>> a very good morning, welcome to "bloomberg daybreak: australia." i'm haidi stroud-watts. >> and good evening from bloomberg's world headquarters in new york, i'm kathleen hays. vladimir putin defies the west, signing an order recognizing separatist and eastern ukraine, but the russian president continues to deny plans to annex the territories. haidi: oil drums and stocks fall

as the local standoff over ukraine appears to be worsening. >> plus jack ma under renewed scrutiny in china. haidi: let's take a look at how asian markets are really taking in this perceived risk off when it comes to the ukraine and russia situation. futures slumping as well as bond markets rallying in response. australian and new zealand government bonds gaining over concerns over ukraine, boosting the demand for haven assets which has become such a scene in the last few years -- days. the yield sitting pretty close to that level coming ahead of the rbnz monetary policy decision as well. we saw the ruble and russian bonds slumping monday after putin recognized self-declared ukrainian separatists.

pretty flat session when it comes to new zealand. sydney futures looking markedly lower. we had futures when it comes to the u.s. side, really retreating with the u.s. market, closed for the holiday. not much leadership coming through. going to the start of trading in japan, for merely -- firmly negative as well. kathleen: of course, this news from vladimir putin recognizing the separatist republics in eastern ukraine is something that has been growing in the last 24 hours. it certainly hit russian stocks hard, even before this amount was made -- announcement was made by putin. this big drop in russian stocks, it was the biggest drop in eight years. people still thought french president macron had managed to broker some kind of summit, but

even then, stocks were down some 10% from the peak down 30% an intraday down about 14%, the biggest drop since november 2008. the russian ruble also having a tough day, the worst currency performer globally. russia's foreign ministry having to cancel a bond sale because of so much market volatility. a very volatile situation. i think markets will have an interesting time today. let's get more of the reaction to putin's decree recognizing separatist in eastern ukraine with woodhouse correspondent annmarie hordern -- white house correspondent annmarie hordern. is biden going to talk to president putin about this now? reporter: given the fact that we've seen significant escalation, it does seem like a summit would be off the cards given what happened. we should rewind and go through the steps of what we witnessed today. first we had president putin come out and say he will recognize those two so-called

separatist regions and what they claim to be, separatist regions. this would mean they would not be part of ukraine. about an hour or so ago, a top news agency in moscow reporting that signing that decree, president putin is sending troops into these regions, quote unquote "peacekeeping troops." this will certainly cause alarm for the white house and european capitals. from the white house, we heard they would move in an executive order prohibiting new investments, trade, financing, barring anyone from doing business in these separatist regions president putin is now recognizing as separate regions not part of ukraine. we are still waiting potentially if there's going to be more severe and swift sanctions against russia given the fresh

escalation we see happening in the last 24 hours. haidi: to that end, we are getting the read from the call, president zelensky really saying the move will not go unanswered, saying along with the allies, the u.s. will respond with fully in lockstep with these allies and partners to further russian aggression. but could the further lockstep measures include? reporter: we really need to see. they want to make sure they are in lockstep, already getting to this point, we have seen different leaders with different takes on how far they want to go. on friday we heard from italian leader mario draghi talking about the fact that potentially energy should not be on the table him and's should match the exact attack. what are they going to claim in terms of putin acknowledging these regions and recognizing them as separatist regions?

we should note president put in doing this has torpedoed any movement or implementation of the minsk accords. this does take as many steps back when it comes to moving towards a diplomatic and peaceful path forward when it comes to ukraine. haidi: our white house correspondent and reordering with the latest. let's get more of the market side of the reactions. we are seeing that firm risk off movement continuing. take us through the key assets. what are the sentiment and technical levels telling us about how much further they have had to fall? >> to some extent, that depends on exactly how rapidly his latest move escalates tensions from the u.s., but we are

