>> a very good morning. we are counting down to asia's major market open. >> welcome to daybreak asia. our top stories this hour, asian stocks are set to slide as the war in ukraine intensifies. it stokes demand for sovereign bonds. russia's invasion enters the new phase with a return to

traditional artillery-based attacks. officials expect a more deadly time ahead. president biden plans to say the u.s. and allies were ready for moscow's actions as he prepares for his first state of the union address. shery: start you off with breaking out of south korea. industrial production coming in month-to-month, a growth of .2% higher than analysts consensus that it would contract by more than 1%. and it's a little bit of a slowdown from the previous month when the number was revised down to 3.7% growth month-to-month. industrials you're on your missing to the downside. the expectation was for growth up more than 6%. haps not surprising given the year on year basis indexes becoming less favorable. we continue to see double-digit export growth for south korea in industrial production both year on year and month-to-month in expansionary territory, haidi.

[no audio] haidi: let's get a look at how we are seeing trading. it is firmly risk-off. there is that extension of that global bond rally that we saw with investors piling into treasuries overnight. we see that yield when it comes to the 10 year and the three year, that the group will be watching the way that the japanese government bond trades as well. when it comes to equities trading, a pretty slack start in australia as we hear prime ministers scott morrison has contracted covid-19. he will be continuing with his prime ministerial duties. when it comes to new zealand, a

little bit of downside in that part of the world as well. it looking like a usual start of trading in japan. shery: u.s. futures at the moment are gaining a little bit of ground after equities pushed lower in the new york session. that jump with rising fears about how that might complicate the fed's outlook. and look at wti crude past seven dollars a barrel. we haven't seen a surge of 100 five cents 2014. there was a release of -- 105 since 2014. we are watching treasury futures because we have the 10 year yield seeing a four-day drop, the biggest since december and going toward the 170 level. this all concerns on what is happening with ukraine and how that can affect the global economy. there are signs that russia's

invasion of ukraine is entering a new, more deadly phase with more firepower. that is adding to the list of challenges u.s. president joe biden must tackle in his state of the union address. for more on all of this, let's bring in our political news director george schneider. and chief asian correspondent stephen engle. we are now expecting more violence in ukraine given how russia has been trying to push further. >> that's right, shery. there is a strategic shift being looked at and begun by russia and ukraine. initially, they were going to attack more strategic, rocket fire cities. they thought it would not be particularly well defended. the resistance turned out to be greater than they anticipated

and there were signs now that they have regrouped and this new deadly phase will be with more firepower. they will be using more unconventional, if you will, tactics. we have seen that in kharkiv where there were rockets in residential areas that did lead to deaths. this is accelerating the refugee crisis out of the ukraine. in poland and hungary, citizens are fearing for their lives. there are pictures on television and social media of rockets in residential areas. many are fleeing and that will add to the burden on nearby countries. to try to deal with this accelerating wave of refugees. shery: and it's a challenging -- haidi: and it's a challenging time for the president to give his first state of the union. is he battling the invasion as

well as these pressing domestic challenges he has? >> yes. we can expect the president to open his speech talking about the crisis in ukraine, the white house moments ago put out excerpts of the speech that he will give tonight to a joint session of congress. we can also expect him to talk about his plans to cut prices for families. his solution to rising inflation. his plan to cut the cost of childcare, to though -- to lower the cost of prescription drugs. and he will talk about his plan with how u.s. businesses compete with businesses abroad. all as he sees ways to lower prices. shery: despite speculation of russia, there is -- despite sanctions on russia, there is speculation of china. is there a tone shift coming

from beijing? stephen: beijing has struggled, on one hand, to defend its position on russia. and at the same time, respecting ukraine's sovereignty. the cornerstone of chinese diplomacy are these five principles of peaceful coexistence which includes respect for national sovereignty, noninterference, and nonaggression. china uses these five vague principles to its advantage on both sides of the coin. in particular with respect to taiwan. but in russia, xi jinping and vladimir putin met before the olympics and talked about the relationship having no limits and xi voicing support for putin's claim for security assurances from nato before the war. after the war, it has been much more vague. it looks to me like beijing was

trying to coalesce a consensus narrative with how they will respond. in the conversation with his counterpart from ukraine, the first conversation between the two gentlemen, there was a bit of a harder line towards the war. and i use that" tatian's -- in quotations because china has not used war or invasion. it might be a translation issue. i will have to see the mandarin, but he is deploring the outbreak . haidi: let's get to vonnie quinn with the first word headlines. vonnie: the european union has agreed to exclude seven russian banks from the financial messaging system in response to invasion of ukraine by russia. however, the nation's biggest lender and another one part

owned by a giant. it came 10 days after their adoption. the european union has agreed to move the ukraine's membership bid. they will ask the executive arm to look into the possibility. the ukrainian president formerly -- formally put in an application. it can last more than a decade. >> we have proven our strength. we have proven that, at a minimum, we are exactly the same as you are. so do prove that you are with us. do prove that you will not let us go. do prove that you, indeed, our european. -- are european. that life will win over death. vonnie: ukraine has raised 277

million dollars from the sale of war bonds. ukraine also paid about $300 million in bond interest to international investors do tuesday. the government is looking at other fundraising options including foreign currency issuance and in talks with the imf and world bank. >> you can see a lot of requests . we are looking at a way to attract not only global currency, but also dollars and euros. and there are other types of currency, but i'm not sure we are in position there. we will explore other options. vonnie: the u.s. and other major economies have agreed on a coordinated release of oil stockpiles after russia's invasion of ukraine pushed crude prices higher. international energy agency will deploy 60 million barrels from reserves. half of that amount will come from the u.s. and the rest from

iea members in europe and asia. global news 24 hours a day on air and on bloomberg wick powered by more than 2700 journalists and analysts. i'm vonnie quinn. haidi: sanctions continue to mount. how investors are reacting to the release of emergency stockpiles of oil. haidi: and up next, we hear from port shelter ceo richard harris who says the war in ukraine may hasten the next recession. stay tuned. this is bloomberg. ♪

