>> i'm haidi stroud-watts in sydney. >> i'm shery ahn in new york. welcome to daybreak asia. the u.s. says russia wants military aid from china sparking fears that beijing could undermine efforts to help give. -- kyiv. >> china blocks down shin jan as

covid cases spike risking disruption and production delays in the key tech hub. let's get a check of the sydney session as trading begins. we are seeing a muted start to the staggered session, 1/10 of 1% higher. reversing some losses we saw friday. australia's dollar is down by 1% the end of last week. we are looking ahead to futures in japan. nikkei futures look positive. hong kong a little downward. it will be a jampacked week when it comes to the first of the global risk lawns and ss -- risk bonds and assessment made by global banks, the fed, the bank of england, and in asia as well a number of rate increases pricing in the russian invasion and inflationary pressures. we heard a preview of the australian budget.

that is expected to focus on the impact of inflationary pressures on households as they deal with rising prices. but it is a pretty stable start to the start of trading in sydney. >> u.s. futures are up 6/10 of 1%. this is after the s&p 500 saw its worst week since january. it was a frenzied week of panic selling and identifying. -- dip buying. we have the 10-year treasury yield climbing to the 2% level. we watch oil prices. wti is under pressure after posting its first weekly loss since russia invaded ukraine. it has been such a volatile session. brent prices started last week at $140 per barrel. they settled around the $112 level. we continue to be around that

point. of course, this as we continue to watch at the latest in geopolitical tension, now turning to china with washington and beijing set for the first in person talks on ukraine. sources say russia is a seeking military assistance from china. let's bring in our chief northing -- north asia correspondent stephen engle. we have seen -- not seen these talks between the u.s. and china since october of last year or so. what are we expecting during these talks? >> just upping the game a bit because the national security advisor jake sullivan will be meeting face-to-face with china's top diplomat, a top ranking official in the bureau. so they are raising the level of contact because of the white house, while stopping short of, you know, outright condemning the beijing neutral stance, they are trying to court beijing's

efforts to wield influence on moscow to, a, enforce sanctions and as well, of course, ultimately help persuade vladimir putin to end his war in ukraine. so, the fact that these two gentlemen will be meeting for the first time face-to-face since the war began is positive news on both fronts. perhaps, jake sullivan did the rounds sunday morning talk shows in the u.s.. he told cnn that the u.s. would not allow others to provide lifelines to moscow. that is in regard of course to that story that has emerged this morning that u.s. officials are essentially saying that

have seen so far will actually start affect asian assets and who are the winners and losers in all this? >> there have been surprising winners. the ukrainian dollar and share market has done better than many expected. indeed, up in the data through last tuesday, leveraged funds went strongly. australia is a wheat exporter, a metals exporter. it is actually benefiting from what is going on.

asia will continue to get beaten down both because of the disruption that high oil prices because to travel and economies in general but also more importantly the realization that the inflationary impulse from commodities will drive interest rate changes. when i say i was looking at whether treasuries can get a little bit of a breather i think tech stocks hope that too because higher interest rates are not good for tech companies. >> our chief correspondent for asia and strategist. let's get to paul allen with the first word headlines. >> russian missiles hit a military training facility near the polish border of western ukraine killing 45 people and wounding more than 100 after russia warned that convoys of western military aid would be considered legitimate targets, raising new concerns about the war potentially spilling over

ukraine's borders. the eu is discussing sanctions on the owner of the chelsea football club and more than one dozen other prominent russians. the list of 15 individuals and nine entities includes several energy and mining executives as well as leading media figures accused of spreading propaganda. sanctions are expected to be finalized later on on monday. try to place to the southern city of shenzhen under a lockdown for at least a week with its 18 million residents set to undergo three rounds of covid testing. virus cases doubled under the weekend. shanghai is halting bus services as the outbreak grows. officials are discussing whether to prevent international flights. malaysia's ruling party secured a super majority of local elections for the second time in four months. the winner will renew pressure on the government to announce the national vote soon.