already seeing a significant turnaround in the way that haven assets have been trading. australian government bonds are down in yields, five or six basis points today. if that sustains, that would be the first two day decline in australian yields this month. this is flipping that script, which adds to the difficulties for everybody. investors are positioned one way across a range of assets and now have to go another way. equities are also likely to continue to tank in particular because there has been a strong move by investors to buy equities because bonds were seen as headed downward because central banks are tightening. now bonds are going to surge, treasuries will resume cash

trading. we will also look at what goes on with those bets on fed rate hikes and if those these further if people parse in the potential that this russian situation will be so devastating that central banks will have to actually step back from plans to raise interest rates. kathleen: it seems every day central bank investors are saying we will know today or tomorrow. oil jumping of course, this is a big step and oil is kind of a hot potato in the region of negotiations. how long does this take to settle down? most people don't think the west will go to war, they will just put on new sanctions. what are the investors waiting to see? i think they have mostly seen enough to realize that this is

not going to be something that goes away one way or the other. i'm not about to judge what sort of a conflict there is going to be. it's obviously already a conflict on the diplomatic side of things. the way that mr. putin has continued to push the envelope, agreeing to a summit but then turning around and announcing this independent sections of ukraine, that emphasizes he's not going to turn around tomorrow and say, ok, we didn't mean it. that's a realization and markets. people have position very strongly for a situation where bombs are falling because central banks are hiking and some sectors are doing better than others and there's a hope growth will be strong enough to

justify higher stocks. now we are in a situation where everything gets flipped on its head. a lot of people are thinking, the one thing we want to bet on is oil but there could be moves bringing heat out of the oil market. i think this will bring a lot of interest in safety, in cash, and the bonds people would be dumping for three months. kathleen: when you have a plus b equaling may be f and then you add in a c, maybe you don't know what you've got. [laughter] garfield reynolds, get more on the story and all the day's trading on the markets blog. you will find market commentary and grid analysis from expert editors to find out what's affecting your investments right now. what an apropos moment to bring in the federal reserve governor who said today actually that she's willing to go into the fed

meeting on march 15 or 16th and look at the possibility of a rate hike. maybe she's going to go with the plan as the majority of officials have said. but she also said in answers to questions that she is watching the situation closely. there's not a lot of connections between that small economy and the u.s., but his point is well taken that if central bankers see turmoil in the market, big questions over the geopolitical situation, with that make a difference of how they move or how they communicate about future moves? haidi: and so much of it still depends on how we see the pandemic playing out, not just the u.s. but globally. we see a patchy recovery depending on which point we are in the covid-19 outbreak and the

different ways governments are dealing with it. to that end in the u.k., we are seeing a rapid attempt to return to normal, boris johnson confirming they will scrap covid-19 rules including the requirement to self-isolate after a positive test. that will be interesting in terms of the health system. there's also another booster sought -- shot for the most vulnerable parts of the century -- population. in canada, we are seeing trudeau extend the state of emergency as they continue to do with protesters not happy about the mandates. and of course in hong kong, a very different picture as they continue to scramble to work out what restrictions could help cope with the omicron outbreak. let's get to paul allen here in sydney with first word headlines. reporter: china may be renewing

scrutiny of jet my -- jack ma's group. they will start a first run of checks on financial exposure and other links to the group. the process is being described as by far the most thorough and wide-ranging looking to deals with and. it's unclear what triggered the fresh inquiry. former u.s. secretary of state mike pompeo is scheduled to travel to taiwan next month. that would make him one of the most senior u.s. dignitaries to visit the island in recent years. he is said to have accepted an invitation from type a based prospect -- type a -- taipei based prospect rendition. pompeii was a vocal advocate for a hawkish china policy. hong kong is expected to unveil a budget headed further into the red. the covid spike has pushed authorities to implement tough social distancing and travel measures which economists predict will leave a heavy toll on growth. hong kong financial secretary paul chad is expected to dry up

the government budget to its fourth fiscal deficit in a year. the announcement expected wednesday. the japanese prime minister says benefits of growth don't belong to a limited group and should go to more stakeholders. he was questioning policies that some say are negative for stock prices are the premier has talked about a shift from shareholder focus and a bid to expand the middle class. he says capitalism must be something that belongs to all. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm paul allen. this is bloomberg. kathleen: still ahead, oriana financial services says geopolitical risks are yet to be fully priced into markets. we will discuss the odds of the fed hiking less than traders are expected. and the australian chamber of commerce and industry tells us how the international reopening will renew its tourism business.

