? gold is an important part of

diversified portfolio. we work with a lot of retired investors, or those looking to retire soon and gold doesn't pay and income. a lot of those plans are holding cash deposits to provide the question in addition to corporate bonds and and -- unhedged international shares to provide protection rather than gold given the share price has rallied. paul: thank you for joining us. now you can get a roundup of the stories you need to know to get your day going for you can go to today's edition of daybreak. on your to dayb terminal. it is available on mobile in the anywhere app and you can customize settings so you owe -- you only get news on industries and assets you care about. this is bloomberg. ♪

allen in sydney. you are watching bloomberg markets: asia. let's get a check of the business flash headlines. lufthansa is seeking government support after what it calls the immense fallout of the coronavirus and the possibility of job losses. capacityer has slashed by as much as 50% and is considering the government paying staff wages. the ceo says it will take months before stability returns. hong kong's cathay pacific is suspending flights to run from japan.nd from flights will shut down to march 28. various other flights will be halted from friday. this comes after japan heightened quarantine rolls on people arriving from hong kong. cathay pacific will report on wednesday. airlines across the middle east

are stepping up precautions against the virus. getting a special team of people to clean the airlines. this process takes up to eight hours. more to come. this is bloomberg. ♪ loomberg. ♪

>> let's get you to some breaking news on the bloomberg terminal. ted cruz who once sought the presidential nomination is now he had aantined after confirmed case with a coronavirus. self-quarantined with ae had contact confirmed case of coronavirus. since 2009. day

now we have seen a little moderation. there were stations 2015. the asx 200 trading at the lowest levels in a year. s&p futures are 4.5%. as 2819.d trigger rules don't allow futures to trade below 5% overnight. the dollar-yen affording this handle. the japanese yen trading at the strongest level versus the u.s. dollar since the 2016 u.s. election. within australian stocks, we have seen energy really take the largest hit. within the asx 200, energy is the worst section -- sector by far. we would see that the stocks are under immense pressure. names to keep your eye on while

the energy sector has its worst day ever is woodside petroleum, caltech, certainly a space to keep an eye on. these are some of the names at risk here. paul: iran says that it hopes that opec and it will reach an agreement to avoid a price war. they must commence them to accept a production cut in the near future. the result of yesterday's meeting was unexpected for me. opec is like a 60-year-old and opec plus is like a baby.

yesterday was a really bad result for this. i want them not to decide something that is subject to the acceptance of the non-opec countries. russia, mexico and they were contributors with the opec decision. these are not new things. russia is the main player in this cut.

i believe that opec has to understand their role in the market. that does not mean we don't need their contribution and cooperation. especially russia. thee want to continue alliance with opec and the more onwe should rely opec decisions. fewooking over the next months and into the future, we are not sure there will even be a meeting in june for opec members. what will happen in the next few weeks? we know the last agreement in december is coming to an end at the end of march. what happens at the end of the month? is there any hope of any further

discussion with russia? >> yes, i hope. we need the markets to witness a new cut in the market. .t is the nature of the markets the expenses tell me that it should happen very shortly. we have to have a big compromise or not to become from eyes. however we need to have a cut in the market. for oure, it is better non-opec producers to contribute .ith us a huge burden in the surplus market. we should do something for it. >> do you have any solid or

concrete sense from russia? --e you spoken to your cap russian counterparts about meeting? life is full of compromise. witness one of these compromises with russia. was the iranian oil minister speaking to us. we will have more analysis on the way -- on the energy sector next. joined by our correspondence next. the australian tourism sector is battling a double ma of the coronavirus and the fallout from from theuble whammy coronavirus and the fallout from the bushfires. this is bloomberg. ♪

i am paul allen in sydney. you're watching bloomberg markets: asia. i just want to update you on ted cruz at the moment. he was saying that he plans to self-quarantine due to brief contact with a person who tested positive for coronavirus. he said he had a brief conversation and a handshake with that confirmed case. he says he feels fine and he is not experiencing any symptoms. ted cruz feels fine but he will be self-quarantining as a precaution. the hit to tourism will amount to $2 billion per month.