>> tonight, bloomberg brings you live coverage of the state of the union address hosted by joe mathieu. reaction, analysis, and what it means for wall street. >> we did leave this door open.

those are the words that democrats wanted to hear. >> the state of the union address followed by the republican response. coverage because tonight at 8:30 p.m. eastern. >> i think we are at a very, very -- inflection point. it comes down to if the russians will be satisfied by extending their borders in ukraine. will they take he of? -- will they take kyiv? will they extend beyond the borders of ukraine? the last is terrifying to markets. it would shake a bunch of core europe if they move their military to the western border of ukraine. and that has the markets concerned. shery: ken griffin on the market reaction to the war in ukraine.

a chance of accelerating the chance recession, let's bring in richard, ceo of investing management. i guess this is why we are seeing traders pair back those bets. we might see a big rate hike in march. but is this enough for you to consider adjusting your positioning? richard: i think if you haven't fixed the roof in your house while the sun is shining, it's probably a bit late now. i don't really see any reason for a lot of changes at the moment. i think what we are seeing hastens the next recession. but the next recession will come anyway. it is a little way off. it will be generated by the fact that we can't control inflation, that people will find it difficult making ends meet and companies will go bust because of that. as we are seeing in the bond

markets, there are reasons to be cheerful. interest rates coming back. we do have a real slow down, a potential slow down in the world economies. even with the trade frictions we have with trade restrictions on russia. all of this will affect the margin and price is made on the margin. shery: we have seen gold as well, not to mention the dollar. are those trades that will continue to be popular? richard: well i think the knee-jerk trades that you tend to get in a situation like this when there is an increase in global tensions, yes you go for the dollar. you go for gold. it seems unlikely that global tension will necessarily slow. you probably want to keep reasonable exposure there. but i think equities for the next three months to six months, you will have to look at target last night.

unusually good earnings up 10%. this isn't a situation where the market is throwing everything out. it is being concerned and repricing because there are some stormy days ahead. but i don't think those stormy days will be with us just yet. haidi: some of those stormy days will probably come from higher energy prices, right? how does that impact the consumer? also, how do you gain exposure to that if that is one of your top trading themes right now? richard: while the problem with that is i'm not sure whether it's not too late. you probably have a chance of some appreciation already. but if you look at how oil has moved ready dramatically up from $80 to nearly $110, that is a big move already. we will probably not see an easing of those prices in the very short term, but don't forget we have shale pumpers down the line.

shale pumpers are like cockroaches. it is not just one. there will be a lot of them. and don't forget that saudi arabia has always taken the view that if there is a slowdown in the west, it is bad for their interest. there is a possibility we may see an increase in oil coming out of opec. don't forget russia is only, but it's quite a big only 10% of oil output. so that kind of supply, i think, can be taken from a period of a few months. oil may get a bit higher but i don't think it will be stratospheric. haidi: china is an interesting one depending on who you speak to. either the ultimate safe haven or not really something you want to go to at the moment. take a look at this chart when it comes to the impact on investor confidence we have seen

so far, easing measures. we might get more from the nbc -- mbc. -- from the nbc. how selective are you when it comes to opportunities here? richard: i think it would be brave to called china a haven after the uncertainty of last year. the market has underperformed quite dramatically. we have had lockdowns and slowing of the economy. we have had moves on some of what you might call in china the big oligarchs, the big tech companies. a lot of that has gone to the pipeline and i think there is an opportunity for china to start to recover. as covid does ease and it has eased in most parts of the world. and it will here in a few months. we will see the dividend coming back, people allowed to work and

lockdowns being relaxed. i think in the short term, there is momentum in china that is likely to start to build. it is a move off the bottom. i think compared to other markets, relatively, it looks pretty good. haidi: richard, it feels like the pandemic is a little bit of old news. when you look at places like hong kong, they are still grappling with the outbreak and the pandemic. how do you get around that reopening theme? is there a sort of "no more" at this point? richard: hong kong is difficult at the moment, using 2020 policies in 2022. we are in a situation where cases have outstripped all means of the government following

current policies in terms of hospitalized and positive cases. this particular phase will probably start to fade come april. so that will be positive for hong kong. but at the moment, there has been a lot of gloominess, shall we say, within hong kong. i'm not sure that domestically, hong kong will recover quickly. but certainly, in terms of the market and hong kong's place as a place for chinese companies to raise capital, i think that is still pretty well intact. haidi: richard harris of port shelter investment management. and you can get the latest of the ukraine and around up of other stories in today's edition of daybreak. terminal subscribers can go to daybreak go and get the assets

that matter to you. this is bloomberg. ♪

haidi: we are tracking fall out of the global supply chain. these are our top stories today. commodity prices soar the most since 2000 nine as russia threatens key supplies of energy, crops -- since 2009 as russia threatens key supplies of energy and crops. major chinese companies are joining u.s. led sanctions against russia to cripple the country's ability to buy technology components. kinda is russia's biggest supplier of electronics and accounted for one third of semiconductor imports and more than half of computers and smartphones. we are counting down to president joe biden's state of the union speech. president biden will address washington's plan to curb