this is bloomberg. ♪

>> party central out here at sydney airport as we reopen fully to the rest of the world. >> market rates here in australia have not been twiddling their thumbs, they are focused on the markets that will be available. so the u.k., europe, parts of north america. >> companies have learned how to manage with covid.

>> the tourism industry rebounding strongly as we come out of this pandemic. >> the more challenging issue for australia will be things like aviation we attraction because many international flights have lessened the number of roots to australia. >> we are optimistic about what the rest of the year looks like and looking forward to a more normalized 2023. haidi: some of our guests on bloomberg tv reacting to the border reopening in australia. the demands of australian policy, the latest step in the nation's shift towards living with covid. after 704 days of close borders -- closed borders, businesses can finally start to plan for the future. our next guest overseas australia's largest business network. the australian chamber of commerce and industry ceo, andrew mckellar. obviously, there's a lot of jubilance and relief, but meaningfully, how long will it take for some of these businesses to see a return to

something akin to pre-pandemic normality? >> yesterday's move west welcome and the first step, but it is a long road ahead. we can't expect activity will just spring back automatically or that we will get back to having 9 million plus international visitors coming to australia in the next 12 months. it will take some investment. we will have to get back out and spend extra dollars as a nation convention world we are back open and we have to decide this image of fortress australia. it will be some work to do. we will have to undertake additional investment to achieve that and we are urging the federal government to look at that in the context of the federal government that will be announced later in march.

haidi: and at the same time, we are looking ahead to wa reopening borders after being a strong hold out. has the nature of doing business changed? do you still expect to see a revival of business travel and holding negotiations in person after the last two to three years? >> many businesses have learned a lot more about doing business virtually your online digitally, so i think that's been one of the features of the past two years. we were forced to learn very quickly for many of us in that space. i am confident that there will be a bounceback to face-to-face business and i think people will enjoy that. it is a very productive business so i have no doubt there will be

some sort of mix. i'm sure we won't change everything we've done in the last few years but people overwhelmingly want to get back to a more normal operating environment and i expect that will become the main focus again quickly. kathleen: australia you say has a huge task ahead to repair its international reputation. i read that and i thought, i think a lot of people are thinking great, australia's open, if anything i think there's a little -- amount of sympathy and affection for people who have visited before and for people that it was on their bucket list. >> that's very welcome news and i'm pleased to hear you say it but i think we have probably been out of a number of people's minds for the last few years.

the pandemic impact globally is waning, not gone, but it is waning and many markets are open for business. there are markets that are competing for our dollars and we have to remind people of the great experiences and opportunities we've got so i'm sure that if we do that, people might be willing to come back. it won't happen overnight, we predict it will take at least 12 months to two years to build back to the former strength but it is encouraging to hear your comments. kathleen: how is a -- important is it? increasing the funding up to $200 million being essential to rebuilding this international image, is the government on board? what does it need to do?

>> there's about $160 million currently and we think that will need to increase. a lot of it is marketing and traditional established markets, reopening markets certainly will also want to focus on. some traditional markets including china remain more difficult at the moment so we have to break new ground and that is part of the challenge. the other area we cannot forget about, that is business events. we have to get back out there and start bidding for those. there is a time lag in the process to determine the venue. they like to look at what is

competitive so we have to look into that space and remind those conference organizers and advantages australia has as a destination for that sort of thing. haidi: great to have you with us, andrew mckellar, australian chamber of commerce and industry ceo. plenty more to come here on "bloomberg daybreak: australia." this is bloomberg. ♪