--gie osmond joins must now joins me now from sydney. the bushfires were a great hit to the us trillion reputation and another coronavirus. >> it has been a perfect storm. you had the bushfires. they trashed our international image. there will be a lot of rebuilding work. it doesn't matter where you work, you saw the image of the fire. people think that places like north queens land have been affected. and the coronavirus and i think it will be three years until we are back up. tourism exports for education have fallen. is that in line with the numbers you got?

>> i think it is. there are students that come from different parts of the world. it is the visiting friends and family component of it. r friends and parents can visit three or four times over degree but that is where we are seeing a hit. paul: a shortage of workers isn't the issue. is that likely to boost travel numbers? margy: it may encourage more backpackers to come. i think what we are looking at is a global slowdown in travel,. -- travel. the big issue for us now is going to be how much of the domestic market can be shifted into fill the gaps in the medium-term.

that will be the big trick. measuresyou see any happening domestically that might encourage travel? there was a big move down on the oil price. will that bring the cost of travel down? paul: it may. it will be confidence factors. in terms of people's willingness to spend. with this kind of issue, it makes people very cautious. i think that outbound and inbound is going to suffer. with the kind of effort being put into the domestic campaign, i think that domestic market will see a big uptick. australians wanted to contribute to the communities for the bushfires. what paul: paul: about the fiscal stimulus pass -- paul: what about the fiscal stimulus packages? margy: there has to be a long-term commitment. that is the important thing. treasuries have a blind when it comes to the tourism industry.

increaseo massively tourism. this will be the farming industry's agriculture and the manufacturing sectors. this is more than just the tourism industry. we think there will need to be a very big aviation program. there will be quite a bit of flight back to australia. thatcould get rid of charge to everyone who lives the country. paul: the suggestion that there needs to be a three-year loan package suggests that you see this lasting for a while. partially where we will be in a month comes from. we are anticipating 130,000 jobs

lost. that is a serious chunk of wages not going into the economy. the government is not going to be getting this. the job issue will be significant. i think that particularly in regional communities, they will lose skill workers. most people will look -- move away. transport formnd y.o, marg next, we have rachel farrell joining us in the next hour. right now, a quick check of the latest business flash headlines. apple says staff in most of its worldwide offices can work from home from the coronavirus -- during the coronavirus outbreak. ifloyees can work remotely the job allows them to this week. apple is trying to ensure that on-site remain safe.

the company is especially close to the virus with its supply chain in china. is unlikely to move forward with an offer for the ritz hotel in london. bids have been weighed. the news comes amid disputes among the heirs of the hotel. one member of the berkeley family is threatening to sue. reports from jakarta says that google will open his first data center in india this year. jakarta says that google has already completed the physical infrastructure and has hired staff. alibabat, amazon and are also launching services in indonesia. still to come, we get japan's final adp prints. gdp numbers.

will break those numbers for you, next. this is bloomberg. ♪

japan is likely to revise down its fourth-quarter gdp data with the economy on fresh assault from the coronavirus. a back-to-back contraction is to be in the cards. joining us now is the former boj board member. professor, thank you for joining us today. i am wondering as we wait on these numbers, do you expect declines in gdp and trade to outstrip our expectations? >> yes.

i think this gdp data will be adjusting, mainly because of the lower-than-expected capex. we are getting some breaking news as well. japan teamng the dropping the yield. that is the lowest since october. on japanese outlook bonds under so many macro pressures? : this is very difficult for the boj to continue to increase the japanese government bond. -- what the boj can do in the forthcoming on a tory policy meeting is make it available -- monetary policy

meeting is make it available. paul: they are seeing nervous moves in the currency market. at levels wee yen have not seen since 2016. now hovering at 103. we are waiting on these numbers out of japan. we are just getting that right now. the gdp is sinking to worse than expected numbers of 1.8%. the market was expecting 6.6% for annualized gdp. talk about the current account billion.s well, ¥612 that is a never a mess but the gdp numbers appear to be worse than expected. what are your brought observations on what you have heard?