reliance on foreign supply chains, boost u.s. manufacturing, and promote renewable energy sources. shery: take a look at commodities as we continue to see gold prices rising. we will talk about the highest level since march of 2021. already coming off the back of february since 2016 as we continue to see these concerns of global growth coming off the russian invasion of ukraine. we are seeing crude continuing to rally in the asian session above $105 per barrel for the first time since 2014. the stockpile release failing to ease concerns that we might be seeing a major shortfall in supply. u.s. futures so up a little bit following equities falling in the new york session. number terminal users can read more about the stories in our newsletter. haidi: and here's a quick check

of the latest business flash headlines. forbes is suspending operations in russia to join other multinationals following the country's invasion of ukraine. the automaker told partners that it will halt work immediately until further notice. there will be the closure of three russian factories. back in 2019, there was a wave of sanctions and an economic slowdown. halting bookings to and from russia, the war in ukraine is now impacting global supply chains. the shipping and logistics giant says sanctions are affecting their operations. question based transports and all russian gateway ports. food, medical, and humanitarian supplies will continue. haidi: were in ukraine has prompted several financial institutions to freeze funds. bnp paribas and asset management

have suspended activities with funds investing in russian securities. any of the funds have suffered losses of more than 30% this year. jp morgan may revive its widely followed bond indices at sanctions pilot. the bank says it is renewing the exclusion of some debt from russia, belarus, and benchmarks. russian entities will be excluded from the jp morgan emerging-market bond index. haidi: and coming up next, more on the oil surge as the economy fails to ease supply. right now, wti standing at $105 per barrel. in this for the first time since 2014, really surpassing that level. we will discuss. this is bloomberg.

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>> we have proven our strength. we have proven that, at a minimum, we are exactly the same as you are. so do prove that you are with us. do prove that you will not let us go. do prove that you, indeed, are european. and then life will win over death.

>> ukraine is literally fighting for survival. troop movements are on a large-scale, but we should not fool ourselves. this will be a very dramatic time. i do not want to miss the opportunity to get together with my colleague and ask president putin to stop fighting and bring the troops back to russia and return to dialogue. the bloodshed must come to an end. haidi: ukrainian president volodymyr zelensky and german chancellor olaf scholz on the heightened state of war in the ukraine. at the start of asia trading, wti futures jumping 4% to trade above $107. su keenan, what are the key worries here for the market? su: three words, it's not enough. this emergency coordination among nations not seen as offsetting the anticipated loss of oil products out of russia.

drop in the bloomberg and you can see those prices flying higher before the iea made the announcement. the $60 million -- the 60 million barrel amount. the market says it just won't solve the problem. russia is the world's third biggest oil producer. that is the key issue. how to make up for the loss of the oil, the iea's 60 million amount is the equivalent of six days of russian fuel output. therein lies the problem. it is really seen as a drop in the bucket. the rally would be immediate and shocking after tuesday where oil was at $103. asian trading is mentioned, shot up to $107. pulled back a little bit to $105. all of this is being juiced by a

lot of the options markets. the $100 contract has a huge benchmark -- oil hit 100. they had a bit of exposure. and that just juiced the rally and snowballed higher. what we are looking at an intermediate and crude contracts, it is called super back where the station. it is a big structure going out. and traders putting bullish specs have to pay the highest premium they've paid in two years. it's kind of any's event. -- it's kind of an easy bet. it is likely going higher. shery: where do they see energy and other commodities going from here? su: in the short-term, everything is going higher. that's jump into the bloomberg for gasoline places. the pump prices can't even keep up with the jump we are seeing.

that is another area going higher. when it comes to jp morgan, banks taking the price cap. taking them higher because of anticipation of possible supply disruptions. the possibility of heavy disruption is growing to such an extent that they could possibly see $150 oil. again, it's not just oil and natural gas, it's also wheat and other commodities. russia and ukraine supply more than a quarter of the world wheat exports. energy in europe is highly dependent on russia. one third of oil and one third of natural gas. on top of that, we have the opec-plus meeting on wednesday. they are not only expected to stick to the plan of gradual

increases, but also giving us an updated forecast for supply. that is something the market focuses on. shery: su keenan in new york with the latest on the commodities space. the word ukraine is adding to the challenges. russia is sinking in the latest scorecards. china's renewed crackdown is another fresh concern. let's bring in our strategist for more. what are you most concerned about in the e.m. space? >> it's nice to be on your show. the many things to be concerned about, clearly russia is front and center. and there are many opportunities. what is consistent about russia, investors are not looking at the risk in taiwan is much as they should. but looking at opportunities in e.m. and many of them will look

at rcm for significant opportunities there. there are significant opportunities in latin america. most of these things have commodities backing them. there is also a lot of policy and what is favorable in these markets. there is risk to china which keeps coming up from time to time. and clearly, it has been difficult. haidi: and yet, e.m. has been holding up fairly well. vonnie: -- gaurav: it has been. e.m. is the story of 40 different markets. clearly, they have the positive macro payment. a very good bottom up earnings story. a terrific performer and has been up for the year. latin america up close to 20% for the year. for a variety of reasons,

commodities are really going to be in a strong space. and russia is the only other region that can really supply. that is why we have both of these regions doing relatively well. china is holding out -- holding up. china is doing ok. india is not yet cracking up. e.m. is actually doing relatively well despite russia being a big challenge. haidi: our bloomberg intelligence head of equities. can griffin says the market is at a very volatile inflection point. he spoke with david rubenstein. >> people do not often appreciate how forward-looking financial markets are. when a company announces a great quarter and you see the stock

price fall, people go, how did that happen? it's because investors had anticipated and even better quarter. markets are forward-looking by nature. this year, we have seen the markets off quite a bit up to the date of the invasion of ukraine. anxiety of higher interest rates, worries about the war. as the war broke out, the narrative changed. we started talking about lower interest rates for longer. we started talking about how different governments were going to react to this, vis-a-vis russia and the scope of the sanctions that would be unfolded. and the consensus over the course of the trading day was that the worst news was behind us. and the prospect of is there monetary policy, lester cody and sanctions than fear created -- less draconian sanctions than fear created a relief rally.