an early election may stand to benefit convicted firmer -- convicted former premier naji project. global news 24 hours a day on air and on bloombergquint take. i'm paul allen and this is bloomberg. >> ahead, the ukrainian ambassador to japan explains why cutting business from russia is a good investment. >> the economic toll of the war

in ukraine said to backdrop for policy decision from three of the world's most influential central banks in coming days. the main event will be the fed decision wednesday. we will likely get the first rate hike since december of 2018. char jerome powell has said he backs a 25 basis point rise with inflation at the highest in decades. the bank of england follows thursday. money markets are betting on more than 100 basis points of hikes by june. in asia, central banks from japan, indonesia, and taiwan. it is some of this rate differential expectations being felt across markets especially with the japanese yen at a five-year low. we have expectations for widening yield differentials with the fed expected to hike by at least 25 basis points. budget, the doj is continuing

its easing stent the -- the boj is continuing its easing stance. the dollar is back at around levels we have not seen since 2020. we have some losses when it comes to the aussie and kiwi dollars last week. we are watching some key data points including australia's february jobs numbers not to mention new zealand's fourth-quarter gdp. >> let's get more on the outlook for the dollar. we continue to see one of the drivers being the amount of progress or lack of progress made between ukraine and russia in these ongoing rounds of talks. let's bring in sean callow, the senior currency strategist at westbank. it has been quite interesting seeing dollar demand trumping yen demand for example and it haven space. what could we see from the fed that directs the next leg of

potentially this rally? >> it does seem very clear that they will go for 25 basis points. there has been a bit of talk. this time last week, the risk aversion theory elevated toying with the prospect of no change. it was always very likely it would be 25. it is about the dot plot projection of rates. commentary about the balance sheet. they probably will not commit themselves to win they will reduce the balance sheet. so i guess, they balance when powell talks about how hard will they go on inflation? they are way above inflation targets. so, how worried are they about the ukrainian impact of higher energy prices on the consumer and business spending? i think that will help guide the markets into how high rates go. >> australia's also worried about the impact on business sentiment but seen as a net beneficiary of a commodities boom and price pressures to that end.

that big move in the aussie dollar, is it continue? or, have we reached the point where there is a race? >> the aussie had taken a step back last week but had risen five weeks in a row. take it from the 23rd of february. the people of the invasion. the aussie dollar is number -- the eve of the invasion. the aussie was number one and the kiwi second. the aussie has come off a bit now but the scale of commodity rises and the mixture of commodities soaring is very much what australia exports and that has been very supportive. but clearly the iba is not in a great hurry to change rates and the differentials will work against the aussie dollar for some time. we do not expect any change until august by the iba and i think that will cap aussie rallies near term. >> commodity linked currencies

in other asian nations as well. we see a rally in the colombian peso, and so forth. >> it is mixed obviously for some commodity exporters. it's a net gain that we have seen for aussie, and kiwi. the canadian dollar is not far behind. if you had that strong used to export prices but your growth outlook has not changed much, if only from distance, from being from europe, for example, then that is a positive. other commodity exporters, maybe their currencies do not really have the liquidity that might be so attractive during a time of heightened risk aversion. so, i think for the most part the g10 commodity exporters are the ones that probably will make the most stable gains. but as you say, it is not just those currencies that will gain from the surge in prices. >> what is happening with the

japanese yen currency pairs? we are talking about a five year low against the u.s. dollar. we have a war in ukraine. >> yes, it's been remarkable that this sensitivity of the japanese yen to risk aversion is much lower than it used to be. it really didn't even align during the global pandemic of margin 2020, it did not light up that well if you are betting on dollar-yen in response to dislocations of the pandemic, it did not work out well for you. talking about interest rate differentials, the fed is almost certain to kick off rate hikes this week and follow-up we think are the next we at least consecutively. on friday we should have the bank of japan keeping the tenure target at 0%. it just looks as though that yield differential is too tempting for outlook -- outflows for japan. >> when it comes to

differentials what other currency pairs are you watching? we see strengths in the chinese yuan when the fed and pboc seem to be going in opposite directions. >> obviously, the yuan has had a substantial insulation. there was never the qe equivalent in china. so, they have had that support that discourages capital outflow. clearly, china's trade balance is so enormous. surplus surged during the pandemic and that provides you on with a lot of insulation -- the yuan with a lot of insulation. the six to 12 months outlook that you want is one of -- the yuan is one of the c urrencies we are expecting to consistently up on -- outperform the u.s. dollar. great catching up with you, the

senior currency strategist at westpac. it's a very volatile week when it comes to currency pairs. you can get all of these stories. daybreak terminal subscribers, it is also available on the bloomberg app. customize your settings so you only get the news on the industries and assets you care about. this is bloomberg.