sayuri: october and december, that is the tax hike. in october, there was bad weather. activities slow down. happened -- important is what happens in january and march. now, because of covid-19, we may have another of the growth. japan may face a decision. whatstart to appreciate the government can do. the government already announced a big government communications package. maybe the government has to do more to cut spending and see with the boj can do with this information. paul: to your point, the prime minister was saying that coronavirus came before.

what needs to be in that bill in your opinion? sayuri: the government has to spend a lot of money to support the smaller companies that cannot do business because of the lack of tourists and production. i think the government really has to spend money targeting business people and the companies. this is not something the boj can do. i think the government needs to spend more money and get some county to the bank or helping those business people and companies. lows --terest-free loans are being offered to small businesses. how big do think that sector will be? sayuri: the policy cannot increase the amount.

those policies are there for company to survive. back not going to bring all of the things we used to have. covid-19 is how long will continue. until summer or the end of the year, a little more money is needed to support those companies. companies --hose it affects immigration. paul: i want to get your observations on the yen. we have a chart on the bloomberg terminal here. you won't be able to see it but it illustrates what you already know. 1.03.n is already at i am wondering what is the threshold here for intervention?

>> under the g20 understanding, we are not supposed to intervene. the bank of japan was really trying to create this over the yen. it was up around 1.05 and 1.06. they mentioned that they were late -- waiting to lower the interest rate. before they make the decision at the monetary policy meeting, the yen started to decrease. they did not do anything. now the yen is appreciating much more than last year. i think they have to be able to come up with some policy. at least the boj may have to provide longtime lending to the bank.

paul: unconventional policy has been the case for the boj so far that it almost looks conventional. if we are looking for some silver linings, a strong yen and an unbelievably weak oil price, will that provide any tailwind for japan? especially this exchange rate is very important. we know that for the large 1.08nies, they need around yen for a good profit. below 1.05 at 1.03 and stays there for a while, for many months, that could affect the corporate profits. it will affect japanese stock prices.

paul: one thing that the world was looking forward to for japan was the olympics coming up later this year. an event expected to bring a lot of economic activity. what will the impact to be if that is canceled due to the coronavirus? sayuri: the biggest issue in japan now, they already spend a lot of money. they were expecting a lot of tourists coming and spending. to do it thisant year but then we may not have a lot of tourists and they may do it next year, that is very bad for the athletes. it is very difficult. they mid an assessment about the impact of the liv-ex. -- made an assessment about the impact of the olympics. ¥20 billionpecting

of additional demand coming. tokyo has a very bad memory from covid-19. this kind of impact will be eliminated. that is a big thing for japan. sayuri shirai. thank you for joining us with your take on the gdp numbers out of japan. japan is about to open at the top of the hour. we have futures for the nikkei, it can't be more than 4% now. an absoluteaking beating today. weaker by almost 5%. these are the biggest declines we have seen since the global financial crisis. we have just six stocks in the green right now.

there is plenty more coming up in the next hour of bloomberg markets: asia. we will have more outlook on the oil, particularly. this is bloomberg. ♪ awesome internet.

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>> good morning. asia's major markets just opened for trade. welcome to bloomberg markets: asia. haidi: our top story this hour, afters slumped further the coronavirus impact. crude collapses. the most since the gulf war. said outlook curbs would

be regifted to u.s. shale. quarantines 16 million in milan.th in mile on -- it has been a knockout blow for the markets. and asia markets capitulating. we have sarah. >> no region is being spared. there is a safe haven bid coming in strong. we see the nikkei 225 extending losses. the open.cent at the japanese yen trading at the strongest level versus the u.s. dollar since the 2016 presidential election in the united states. yieldinggb's are now -18 basis points. that is mashing some of the lowest levels we have seen over the past couple of weeks. south korea is coming online. we saw this approaching the 200