david: do you think the markets have basically made their assessment right now? >> i think we are at a very volatile inflection point. it comes down to if the russians will be satisfied by extending their effective borders, will they take kyiv? will they position themselves to reach beyond the borders of ukraine. the last is terrifying to markets. they will be adjacent to much of core europe if they move their military under the western border of ukraine. that has the markets concerned. so much will unfold over the days to come more weeks to come as russian ambitions become clearer. haidi: founder and ceo ken griffin. you can hear more when bloomberg wealth returns on march 22 at 9:00 p.m. in new york, right here on bloomberg television. we do have an alert on the

bloomberg. we are hearing boeing is suspending support services for russian airlines. politico is reporting boeing has suspended major operations in moscow and temporarily closed their office in kyiv. they have suspended parts, maintenance, and technical supports services for russian airlines. not surprising given we have seen other multinationals pulling out of the country after russia's invasion of ukraine. and we are hearing from politico. suspending support services for russian airlines. haidi: russia's invasion of ukraine appears to be entering a new stage. russian forces seek to suppress their systems. moscow relied on lightning strikes. they say the operation is on

track. china has reportedly told ukraine about harm to civilians in the country. between the two nations at russia's invasion, it also holds for more negotiations. china initially backed moscow. it has struggled to explain support for the kremlin. the united nations estimates up to 4 million people willfully ukraine as the war intensifies with around 680,000 residents already departed. the commissioner for refugees offering the estimate in a security council meeting. it represents a 300% increase from earlier eu predictions. russia has banned coupon payments for debt. it applies to rubles and bonds issued to depositories and registries.

it could mean international investors are blocked on sale by restrictions. global news 24 hours a day on air and on bloomberg quicktake powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. haidi: hong kong is set for a four-day lockdown. that's according to the latest local media reports. we get the latest on the city's covid crisis, next. this is bloomberg. ♪

haidi: we are counting down to the start of trading. tokyo edsel some of the stories we are watching today. korea at the top of the hour came in better-than-expected with chip reduction leading the way. the bank of korea also set to sell to trillion one two-year bonds. the nikkei sick -- exceeding 200,000 for the first time. health authorities predicting the number to go up to 270,000 within early march. over and japan, after toshiba ceo resigned tuesday, his replacement wants to move forward with a plan to split the company into -- in two despite

opposition from investors. domestic output was halted following a cyberattack on one of its parts suppliers. and plans to further ease order controls and exclude them from the 5000 person per day cap, prime minister kish era could announce the move -- kishira could announce the move as early as wednesday. haidi: a partial lockdown on the covid testing exercise. this continues to grapple with the outbreak of the pandemic so far. the fatality rate is among the highest in the developed world. let's bring in bloomberg managing editor for asian global business. if these reports and up being confirmed, what does a four-they lockdown realistically going to do? what are they going to try to do during that period? >> a lot of reports, bits and

pieces of information coming out about what hong kong is planning to do. as far as we understand, they are still considering and mulling it over. they will do compulsory mass testing push. 7.4 million people -- whether they will do compulsory mass testing and a push for 7.4 million people remains to be seen. for a number of weeks, the one and she and really did nail the outbreak there for about a month. it's tough to see if that will have any impact on raining in cases, but it may get everybody in the same place and at the same time in order to really facilitate one round of this mass testing regime. shery: we are seeing japan easing some of the world's most stringent virus border measures. what can you tell us?

>> japan was quite interesting when it came out. after omicron emerged, it was a band that had proven quite popular among the population. they are slowly peeling it back yesterday, allowing 5000 people a day to come in. and now they will be allowing foreign students back in. they are slowly rolling that back in line with what we are seeing more broadly around the world. border curves start to be dismantled because of the virus. shery: we do have breaking news at the moment. we are now hearing that the u.s. is expected to ban russian flights from airspace according to the wall street journal. the flight ban would follow european union flight bans. the expected ban would be from

american airspace according to sources. we are expecting to hear more details. but so far, the u.s. a be following some european union flight bands and is expected to ban russian flights from airspace as well. >> we have been expecting this in terms of trying to address what is turning into a global energy crisis. the u.s. apartment of energy saying that it will release 30 million barrels of crude oil from the strategic reserve. the department of energy issuing that statement, that they will issue a notice of sale. 30 million barrels of crude oil, and this coming even as we continue to see oil pushing higher. investors trying to work out if that strategic relief of crude, the court needed action by allies can really do much to curb what we have seen as that

big dramatic surge in prices following the invasion of ukraine. and it comes after a scene that correlated international agencies pulling 60 million barrels from stockpiles around the world and half of that amount coming from iea members in europe and asia. lots more to come on daybreak: asia. this is bloomberg. ♪

shery: breaking news out of japan. we are getting the capital spending numbers for the fourth quarter coming in at or .3% for japan. this is a beat of expectations when analysts had expected a gain of 2.9%. it is also a gain from the previous quarter, and perhaps given that we have a bit of a rebound in fourth-quarter japan given some of the restrictions domestically over coronavirus. they are also leading expectations, sales and profits also rising. haidi: a quick check of business headlines, product sales in