>> we are tracking the fallout of the global supply chain crunch. other top stories today. a ransomware attack. the second recent cyber attack

against day toyota supplier. it promptly responded to the incident but did not say how. the attack did not make an impact on operations. ford is projecting a 12% drop in sales this year as production bottlenecks worsen. 37 suppliers failed to provide parts as scheduled causing the automaker to lose 100,000 units of production so far this year. india's biggest producer is is seeking alternative sources for call amid uncertain -- coal amid uncertain russian supply. taking a look at ukraine's wheat exports, the global food system is under threat as russia's invasion puts one of the world's major bread baskets in jeopardy. countries in africa and asia are among the most reliant on that supply. efforts to source from other countries are becoming complicated.

governments around the world are taking steps to keep food supply closer to home. bloomberg terminal users can read more about those stories in our news letter. >> latest business flash headlines. the nickel trade. the chinese tycoon caught in the unprecedented short squeeze. about 50,000 tons of nickel, over 150,000 tons held through an over-the-counter position with jp morgan. based on that, the show and jen holding would have owed to the bank about $1 billion in margins monday. deutsche bank is winding down operations in russia after the invasion of ukraine reversing an earlier decision not to put out. the german lender will not have any new business in russia and it has reduced its exposure to the country since 2014. the withdrawal will not include

its i.t. hub that employs about 1600 staff. a german rival bank is also pulling bank from russia. it stopped doing new business in the country and is winding down existing transactions. it said last month its exposure to russia and ukraine was manageable and had been reduced in recent years. paytm is taking steps to comply with a directive of its i.t. system after the central bank band at the fintech platform from taking on new customers until the audit is complete. existing comforters will not be affected. it is another setback for paytm which has seen a sharp correction in share prices since his november tape you. -- november debut. >> tom brady is coming back to the nfl. he tweeted he is coming back to tampa for a 23rd season. remember, the quarterback with his record big bang -- record

breaking 44 super bowl -- 23 super bowl wins said that last season would be his last. this is a surprise turnaround. he said he would work on business after retiring from football. now, this tweet is a saying he realized his place is still on the field and not in the stands. so he will be coming back to tampa for a 23rd nfl season. after just announcing his retirement a month ago after 20 two seasons under the national football league. -- 20 decisions in the national football league. he earned multiple records. tom brady will be returning to the nfl. he just announced this. >> lots of fans will be very happy to hear that news. also seeing upset when it comes to trading in the sydney session, about every sector here is trading in positive territory. the biggest gains are coming

from health care, consumer staples, financials, along with energy as well. we are seeing a stabilization when it comes to australian bonds as well as treasury futures retreating at the open. there is lots more

>> achieving a growth rate of around 5.5% is actually achieving stability at a high level, which is equivalent to progress and will not be easy. there must be support for macro policies. we will make our covid policies or scientific, more targeted. in terms of your grain china believes every country's territory should be expected. we should make all efforts to support russia and ukraine in

reaching a cease-fire. if the u.s. chooses to ease restrictions on china there will be a larger trade volume. haidi: that is the ramping up of the national people's congress. virus cases are spiking across china with a 17.5 million residents of shenzhen put into a lockdown due to last week. let's bring in our guest. how is this lockdown comparing to previous ones we are seeing in china? what are they trying to achieve your? -- here? >> they have never lockdown a city of this scale and importance. this does represent a step up in the way china is approaching increasing flareups of the virus driven by more contagious omicron variant. it shows they are likely concerned about community spread because they are not winning

people to move around. we did see the national case number double over the weekend from just over 1000 on friday to over more than 3000 yesterday, which is a worrying sign probably behind this step up. shery: hong kong has become one of the deadliest places in terms of covid that's so far. how was the city doing right now? >> hong kong is a couple of weeks in to what looks to be the peak of the outbreak, it is hard to tell because they have shifted the weight that they do counts of cases and are probably missing a lot because people are increasingly using rapid antigen tests. we are seeing debts continuing to rise which signifies they are not out of the woods yet. this virus has swayed to the

elderly population. residents of hong kong were very under vaccinated before omicron got in there. haidi: it has been four months since omicron emerged. a lot of places have almost completely dismantled virus curbs and public health restrictions. as it been too soon -- has it been too soon? will we see more variants? >> the short answer is yes. will it be more for ameren -- virulent? it is not guaranteed, particularly when you have parts particularly of the developing world very under vaccinated and

providing petri dishes for the development of new variants. it would make sense to not be unwinding public health measures, masks, social distancing, restrictions in schools, ventilation, that sort of thing that will probably have to become part of our everyday lives if we want to live alongside this virus long-term. shery: huge transition living with covid. let's get to paul allen with the first word headlines. paul: a u.s. official says moscow has as beijing for military committed support his invasion of ukraine. russia currently sells far more arms to china so china has been producing more advanced weapons. equipment has been requested.