day moving average. we hit resistance there. we see losses a salivating. -- we see losses there. 200 is having its worst day in years. s&p futures are trading at 28.19. we have hit that limit. the cma does not allow futures to trade off by more than 5% of a reference point. it was a little bit different. we just hit that limit down 28.19 for the first time since the 2016 presidential election. saudi arabia initiated that price for brent and crude prices are up more than 20%. goldman sachs says they will not be surprised if we see brent

crude oil trade down to $20 per barrel. we see gold spiking, hitting $1700. the highest level since 2013. with the latest on the markets, we have the treasury 10 year following through the floor. story forbe a massive the markets today. just total capitulation. we are seeing record those for aussie 10 years. this is just coming through now. that 10 year yield sliding down. the action is in the oil patch as well. this marks across sectors. a lot to take over over the weekend. results.eing these

let's talk about what we are seeing when it comes to treasuries at the moment. half a percent for the 10 year. >> these are incredible moves. into thingsof going they see as safer bets. the treasuries seem like they may work. there are so much uncertainty with opec plus issues this weekend. markets were already uncertain about coronavirus. where people going? they are going where they think things might be a little safer. seeing the slump in japanese trading, the nikkei, the topix extending by 3% right now. concern?he real you look at pricing for what the fed could do next.

0.75% costs. >> a lot of people are not looking so much at the rate cuts. they are looking at what might be a done around that. we are also still looking at the spread of the virus around the u.s.. the news was not great. people are saying they can't even be tested. australia is talking about fiscal stimulus. other countries are talking about fiscal stimulus. you still have a situation where people don't know how far this will go and how much demand is sapped because of

that. u.s. stock futures are -- we see a2819 wave of sailing when it comes to -- selling when it comes to u.s. stock futures. west future we are session at the moment. we are watching the capitulation comes to oil prices. that really has the potential to push asian credit spreads into the abyss? >> yes. credit could be really affected by this. we have the high yield companies in the energy space. there has already been more signs late friday of problems in the credit market. jp morgan came out and said they are seeing climate concern in

the credit markets. a lot of people have been saying we will see stocks go down but we are really watching the credit markets. that is where things can start to be a problem. you're starting to see signs where the threats are increasing . companies could be having cash flow programs. that is on top of other things like keeping people in jobs. that is one i am really watching. in sectorsompanies like travel and leisure, they seem to be holding on for now, can they hold on with keeping people employed? thank you so much for that. joanna joining us on all of the market action. we'll get analysis on all of the plunging.

get to the source of all of this. the coronavirus outbreak, after was countries have reported infections. additional travel and public restrictions have been in limited around the world. we are seeing that surge in fatalities over 60%. yvonne man joins us now out of hong kong. >> you are starting to see countries willing to go with that hubei style approach. italy is the richest -- the northern part is the just part of the country. they have quarantined 16 million people in the biggest cities like milan.

the death toll surge is 60%. total cases are at 7300. even surpassing south korea's fatalities and being the biggest outbreak outside of china. in the last couple of hours, we heard from the u.s.. this is after the grand princess cruz found at least 20 people, passengers and crew members that tested positive for covid-19. yorkers are being urged to walk and bike instead of taking the rush hour subway. they are avoiding large gatherings right now. banning its

residents from traveling to nine countries like bahrain, iran, iraq, south korea. haidi: we had china exports plunging. show about theta impact of the virus and what we could expect in march? >> this is the first time they reported two months altogether. we expected him to be volatile. especially once you factor in the lunar new year holiday. this is when you start to feel the effects of the outbreak. we saw exports plunge. imports are not as bad of a blow. there's some type of lag affect there. we see that trade balance swing

to $7 billion. that could be another shock to the economy. a lot of questions about whether this is temporary or not. businesses in the mainland are starting to get back to work. perhaps exports could start rebounding in the coming months. there is a lot of uncertainty about the external demand of the factors. thank you so much for that. that was yvonne man. this is becoming more of a global problem. we just got the newest china numbers coming and crossing the bloomberg. 22 new coronavirus debts on march 8. reports of 40 additional coronavirus cases. hubei with 36 additional cases. innew coronavirus deaths