russia following the country's invasion of ukraine. the company is also removing the rt applications from app stores outside of russia. it is also disabling traffic in ukraine as a safety and precautionary measure citizens there. revenue estimates after efforts to monetize ai technology helping offset losses a dad sales. revenue came in at $5.2 billion. the amount raised surged 63% in the three months compared to just 1% and online marketing. their weakness in china's economy was partly to blame. she is in china's 51job's surged in the u.s. after the firm accepted a takeover bid of $61 a share. this values the online recruitment company at $4.3 billion. this after the original takeover

bid by 28% in january. treasuries moving forward with the plan even after the resignation of the ceo. the proposal has the backing who replaced sinikawa on an interim basis. sheba is not considering canceling the plan despite opposition from investors and is not going private. shery: these are some of the stocks that we will be watching with japan and korea opening for trade just a few minutes for now -- from now. etf's and asia expected to extend the losing streak as the workforce continues in ukraine. sony group is consolidating the m&a offerings under streaming giant crunchyroll. they will be watching sony and the u.s. food and drug administration is warning against the use of the covid rapid test because it hasn't been authorized, cleared, or

approved by the fta. stocks gained about 2.5% in the previous session. take a look at how we are setting up for the open. we see u.s. futures now up .2%. this after equities pushed lower in the new york session. we had that huge jump in crude prices raising fears about higher inflation. and what the fed might have to do. wti continues to rally. right now around $106 a barrel. we saw it at the open in asia surpassing 107 already at the highest level since 2014 or so. and we continue to see those gains for gold futures as well. very close to that 2000 level given that we continue to see uncertainty over geopolitical tensions and with war in the ukraine, leading to those haven assets gaining ground. there is also concerned about inflation pushing private higher

as commodities have surged to the highest since 2009. nasdaq teaches at the moment gaming .2%. -- gaining .2%. we are setting up for the asian open but perhaps we might see a little bit of downside. futures across asia are under a little bit of pressure. this after asian stocks rally. that sentiment had improved, but we continue to watch the latest developments around ukraine. haidi: and really, you try to make a sense of the pattern we tend to see. it starts off in mild positive territory but will give way to risk aversion. we see a bit of that when it comes to trading from the real estate and consumer financial names. when it comes to the rest of markets coming online, watch out for downside when it comes to japan and china watching for the

negative impact of surging oil prices on some of the major importers in asia. it doesn't look like they will be able to benefit from those treasury yields, but we see crude continuing to push higher. much more to come. this is bloomberg. ♪

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shery: welcome to daybreak asia from bloomberg's world headquarters in new york. haidi: asia's major markets have jumped open for trade. our top stories this hour, asian stocks are set to slide as the war in ukraine intensifies. rising commodity hi -- prices dim growth hope. there are signs of a return to

traditional artillery based attacks. military officials expect a more deadly time ahead. and reports hong kong will order a lucked out to coincide with its mass testing campaign, the city has one of the world -- a lock down coincide with its mast testing campaign. shery: reversing three sessions of gains, real estate and financials are leading the way down. not surprisingly, the energy sector is the only one gaining ground at the moment as we continue to see oil prices continue to rally in the asian session. we have also seen early in fourth-quarter capital spending rising more than expected, up more than 4%. and we are watching the japanese yen strengthening a little bit towards 114 level against the u.s. dollar. we are watching jgb futures that rose in the previous session after the solid 10 year option. we have seen treasury yields continuing to fall as we are now seeing 10 year yields in japan

also at that .15 level. take a look at the kospi which is down .3%. versing to sessions of losses. we had seen industrial production for the month of january and south korea leading expectations month on month. the korean won is down against the u.s. dollar. it will be the lowest since mid july. shery: the sentiment is starting to be felt again. we see futures holding pretty steady. there is a downside in australia when it comes to financial and consumer names. the worst performers, when it comes to that risk aversion, we see the extension of that bond

rally and seeing it is high when it comes to australian bonds. when it comes to currencies, a little upset take a look at the aussie dollar, and mostly backward looking and seeing a bit of a partial recovery. it is really how this economy and have a go forward given these renewed uncertainties. the big story is the price of commodities complex. we saw broad commodities jumping the most since 2009. we are talking everything from energy, crops, and metals. the bloomberg commodity index coming over for percent on tuesday. it has more than doubled since march of 2020 during the early days of that pandemic. wheat in particular, futures

rallying for a second day, sending that blistering rally that we continue to see from this stable. and when we look at crude, it pushes higher. even after we saw the confirmation. the agency relieving 30 billion barrels and half of that corded release is 60 billion barrels from the iea a little bit earlier. shery: we are now seeing breaking news out of exxon mobil that it will be stopping operations in russia's far east. given the current situation, the firm will not invest in new developments in russia. we have seen shale exiting as russian gas ventures, including a massive liquefied natural gas facility, we see if mobile follow suit.

it now announcing that it will be stopping operation. so let's get straight to our top story and the reason that all of these are taking actions. vladimir putin is working ukraine and the international response. jodi schneider has the details. there are more signs that we could see a more violent conflict coming from russia. >> the military analyst and the west says it looks like russia is shifting strategy. and they go to places that they thought would not be too well defended in terms of very targeted strikes. and when resistance was stronger than anticipated, they took a pause and are starting a new phase that is expected to be a much more deadly phase where they will be targeting areas and using different kinds of more indiscriminate tactics including

residential areas. we saw some of that today in the past two days where residential areas targeted and there were civilian casualties. this is causing concern about the refugee crisis deepening and accelerating into neighboring countries like romania and poland and hungary. you could see more than 4 million ukrainian refugees. >> we heard ukrainian president zelensky urging them to allow his country. take a listen. >> we have proven our strength. we have proven that, at a minimum, we are exactly the same as you were. so do prove that you are with us. do prove that you will not let us go. do prove that you are, indeed,

european. and then, life will win over death. haidi: there are lots of discussions about how this hastens integration with europe. >> the european union ambassadors the fed cult of the european commission has basically said that they will accept that application, if you will, for ukraine to become a member of the 26-country block. however, it is a very long process and it typically takes more than a decade. but they will go ahead and start that process largely symbolically by saying that they will start as a symbol to russia that europe is standing with ukraine. they consider ukraine eligible to become officially part of europe.