kathleen: a quick check of the latest business flash headlines. tencent has denied rumors it's facing a new crackdown from chinese regulators, in an unusually aggressive statement, the company poked fun at an anonymous online post from a tencent employee that hinted at of potential clampdown without elaborating. wider reports about new rules sparked the worst today selloff in china tech shares since july

with tencent closing more than 5% lower. life insurance corporation of india has reiterated plans to lift this year despite volatility in global markets. they say they're keen on having the ipo in march, signaling urgency in the government to boost cash inflows and a budget deficit -- close a budget deficit. they are aiming to raise almost $9 billion by selling a 5% stake in lic. reliance indices -- industries could spark a bidding war for the telecast rights. it could be worth $5 billion or more. sources say reliant and volley -- viacom are in talks to include that and comcast in a consortium to outbid competition. amazon is said to be in the fray and sony is also said to join the rights currently owned by disney. next, we discuss how asian markets react to the latest developments in ukraine with oriana financial global cio

isaac poole. we are watching the asian stock markets. good time to take a look at all of this and see what might happen next. keep it right here. this is bloomberg. >> you are wak

australia. vladimir putin has recognized separatist republics. in a televised event, he demanded that governments all stop military action. they say that they killed five ukrainians of that they called spies who crossed into russian territories.

the latest policymaker flagged a hike in the march meeting. bowman said she favors forceful action two inflation and supports raising rates in march. she added it was too soon to see how big of a rate would be. u.k. prime minister boris johnson has confirmed the covid rules will come to an end in england. starting on thursday, people infected with the virus no longer have to self-isolate or inform employers. free virus testing ends in april. >> we will advise people who test positive to stay at home. after that, we encourage people with symptoms to exercise personal responsibility. just as we encourage people who may have the flu to be

considerate to others. >> global news 24 hours a day, on-air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. >> let us get some morning calls. the ukraine issue is causing issues. has s&p 500 could draw more than 6% in a full-blown crisis. on the other end, it could jump on de-escalation. nasdaq is a .6% upside in -- 8.6% upside. >> the bank strategists says a doomsday predictions are fashionable but wrong. investors should stick with stocks. to look at strength in a range of sectors -- they look at

strength in a range of sectors. let us get a look. what a time, if i am an investor, i either want to see this settled because there is an agreement made between putin and biden. or i guess i want putin to win and take over and it is over. we are in this netherworld. what is this going to mean for markets who are wanting to get on the central bank rate hikes? >> it is a challenging time right now. there is so much uncertainty, the range of outcomes is extraordinary wide. the long-term outlook is uncertain.

it is difficult when you have this new slow on a daily basis. even though markets have been struggling to digest this and we have seen some risk a bill into prices, there is more to come. we are likely to see further risk built into equity markets and sovereign bond markets and treasuries as this unfolds. while it would be good to get a diplomatic outcome that allowed a clear finish and allowed us to move quickly back to the medium term never to -- narrative, it looks increasingly far away. we have the near-term risk that is escalating to a war and we know that it can aggressively get the hard decline. >> we do not have any recent

paths to see how this will go on. when it comes to central banks, the federal reserve is meeting in 2.5 weeks from now. is this something that most central banks put to one side? we move ahead on our rate hikes? >> to a greater extent, yes. you have the fed which is a great example. other is a rate hike coming in march -- there is a rate hike coming in march. regardless of what happens, what is relevant with this uncertainty is whether the basis point hike where markets have moved to pricing or if it is a 25 point basis point hike. this uncertainty allows the fed to say we need the hike and we know that. let us hold off a little bit

because we do not know the potential outcomes here. there is some near-term and potential medium-term uncertainty over the next 6-9 months. we begin the process but we are not going to raise the hike immediately. beyond that, every meeting is live and that is good. the market consensus. >> what would tell you that the fed has a lost control of the narrative? -- has lost control of the narrative? >> what is going on in the of the curve and real rates? we have seen the yield curve flattened. that is not positive in our view. that is always a bad sign. it is almost always indicates we are going towards a recession. there has been a fed policy era.