hubei province. continuing to paint the picture we have seen of declines. we will get more insight on how markets are -- i will be joined by rachel farrow. you the first renews. self-quarantine in his texas home after coming into contact with someone coronavirus. handshake had a brief and conversation with the carrier at an event. those who interacted with the senator should not be worried. ted cruz says he has no symptoms and feels fun and healthy. north korea is reported to have fired more than -- more unidentified projectiles. they were fired in the east see in the direction of japan. it is not known yet how far they

flew. kim jong-un did missile testing after the planning about u.s. policy to the korean peninsula. at least two of the detainees have been accused of treason. they show concern about potential challenges within the family. police in hong kong have arrested 17 people in connection with suspected homemade exposer devices. 12 men and five women are being held on 22 properties. police say they recovered 1.5 kilos of explosives. global news, 24 hours a day on air and on quick take by bloomberg. powered by more than 2700 journalists and analysts. i am karina mitchell.

this is bloomberg. haidi: still ahead, we will continuing honoring -- monitoring the moves in the oil market. coming up next, china's latest trade numbers showing the extent of the coronavirus impact on the economy. we will be assessing the prospect of recovery. this is bloomberg. ♪

haidi:haidi: this is bloomberg markets: asia. -- i amdi straws mark haidi, in sydney. 225, we are seeing declines across the board. we have had statements from japan, concerns about the

strength in the yen, trading around 1.03. we could be looking at intervention from the bank of japan. in australia, a wild morning. this is the biggest decline we have seen since november. we are seeing that selling continuing to comes to that one point. the trading limit coming through. futures down by 4.5%. this extreme bout of risk here when it comes to sovereign bonds. look at the u.s. treasury. we were as low as 0.8%. 28 basis points lower, zero point a poor percent -- 0.84%.

this is just above 1% at the moment. looking for a bit of refuge from that plunge. we are also seeing pretty close to record those when it comes to aussie and new zealand bonds this morning. the latest china trade numbers laying bare the extent of the coronavirus impact on the economy. they are not expected to be pretty. let's look at the close outlook -- take a look at the outlook of the chinese economy. extent a surprise, the to which we saw export and import suffer. will marge be much better? much better? the travel restrictions have severely disrupted production

and transportation and china's ability to meet export demand. this elevated coronavirus overseas. some chinese companies may be placing here's import orders. >> i was going to ask you about your expectations for the impact on prices. in some respects, it will be inflationary. >> we have seen that for february and march.

there could be lower economic activity. adjustment may be related to the travel restrictions. >> in terms of what this means for the u.s. china trade war and the trade deal that was struck, is there any indication that china will not be able to meet its commitment under the phase one trade deal? through the import numbers, we can see that china's import of some large commodities are still quite significant. suggesting that china is committing to the first trade war deal.

this may also boost china's demand. haidi: do you expect to see large-scale stimulus from the chinese government? there seems to be a mentality of wait and see to see how bad the data really is. >> we think that if the virus can be largely contained then it could pave the way for recovery. of course the policy stimulus will likely pay a role -- play a role in the resumption of business. china will continue to ease policies. it will ease at its own pace rather than following the fed.

that fiscal quality support will be special. total finance growth will outpace gdp growth. the pboc is likely to rotate cuts and also the annual review of the targeted rr. enjoyould allow banks to more rr. this can help more companies after they have converted their outspending pricing. indi: how much has the drop oil prices affected the inflation in china? > we think it will have an impact. in weight is rather small

internal cpi areas. government is containing prices as well as oil prices and lower economic activity. 'sey continue to wait on china inflation going forward. haidi: thank you so much for joining us. economisthinese joining us now. we will be speaking with gordon goulet later today. he will give us an update on the coronavirus. you don't want to miss out on the conversation. this is bloomberg. ♪

bloombergi: this is -- haidi: this is bloomberg markets: asia. seeking government support that