shery: our next guest says higher energy costs could reduce consumer demand. let's join extra pin strategist. in what we might see for asian goods, where you can see the biggest market impact when it comes to what's happening in ukraine. >> british consumers are dealing with elevated prices and services. certainly if the price of oil continues to go up, that will certainly affect consumer sentiment when they are pumping gas in their cars. and it will certainly have an impact in terms of how american households think about spending their money. they are potentially on goods

and services. shery: when it comes to some of the costs of this war in the ukraine, what are your thoughts of the costs to the u.s., especially when it comes to the credibility of the dollar? and we see these sanctions. perhaps the idea that the u.s. might be taking a political risk. >> i think it is certainly a wake-up call to many other central banks around the world are watching this and have been surprised when it comes to the reserves being frozen. and it may shake the confidence. and perhaps central banks and citizens around the world that are watching this. they think about diversifying to other forms of currency. haidi: if you have not diversified at this point, is it

a little bit late? what hedges would you be looking at right now? >> i think what we are seeing from russian banks, they are diversifying to cryptocurrency, gold, and the rmb. these are also rate diversifiers for investors. haidi: what about china as a diversifier? there is certainly a group of investors and haven status at the moment. >> i think china could come out of this a net winner in terms of the ability with russian entities, and also purchasing russia after gas and oil. in terms of collaborating and working with russia from a commercial side, and also being able to trade and engage with

the west. i think china is certainly in an interesting position. [no audio] shery: let's talk a little bit about the rotation we are seeing. that seems to be disappearing and people seem to be crowding growth stocks again. is this the new normal given the uncertainty out there? >> i think there will be a bit of seesaw action right now. this is what the fed is going to do in response to the geopolitical tension. there could be a rate hike in march and 25 basis points. they're going to continue to pivot and rotate from tech over

to value. i think that rotation is going to be delayed as investors try to figure out how long this war was going to last and what that means for monetary policy in the u.s. shery: what does it mean for the consumers from an inpatient and confidence standpoint, particularly as we see a nascent start of the reopening post-pandemic? >> that is what i'm worried about in terms of if oil prices continue to go up. this would be a damaging influence and factor on consumer sentiment and spending. and we have elevated prices. if there is going to be any kind of stagflationary risks or costs, that would come later this year.

shery: david chow from invesco. let's get the headlines from vonnie in new york. vonnie: china has told ukraine it is extreme leak concerned about armed civilians in the country. the first high-level phone call between russia's invasion, they say multicultural innovations -- there are back security guarantees from the u.s. and nato. this applies to rubles and sovereign bonds. officials say it is a temporary step that could mean international investors are unable to collect income on their holdings which are already blocked from sale. economies agreeing on a cord needed release of oil stockpiles after russia's invasion of

ukraine push food prices higher. half of that amount will come from the u.s. have the rest from the iea members in europe and asia. hong kong is said to be planning a four-day lockdown. the virus campaign will start march 26 and and april 3. the covert outbreak and containment measures are weighing on hong kong's economy -- the covert outbreak and containment measures are weighing on hong kong's economy. a for your growth estimate of 2.4%. global news powered by 2700 journalists and analysts with more than 120 countries. i'm vonnie quinn. haidi: expected to extend a losing streak as work continues and were -- in ukraine. we are seeing downside pressure

with next month's russia linked atf. sony consolidating m&a offerings under -- m&a -- anime under crunchyroll. and warning against a covert rapid test against korea-based sultry on because it has not been approved the fda. but the stock is up .3%. >> we are watching japan titanium stocks for another day. we are seeing another day as these stocks go higher after we saw them surge in the tuesday session as well. jeffries highlighted the potential out of japan. that alternative procurement plan is benefiting those companies. shery: take a look at crypto assets right now because we are

seeing a surge in bitcoin approaching the $40,000 level. three sessions of gains already. also, of course, given the sanctions against russia, perhaps warning a potential vehicle for getting around those sanctions. we continue to see those gains in the past two sessions, also adding 20% to the market value of bitcoin already. the total market cap crossing $840 billion once again. australian yields falling ahead of fourth quarter gdp numbers due in less than half an hour. and p capital investors join us to break down the numbers and what they mean for the rba. up next, president biden says -- set to address russia and inflation in the state of the union. more on what to expect, just ahead. this is bloomberg.

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haidi: dictate is must pay a price for their aggression.

it's the warning joe biden is expected to issue during his state of the union address which begins in one hour's time. but russia's invasion of ukraine is just one challenge. the state of the union, one of the themes he will try to drive home for americans. quickly focus on economy and inflation is going to talk about his plan. in talking about his pant -- plan to lower prices. the plan is stalled in the u.s. senate and we talk about ukraine and the crisis happening there.