the u.s. and china are sent to hold their first high level in person toxins russia's invasion of ukraine. national security advisor jake sullivan will meet with his colleague in rome on monday. mr. biden's advisers have been working to decrease pressure on janet to enforce sanctions against's economy. the imf had said a russian -- is no longer improbable. it is not likely to cause a financial crisis. russia and russian banks under sanctions, its credit rating has phase downgrades. a blood default is imminent. philippine investors are lukewarm to the prospect of a third presidency. the bloomberg poll asked 28 investors and analysts who they think is best to steer the country's economy.

mumbai has become the first out eastern asian city to detail up path to phase out carbon emissions by 2050. officials laid out exhaustive changes to the management of energy, water, air, green spaces and transport. mumbai's net zero target puts it decades ahead of india's national goal. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am paul allen. this is bloomberg. haidi: when gaming industry veteran is particularly skeptical about mark zuckerberg's vision for the metaverse. the former nintendo representative said smaller firms will drive the digital future. >> i am not a buyer of that idea, i do not think that their current definition is going to

be successful. why do i say that? first, and i do not know if anyone from facebook is here, but you have to admit facebook itself is not an innovative company. they are not. you look at -- they have either acquired really interesting things like oculus, like instagram or they have been a fast follower of other people's ideas. that is facebook. inherently they are not an innovative company other than the very original social platform that was created many years ago. >> what do you think mark zuckerberg is getting wrong here? >> i believe that in order to be innovative you really need to be thinking about the consumer

first, and i do not think they do. i think you need to be looking at -- >> who do you think they think about first? >> i think they think about advertising revenue first because that is 90% of the revenue. you have to think about your consumer, think about your customer, think about bringing new and different ideas into the marketplace, you need to reward that within your culture. these are the things that drive innovation. you need to have a culture of innovation. anything that you do within an innovative company, whether you are in accounting, product development, marketing, you need to be challenging yourself to be doing things differently versus doing the same old or copying someone else's ideas. that is why i look at the vision that has been today articulated,

and i am not a believer. the other thing i would say about facebook is they do not have a great history with physical products. portal, not a big idea. >> oculus. >> they bought oculus and they have been working on it for a number of years. last number i saw was in total 20 million vr devices had been sold. when i was running nintendo, that was a good year one year in hardware. shery: coming up, more japanese companies joined the exodus from russia as the war rages on in ukraine. the nation's ambassador to japan joins us next. this is bloomberg. ♪

haidi: japanese markets will open in just about 20 minutes time, let's take a look at trading to start off this jampacked week. when it comes to nikkei futures

we are seeing up .7 of 1%, looking like a calmer start as we see price action pulling back when it comes to the end. it is still a one-way bet, import cost surging as well as the strain in the dollar is expected to continue as the war in ukraine continues as well. we have seen global bond market stabilize as we see treasuries pullback in the early part of that future session. shery: here are the top stories where following, top story of the supplier saying it was targeted by a ransomware attack, denso saying its operations are not currently being impacted. toyota is lowering its plans for the april to june. period. it is looking to boost output

after months of disruptions. we will be watching the yen as it fell to a five year low against the dollar, expectations for rate hikes are highlighting convergence monetary policy between the two nations. we are watching the developments in russia's war in ukraine. japanese companies finally joining the exodus from russia. in the last week names have set the operation in the country. it has been a slower response than by their u.s. and european peers. the government has ramped up its sanctions along with its allies including a ban on semi conductor exports to russia and prime minister kishida reports he is considering additional action. let's bring in our next guest saying current business from russia is not a loss but an

investment. joining us now, ambassador. thank you very much for joining us. >> my pleasure. shery: you are saying pulling up from russia is an investment in security and democracy. tell us out ukraine is paying the price in order to fight for this ideal? >> when we talk about the current situation around the war in russia, we must all understand this is some event in a small scale somewhere. this is an event of huge scale. it will be felt here in asia. when we talk about business in russia, your desire to get a lot of money rather than to maintain the proper face of your country, because russia is a big market. i saw a recent estimate in the japanese press that japan will

cut all connections with russia at that will affect 0.95% of japan's gdp. it is not huge from it economic point of view. we very much appreciate the support of the japanese government, which is unprecedented. we see it is the right thing to do. shery: what conversations are you having right now with the japanese government, and what more do you want to see? >> we have a very comprehensive discussion. i have met already with almost every minister who is responsible for somehow in this situation, and we have found complete support. already we count four ways of