would impose the immense follow from the coronavirus and job losses. the carrier has slashed capacity by 50%. the government stepped into pay staff wages. the airline ceo said it would take months before the stability returns. flagship carrier cathay pacific is suspending flights to japan. these airports will be shut down until march 28. the move comes after japan tightened quarantine rules on people arriving from hong kong. cathay's four year earnings on wednesday. around 9% after saudi arabia sparked a price whereby slashing prices for crude amid a dispute with opec

plus partner, russia. this is seen as a step back in a piece for the plan to open up an independent academy -- economy for the kingdom. are seeing broad downside across most parts of the markets that are trading. some parts when it comes to the --rgy sector ozzie stocks are up by the most since november, 2018. in new zealand, we are seeing a downside of 2.5%. look at oil markets. this was the knockout punch we saw it early in the morning with brent and wti giving away those trading.saw in crude is still down by 20%.

the other piece of the puzzle, the risk aversion playing through. we are seeing sovereign bonds from the u.s. to new zealand, australia trading up. ♪

i believe that opec turned us down. today, their role in the market does not mean that we don't need their cooperation and contribution. others, especially, russia. there are issues in the markets. there is a unique situation unlike some of our countries where they have to carry all the producing companies.

haidi: those are some opec officials after talks in russia ended in dramatic failure. we know what came next. let's look at the markets. this is the knockout punch that was delivered. >> now we are seeing in spiral. is now below5 20,000, trading at the lowest level since january of last year. kospin see the korean testing this year. inching closer and closer to bear market territory. that is classified by a decline of 20%. for the first time since the presidential election in 2016 when donald trump won the presidency, we did see s&p 500

futures trade limit down. oft wasn't -- was a decline 5%. we are also seeing some massive moves across the rates market. the aussie dollar is roughly steady, down .3%. your dollar-yen has fallen below 1.04. seen theint, we have pointsr below 20 voices -- basis points. of 20 basisline points for the 10 year. fallinge the long and factor on the short end, we see a flattening of the yield curve. what is different about now is that there is finally a whiff of deflation in the air.

that is brought on by following oil prices. that is the focal point after saudi arabia said they are planning on pumping $8 billion of oil. this would not be out of the scope of possibility. we do see that safe haven bid. this ishat was gold, the highest level in seven years. back to haidi. haidi: that was sara with a look at the markets. let's get some perspective on this oil story. our guest is here. i want to talk about this chart to paint a picture. sarah really illustrated this for us. goldman sachs is already jumping and saying we could see oil in

the 20's. if you'ret matter looking at brent or wti. it feels impossible to overstate thesedespread impact prices would eventuate. you're talking about politics or the futures of u.s. shale. the future of climate change even. is this something you expected when we had that familiar situation of saudi arabia and russia? >> absently not. this was no one's best case scenario. of watching the seenarkets, i have not such a dramatic reversal in producers slipping to cooperate against all odds.

is what it is, it shocked and stunned the markets. they would not know what to make of it, it is such a dramatic plunge. the last time it happened was around 1991. what are your expectations going forward as to how long this standoff could last? raises a lottion of questions. there is almost no answers for the time being. not surprisingly, what we have seen in the market was sales, sales, sales. i think the big question right now is if that is really an all-out war that has been declared. let us keep in mind that there

was nothing formal, nothing official from opec. all there was to go by was the russian minister's statements. he said everyone is free to pump at will from april. he can't really speak for the rest of opec. slashed thehave prices in april. the doors in asia are being knocked down. can you take more oil? the question is if this is a gamble by the saudi's. can it take $30 prices? 24 or 48 hourst

in the markets will be crucial. the default presumption of the markets will be that for the time being, it will be a very bloody were but for the time being, it is a war. >> is this really dangerous game objection? can you talk me through the winners and losers? is this really bad for u.s. shale? >> i don't really know if we can call winners and losers. in a normal situation, when the economy is not doing well, countries like china, india, even japan and korea, they would have done well. is on itse economy knees. we don't know when it will recover. india is not so bad.