they are imposing plans for the future and addressing the situation that we are all watching on tv in europe. haidi: to that end, what is he expected to say about the comparisons of the u.s. and its allies against what is going on right now? courtney: he is going to tout unity of countries around the world, europe, asia, and the u.s. to unite behind ukraine. i expect he will highlight that tonight at the state of the union. shery: courtney, are white house reporter ahead of the state of the union and president biden's first. this is what we are seeing when it comes to trading in u.s. futures at the moment. investors and traders going into this saying that the state of the union would be the diversity

of topics. we see a lot of upside when it comes to futures. we see u.s. futures open up a little bit more. and proxies in japan and korea. beijing struggles and we have more on the balancing act. this is bloomberg. ♪

haidi: voicing strongest leg which at -- china is voicing its strongest leg which yet, asking

for -- china is voicing its stngest language yet asking for aause. let's bring in the stephen engle. how do you read these comments from t foreign minister? is there a shift? stephen: it is a delicate tight rope bause for the olympics, xi jinping input and talked about their relationship having no limits. they emphasize their deepening strategic cooperation. over the weekend, they refused to really condemn and they abstained from the u.s. security council vote on the condemnation of the invasion of ukraine and by russia. they have been fairly muted in their commentary. they see the building consensus narrative. and according to the latest statement, his first phone conversation would be softened

anyway. he essentially deplored the outbreak of conflict and also used the word war for the first time. beijing has not used that terminology or use the term invasion. this might be just a translation issue. i have not heard the original phone call or the mandarin use of the word war. but the english translation of what he used was war. it is a delicate balancing act. but he says he is extremely concerned about harm to civilians in the ukraine. if you want a better picture of how beijing is navigating the situation right now after that friendship packed, if you will come of global times on monday which is a stop supporter of the communist party said that the position, china's position on the conflict is neutral.

shery: we also know that a u.s. delegation is presenting taiwan with timing. it's not really a coincidence, is it. gaurav: -- stephen: this is a delegation of former officials including the former chief of staff, mike mullen. they are in taiwan today, meeting with the president as they say it is a clear indication that washington was to send a signal to beijing that they are not being distracted by war in ukraine. they're still very much on the situation. haidi: coming up next, we get australia's fourth-quarter gdp print. the senior economist joins us for an immediate reaction. this is bloomberg.

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haidi: we have fourth-quarter gdp numbers out of australia. 3.4% quarter on quarter, slightly sharp expectations -- slightly short of expectations of 3.5%. measuring when we saw the listing of some pandemic

restrictions on major economies in australia coming out of lockdown and we see a bounceback of hospitality and retail going into the holiday season. then omicron impact and now extended uncertainty of the geopolitical crisis. we are also watching other eco-numbers crossing the bloomberg. shery: manufacturing pmi out of south korea coming in at 3.8, a slight improvement form cash from january. we have seen them expanding for a while. since october of 2020. we continue to see double digit growth on exports out of south korea. pmi numbers at 3.8 four february

as the kospi loses ground 1/10 of 1% although tech heavy stocks are doing better. this as the korean won continues to weaken against the u.s. dollar. the weakest levels since mid-2020. risk off motocross markets. given rising tensions in ukraine, the nikkei is down, reversing three sessions of gains but energy stocks on the nikkei are up today. financials and real estate leading the decline. haidi: and we are getting more elements of that number for australia.

household spending was a jump of 3.6% in the quarter on quarter. it was festive spending we expected to play out. let's get analysis on those numbers from the senior economist from anp capital investments. we were expecting this. omicron wreaked havoc on the labor market and retail spending. quarter on quarter number is weaker than expected. >> that's right. it was pretty much in line with what we were expecting but looking at over 4% over the quarter, i do not think it changes the outlook for the rba. we think the rba will move hawkish in the next few months

before increasing the cash rate in august. the more important story for australia is inflation is rising , wages growth is creeping up in the next few quarters should confirm wages growth is running at a much faster pace than in the past few years. shery: at the same time we are also continuing with weather induced uncertainty. haidi: most insurers are saying it's too early to tell but the s&p at the moment coming out and saying flooding will be a over $1 billion australian dollar insurance event and could increase if further damage happens in queensland. how does this impact every aspect of economic recovery? >> there are two major aspects from events like flooding.

from history we know short-term there is a boost to installation and predominantly when you get an event like flooding, it increases prices in the south parts of queensland where there are rich crop areas and there is a lot of commodity production. so the next six months, more upside inflation risk. the other is what is happening in russia and ukraine an increase of commodity prices of oil, natural gas. so near term, definitely higher inflation. we've look through some short-term disruptions because they tends to track the core measures of inflation but inflation rates are still important. the short-term disruption to

growth and production could mean the march quarter gdp and even the beginning of the june quarter is negatively impacted but then you start to see a rebuilding. shery: so when are we expecting the rba to move given what has happened this week? >> i think it is still looking for another wage growth closer to 3%. we are at 2.3%. australia is in a different position to the rest of the world that has stronger wage outcomes of 4% or 5% annually and they probably want to see that cpi is within the target range. so we need another inflation print. but the rate hike is still in june despite the geopolitical

tensions which is a negative risk for australia even though we are not directly involved in the conflict. haidi: where does it put the aussie dollar? >> it usually tends to be a bellwether for a global sentiment but despite the war between russia and ukraine it has not dropped much because commodity price growth has been so strong. russia and ukraine are major exporters of natural gas and oil. ukraine is a major agricultural exporter so you would think commodity prices will increase across the board on top of strong price growth last year. so that is why the aussie has stayed elevated. and the price of oil is running high, a major export market for australia. in the next six months i think the aussie dollar remain strong, even though the u.s. dollar tends to benefit in times of

geopolitical conflict. haidi: we spoke about the concerns coming out of china. investors are not expecting to see large scale stimulus. does that create further downside risk, given that we also continue seeing the incremental crackdown on tech and other sectors continue? >> i think it was more a risk for china in 20 21. we saw some regulations impacting chinese growth. this year the more important upside risk for china is you will see further rate hikes and we have already had one by the pboc and they are likely to get another. so bottoming in the chinese

economy this year and we should see stronger growth which should generally be a stronger -- generally be a positive for australia. shery: it is good having you with us. breaking news. south korea reporting a record a surge in daily covid cases, 219,241, for the first time surpassing the 200,000 level. 96 deaths and 76 -- and a 762 critical patients. daily cases could reach 270000 and we are already at 219 thousand 241 in the past 24 hours. >> biden will have his first

state of the union address. excerpts of the speech show that he will characterize vladimir putin's actions as unprovoked. russia's invasion appears to be entering a new phase. they expect more tactics as military forces -- the russian defense ministry says the operation is on track. the eu is moving to the next step in ukraine's membership. . -- membership bid. the process requires steps that can last more than a decade. >> we have proven our strength.