if the fed does not control, there is some pushback against the narrative of seven or eight rate hikes at year and allow the curve to steepen out. let the economy continue to grow. that will be critical for the economy. to deal with what will be tighter financial conditions over the year. >> without aggressiveness, market expectations sees the moving board of expectations for the fed has been cut. if you take that long term outlook together with what you have seen out of earnings, where do you think the opportunities ally for the next -- lie for the next few courses? >> right now, at least over the next couple of months, certainty -- uncertainty through equities.

it opens up opportunities over the next couple of quarters. there is solid economic momentum, earnings growth is going to be positive. we have expectations for earnings growth falling. there is opportunities coming. the fed is being cautious and sensible about all of this. they are looking for significant balance sheet runoff over this year. they do not need to rush to heighten seven times. they can be a bit more circumspect and hike four times and wait and see. that will be a positive move for risk assets which have moved the pricing far more aggressively. >> i want to share a headline with you at our viewers. boris johnson is preparing his address. we wait for that, i have to ask

you, you were upbeat on china. questions about tencent and if they are going to get a harsher crackdown. another property developer which was doing fine. you are so positive about china? -- still positive about china? >> there is a lot of near-term risk and ongoing uncertainty and some regulator he uncertainty -- regulatory uncertainty. they do not want weaker growth. you will see policy moves to support that over the next six months. >> the french economy minister says president emmanuel macron has triggered a possible meeting

between west and russia. what options are available if de-escalation of tensions does not work. >> geopolitics is dominating with a huge forceful role that russia -- france is trying to play to ease the tensions. what kind of impact with sanctions on russia have on the french economy? >> it would have a deep impact on russia. on the russian economy and interest. it is time for de-escalation. it is time for diplomacy. there has been a major effort made by emmanuel macron and the possibility of having a meeting between vladimir putin and president biden. two leaders agreed on the principle of a meeting.

i think we should all make the best efforts to make this meeting. he played a key role to trigger this meeting between two leaders. >> if it does not work, what kind of sanctions should we be looking at? >> i do not want to give too many details on sanctions. we want them to be efficient. we had to trigger the sanctions when it is hundred trigger the sanctions. one point must be clear, if there is any attack from russia to ukraine, we have a set of sanctions that are available and it would protect the russian people and state and economic interest. >> how long do these elevated prices for gas and oil will stay ? >> i think that everybody must

be aware that there are some political tensions in ukraine. taking into account the fact that there is a very strong economic recovery in the united states in europe, everywhere in the world. we would have to face an increase in energy prices. >> speaking exclusively with bloomberg. next, more scrutiny as authorities in beijing asked companies to check exposure to the firm. we have details just ahead, this is bloomberg. . ♪

>> sources say china has told banks to check exposure to ant group. for more, let us bring in the executive editor. what do we know so far? i will not disbelieve any story i see coming out of china. >> state firms including state earned banks have been told to review any connections they have with ant group up until january of this year.

they are told to report back as soon as possible any links that they have found and look into any links that have been considered open to january. this is the most far-reaching investigation yet that they have seen. it is unclear what the catalyst for this examination is and if it will resume -- result in legal action. this is what we know that banks have been told. >> we have breaking news when it comes to the u.s. response to the latest offense on russia and ukraine, putting ordering forces -- putting ordering forces. a senior administration official commenting in a call with ukraine. these u.s. missions are also

expected to include additional sanctions. we wait to hear more about the sanctions and there are hints of this in the update between president biden earlier saying that there is a plan to issue sanctions, it will be in lockstep with the u.s. and allies. we are hearing more u.s. measures expected to include additional sanctions. so far, the announcements of the ban on investment in those affected ukraine regions is after the president of russia announced he is recognizing two silver tamed -- sue sophie two self-proclaimed separatist areas in russia. all of the market impacts and setting up for a risk off session here in asia.