the entireipped to world because of the coronavirus. i do think this will be tailwinds for anyone. in oil-producing, exporting the middle east and north hugea, it is absolutely a cry for help. what about saudi bonds and aramco's bonds? these countries can't afford the kinds of prices we are seeing right now. credit you look at spreads, things were looking pretty fragile. this is going to push them over the edge. think, one theory is that the russians wanted a body blow to the shale sector of the u.s.. it has already been limping along. the share prices have tanked much more than the rest of the market. the credit situation is not too

good for them. you also have to ask who will buy their oil with all of the frayed costs. there are so much in the middle east and north african fleet being offered in the region. it doesn't look good for the u.s. shale sector. youfloor and that logic is can't heal the u.s. shale sector. you can bring it down to its knees but the moment prices future, sometime in the it will bounce right back. haidi: thank you for joining us. that was vandana hari. we will be joined by neil in the next hour for his thoughts. >> italy has taken unprecedented measures to try to contain the coronavirus outbreak,

shutting down the northern part of the country. 16 million people are in lockdown, a quarter of the entire population. arece and milan quarantined. are feared people still trapped in a collapsed hotel that had been operating as a virus observation center. 48 patients had been freed from the rubble, a coastal city. the owner carried out unspecified work on the foundation before the collapse. stocks in the middle east plunged as the world's biggest producers failed to agree on production cuts, kicking off a price war and sending oil into freefall. stocks fell the most since the 2008 finance or while kuwait suspended trading. this loan followed the biggest drop in oil prices in decades.

imposing aa is travel ban on nine countries because of the coronavirus. kuwait, egypt,n, iraq. it applies to all citizens of the kingdom. cargo,y exemptions are trade and evacuation flights. local news, 24 hours a day on air and quick take by bloomberg. 2700ed by more than journalists and analysts in more than 20 countries. this is bloomberg. morganng up next, j.p. asset management joins us here. we will have any closer look at the coronavirus and beyond. this is bloomberg. ♪

this is bloomberg markets: asia. haidi: markets are tanking

today. let's get a check of how the price is faring in the early part of the session. we are seeing capitulation across the board. that oil story, this game of chicken between russia and saudi arabia, this price war is slowing risk aversion in the rest of the markets. the nikkei 225 falling by the most since december of 2008. the magnitude of which we have -- sincein just about november of 2008. seen a lot of trading of u.s. futures. u.s. take a look at how treasury yields are faring. we have that 10 year yield crumbling below .5%. 0.48%.

the japan 10 year yield, it is -.20.ing by australia tenure bonds are trading at record lows. -- 10 year bonds are trading at record lows. morgan's asset management strategist, rachel farrow is here. what a difficult time to be an investor right now. a lot of uncertainty right now. we are trying to help clients evaluate the different impacts on the mountain -- markets. we are trying to put that in context of near-term and long-term investing. thatinly, we have noticed

central banks have been accommodative and we would expect governments to potentially lean into some fiscal stimulus and try to help investors balance those two. investors were coming into this at a latedy looking cycle investment environment. looking at the return of volatility in the market, even into the start of this year, it felt like markets, particularly developed markets could only push higher. is this something you would ?xpect to be somatic is this a long time coming? like long time, it felt nothing could keep u.s. equities down. >> we were pushing into a time when we expected volatility in these markets. when you have uncertainty, it is

more natural to have volatility. how do you put this in the context of long-term investing? do you take a mentorship some of that volatility? they expect that this will work its way through the system at some point. by a little bit now. what is the right approach? >> there is no one approach. each investor will look at what make sense for them. they look at the framework that they set up. with this uncertainty, there's nothing we can say until we get to see more clarity in the marketplace and we see confidence restore itself. --t we will have to rate for wait for. >> it was bank action that drove