we have proven that, at minimum, we are the same as you are. do prove that you are with us. do prove that you will not let us go. do prove that you are indeed european and then life will win over death. >> the eu has agreed to exclude seven russian banks in response to the invasion but they spared burbank and one other. measures will come 10 days after adoption. the u.n. estimates up to 4 million people could flee ukraine as the war intensifies. 680,000 residents have already departed.

global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: next, hong kong is said to be planning a citywide lockdown in protesting covid testing. more on that coming up. this is bloomberg. ♪

haidi: hong kong is said to be mulling a partial locked down on the first four days of the citywide lockdown next month. this is as they continue to grapple with the worst outbreak of the pandemic. what does this four day lockdown hope to achieve? >> it's one of a number of reports coming out about a potential lockdown that reflects we do not have a lot of cohesion and organization on the hong kong government side. this outbreak is the worst they have seen in the pandemic. a four day lockdown might get

you away from the first round of testing done but whether it works to really achieve the covid zero goals of bringing the outbreak back to zero is a big question and very unlikely. shery: japan easing restrictions. how is that going? >> japan put one of the most significant travel curbs on foreigners in the wake of omicron last year, basically banning all foreigners from entering the country. they are slowly dialing that back although it has a lot of popular support. they are now allowing 5000 people a day to come in but there is a huge backlog, particular of students trying to get in. some report today they will make an announcement that addresses

that, potentially allowing in more students. shery: south korea's daily cases above 200,000 while at the same time there is a stop to that vaccine pass mandates. >> south korea is an interesting case. it is probably one of asia's success stories. it has one of the highest booster rates in asia come up with singapore, above 80%. so yes, cases are increasing by the death rate is declining so alongside the idea of living with the virus, they are easing restrictions on trying to get back to normal life. haidi: let's get a quick check

of the headlines. revenue in december quarter came in at $5.2 billion and the amounts raised [indiscernible] 63%. they said weakness in china's economy was partly to blame. a firm excepted a takeover bid of $61 assure -- a share. shery: airbnb is offering free shelter to ukrainian refugees.

they will work with neighboring states to provide long-term stays. >> airbnb will house up to one hundred thousand refugees fleeing ukraine. over 30,000 people have visited the page to learn how to be a host or donate. the more hosts we have, the more refugees we can house. shery: what is the feedback you're getting from border crossings about this situation the refugees find themselves in? >> we reached out to several governments like poland, hungary, romania, germany. they mostly say thank you. over 600 thousand refugees have fled ukraine and they need a way

to be housed. we can provide the infrastructure. we have housed over 100,000 people in need and hopefully we are being viewed as a solution to a problem they have. i think they are appreciative of the support on how -- and help. >> has there been an outpouring of support? >> it is just starting in the last 24 hours but we have had a large response so far. as point of reference, two years ago when the pandemic first broke out we worked with the french government to provide housing for workers on the front lines. we had tens of thousands of hosts step up for afghan refugees and we ate expect a big response. we just have to make sure in all

of the noise going on that people who have homes and availabilities in these countries can take in refugees. >> airbnb has a significant number of listings in ukraine. do you have employees there? >> we do not have a meaningful number of employees in central and eastern europe. we have thousands of listings in countries and our focus now is number one, to make sure our hosts and community are safe. we are doing a lot of outreach in countries all over eastern europe. second, trying to house as many refugees as possible. this entire effort really started three days ago.

thursday and friday it became apparent that there were going to be hundreds of thousands of people fleeing ukraine so we worked all weekend to mobilize this effort. haidi: airbnb ceo speaking with emily chang. coming up, looking at the start of trading in hong kong and mainland china. the latest, next. this is bloomberg. ♪

haidi: let's take a look at stocks we are watching as we look at the open of the market in china and hong kong. we are waiting on comments from the foreign ministry in ukraine and if there is a shift in position at all. we have all these reports of a potential for day lockdown in order to get mass testing of covid underway. consumer hong kong in focus. we have already seen a run on

pharmacies with stockpiling taking place. also watching jewelers as a demand for haven and safe haven assets. shery: investors will also be waiting for china's latest comments on ukraine. what should we be expecting today in the chinese trading session? >> i think overall all eyes are on hong kong right now because of the limiting lockdown and expectation of the fed rate hike pressuring the hong kong dollar is in focus and hong kong stocks

that have been relatively resilient this year down 3% coming under pressure. so that will be in focus today. shery: and we are not only watching china but also monitor what is happening with the stock market in the u.s. as we head to the state of the union address coming during the russian invasion. we will be watching clean energy, given what is happening in ukraine. haidi: will he be able to revise his climate legislation? given these concerns over soaring energy prices. we are watching shares of u.s.

energy stocks, including some of the ones on your screen. erasing a little upside and the anticipated tatian at the last close but the big focus will be the message of allied unity as we see the fighting after russia invaded ukraine. lots more to come. this is bloomberg. ♪

>> welcome to the china open. i am david. yvonne: growth outlook of a rate hike. beijing says it deplores the ou