this would be another hint of concern for chinese investors. there has been a lot of talk about the haven aspect of chinese assets given the monetary policy divergence. does this tell us that the attempt to crackdown on technology and so many other segments of the growth economy is not yet over. ? >> there was a lot of rumors about tencent yesterday. there was some rumors around the metaverse. there is regulatory scrutiny still. >> that is our executive editor. the latest when we get more details, new zealand prime minister has signaled covid restrictions may be eased after the country's omicron wave

peaks. this comes as a protest enters a third week. is this likely to change the picture and appease these protesters? >> it is hard to see how that would happen. these protesters have been running for 15 days and they are soon to embed themselves around the grounds. there have been moments of violence with riots being thrown. someone tried to drive a car into a line of police. these protests were about mandates which required workers a certain industries like health care to be vaccinated. the prime minister said they could be removed when the wave of omicron infections peaked. it will be around a 3-6 weeks. there is no firm dates and that will happen when it is safe to do so and not when the protesters demand it. the government has been refusing to meet protesters.

it has gone beyond being a peaceful protest but it is hard to get a handle on who these protesters are and who the leadership is. there are people like sir russell q2 is a well-known sportsman who helped new zealand when the american cup. there is a well-known ceo of a company that has been donating company. -- money. it is hard to see how intention to remove the mandates with no timeline is going to shift the needle on this. >> taking a look at the day ahead in new zealand. it may signal a quicker pace of tightening head and it seeks to rein in the fastest inflation in 30 years. reserve bank of australia is scheduled to give a speech to australian financial markets association today. a consortium of asset management

and technology billionare mike cannon brookes plans to speak to all shareholders including shareholders after their multimillion dollar bid to acquire agl energy was rejected. morehead, this is bloomberg. more ahead, this is bloomberg. -- more ahead, this is bloomberg. ♪

>> boris johnson assist the country must learn to live with a coronavirus as he ended pandemic rules. hong kong is still considering strict rules to control its outbreak. there are different strategies to deal with covid around the world. >> it is different in different parts of the country in the united states, in different parts of the world. you see on the pandemic and the way that leaders and societies want to go about fighting it, we are seeing things getting better and different strategies that are being approached. some things may be premature, we have record numbers. we have very high numbers of hospitalizations in the united states. throwing caution to the wind

does not make sense to me. you casing isolation is not that important is a little bit confusing because -- u.k. saying isolation is not important is a little bit confusing. how can we put this behind us as quick as possible. ? >> how much resiliency has built up in the u.s.? >> doctors are exhausted and nurses are exhausted and many have left the profession. we are seeing a lot of frustration because when the icu has been full and people are wanting to pretend that kobe does not exist, it has been normally difficult for people. there are many health care heroes, the health care system has really stood up to every challenge.

it has come at a cost. and there is a lot of work to do now on covid. we have to do much better on linking testing to treatment. we have to fight covid misinformation around vaccines. if we do more now, we will be in a better position in those regards. >> i noticed there is a question of supply getting out into the market. where do we stand in terms of those treatments? when will they be readily available? >> i do not have a great sense of the supply. i am hearing in a few months, perhaps. there is a lot to work to do between now and then. the vaccine effort in the united states has in a good job getting to communities that are shut out of the health care system.

more or less left out of the health care system. i was out vaccinating in baltimore over the weekend with the city health department. it is outside of a supermarket. if somebody is sick, particularly without a doctor of their own, what do they do? how do they get the treatment within the first five days? otherwise we have the same disparities. the same level of severe illness in communities that have been hit the hardest. while we are not totally frantic over the number of cases in hospitals, to be billing -- building resiliency for what is coming next. >> we have to give you some important headlines, breaking on ukraine, he was discussing moving at the embassy out of ukraine.

people say these measures are spent to include additional sanctions. -- are expected to include additional sanctions. measures are expected to include a call for urgent un security council meetings. that is a four-day break australia. -- that is it for bloomberg australia. ♪

haidi: good morning. we are counting down to the major work it open. >> a dramatic escalation of russian tensions with the west. it expects to send asian stocks south as oil jumps. china is renewing scru