the rally. look at this chart, look at expectations for the march 18 fed meeting. are counting and 75 basis points. will this be the put that the markets have gotten used to? rachel: who can give the final say on that? we have to focus on the long-term. as we have seen, central banks and governments have been very supportive and they want to be supportive in this type of time. you have to weigh that against some of the issues in the markets. much of this uncertainty is a near-term event. rather than a long-term event. >> the oil story, if it is more

eventust a 48 hour cycle could be devastating. >> you look at how investors have withstood some of this volatility. we see them moving into alternative investment. we ran a survey amongst wholesale and institutional investors and found that 50% of these investors were looking to exposure toir infrastructure and real estate. these are good diversifiers in a portfolio and provide income and potential upside returns. >> the problem with alternatives , there could be criticism that there has not been enough policy support. >> i think the investors here are looking to globalize their portfolios. they already have very significant exposure to the markets. they are looking at what that exposure could be.

>> is a commercial real estate you're seeing? it commercial real estate you're seeing? rachel: it is all types. it is a diversified approach to harness the assets of these income classes. haidi: what other avenues? is there a such thing as a coronavirus proof portfolio? rachel: differentiating the near term from the long-term, i think most investors will try to withstand the volatility of today. what they're looking at is what the right thing is for the goal of long-term investment. >> any kind of behavior will change this. thank you so much for joining us. farrell.rachel

about getting information vietnam. a lot is going on when it comes ,o borders being shut down restrictions on travel and entry, not just in vietnam but large parts of asia and around the world. that visatending waiver program. the coronavirus outbreak has gotten worse with that 60% jump in the fatality rate. london and parts of the u.k. have had cases. we are seeing some of these lock down onrt to border control. you can access our interactive tv function at tv and watch us live and catch up on past interviews and dive into any securities with the bloomberg functions.

you can be poem -- become part conversation as well. this is bloomberg. ♪

>> this is bloomberg markets: asia. a quick check of the latest business flash headlines. from says staff can work

home during the coronavirus outbreak. it is unprecedented as an event and a challenging moment. workook says employees can mostly if their job allows this week. the company is especially exposed to the virus with its global presence and supply chain focused on china. tesco will meet to finalize its plans in malaysia. this could bring in $10 million. tesco says that in december, it was reviewing its malaysia outlet after -- thailand and malaysia outlets. dame bank will pay $330 million. it won't ask the government for money but it will work with other investors. the money is meant to reassure

depositors and other investors. the fbi says it is in a comfortable position to act. we are counting down to the opens in hong kong and in mainland china, singapore, taiwan and the leisure -- malaysia. sophie joins us for a preview from hong kong. great to see you. forting down, bracing markets to join? sophie: bracing indeed. it is a red day for markets. this indicates that mainland shares also joined this regional downturn. we have that double digit drop in exports for the first two months of the year. we will see if this could retreat further from a two-year high after capping the best week for the benchmark in 12 months. by stimulusn fueled

hubs as well as by leverage. he is warning that the market is -- there could be a stock bubble. appetite for chinese equities that will be tested, we are waiting to see if the pboc will continue to hold off adding cash. they are betting that the central bank will cut borrowing costs. chinese bonds just set the 10 year yield to a 2000 too low. that will sink further as the global bond rally is continuing. that pushes the u.s. 10 year 10%.s below >> what a volatile session it has been so far. let's get you another look at how asian markets that are online are trading at the moment. it is that oil story. that plunge in brent crude on monday morning, throwing risk

assets into steep decline. the nikkei 225 are seeing losses over 4%. in australia, energy names are falling by 20%. the broader market is down by 5.3%. markets: on bloomberg china open, we have much more action. we look to see where the mainland markets and hong kong will join the meltdown. we will also be speaking with representative about the coronavirus. ♪

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haidi: it is 9:00 a.m. monday in beijing. welcome to bloomberg markets: china open. we are counting you down to the opening of trading in the chinese mainland and hong kong. --w collapses top producers fall out and brent plummets after russia said outlook curves would be a gift to u.s. shale. a grim reading as exports and imports plunge in the first two months of the year. northlogs down the rich -- locks down the ridge north with 16 million people under virtual detention.