sanctions that are unprecedented and they are very important to close loopholes in asia. we are not talking about additional support, we are talking about refugees coming japan, because japan opened its borders to ukrainians who wish to come to japan and stake your as a refugee. we are talking about additional efforts to withdraw the rest of the company still doing business in russia. we are talking to them, trying to persuade them to do the right thing under the circumstances. haidi: we are also hearing reports that moscow has asked beijing fort military aid, military equipment. what do you make of this request? how do you think beijing will

navigate this given the images of carefully cultivated neutrality so far? >> this is the key question of the current situation. the position of china is immensely important. i do think putin set a trap for china, finding this declaration of february 4. on february 4 he already knew that he would innovate ukraine. it would have toxic [indiscernible] for china. i do hope china will be smart enough to understand a very carefully and estimate very carefully the consequences of these stipulations of pollutant -- putin. china is much bigger and much

smarter. they have no reason to support war in europe. europe was the destination of the one built one road -- one belt one road project. if putin will use nuclear weapons or blowup nuclear's, there will be no europe. there will be consequences much wider than ukraine. what happens in ukraine will not stay in ukraine. what happens in europe will not stay in europe. in china it must very carefully consider those were less from russia. this is a very toxic relation. we just need to wait and see. china very carefully considers

what is around ukraine. haidi: how difficult is it for japan to balance what it has been taking as a traditional pacifist stance, it sent some equipment to ukraine. do you think they could be doing more? you think corporate japan should be doing more? >> as i said, the support we have for the government of japan is absolutely unprecedented. what we saw for the first time probably in history, japan supplied us with nonlethal equipment, protective equipment for our military, and this was very important for us, because this is a sign of full understanding of what is going on. we followed regulations in the japanese law and the peaceful

constitution, which forbids japan to be part of any military complex. at the same time we do appreciate the efforts of the government to be a part of g7 efforts of international community efforts and to do the utmost to stop these atrocities and to maintain the regime against russia, so we do hope we will continue looking into those loopholes still left. it is a massive amount of data you have to evaluate and understand for your own country, because this is clearly a time when we are just getting out of two years of covid, everyone needs a revival, and this court is very complicated. shery: we actually heard last week from your colleague, the to south korea, and he was telling

us he believes beijing knows the consequences of this war in ukraine for its own country as well. what sort of change she went to see an china policy towards ukraine? >> i think this is a moment of truth, a moment of choice. you have to understand very carefully. this is an event of huge scale. russia went back 100 years in their economy, sanctions will not and even if the exit. china must understand even if they have discussions with the west, with the united states, the consequences of supporting putin are much more costly, the

price will be higher. i expect china will take it proper position. they need to distance themselves from putin and not support him because this will be a huge blow to the image of china. haidi: we really appreciate your time with us, sergiy korsunskyi. we have reached out to the russian side for their comment. you available to all bloomberg's subscribers. tune into japan ahead to hear from leading names across japanese business monday at 8:40 a.m. until your television. one of the less rusted's pdfs still trading this week.

we get more details ahead. this is bloomberg. ♪

haidi: a check of business flash headlines, gm says it is taking steps to comply with an audit after it was banned from taking

on new customers. it is another setback for paytm, which is seen a sharp correction in it share prices. a group has put a planned ipo on hold. the offering could have raised $3 billion were shopping mall unit. sources tell bloomberg the conglomerate delay due to recent market volatility and challenging conditions in china's real estate sector. steve cohen's as it management company is pulling money from melbourne asset management following a similar move by citadel. it follows a tumultuous period from the hedge fund which ended last year doug 39%. shery: coming up, someone from fitch solutions joins us to discuss the recent rally in

precious metals do to the war in ukraine. we speak to adrian zuercher. this is bloomberg. ♪

shery: welcome to "bloomberg daybreak: asia." i am shery ahn. haidi: i am haidi stroud-watts. asia's major markets have opened for trade. our top stories, asia stocks face a volatile beginning. the u.s. says russia once military aid from china, sparking fears beijing could undermine efforts to help kyiv.

china locks down the city of shenzhen, risking reduction delays. shery: japan and south korea coming online, the nikkei225 being head ir might do an industrial stocks. upside is really wrought with the topix up at 7.1%. this as we continue to see pressure on the japanese yen. we are very much focusing on what the fed will do this week, and expectation of a 25 basin point hike and the biaggi's rate decision, though we are not expecting them to move much when it comes to reversing its easing stance. we are seeing jgb yields rebounding. the kospi losing ground in the morning session right now at the open as we have the korean won

losing against the u.s. dollar. we continue to see a bit of pressure from risk off sentiment over ukraine and as we continue to see also oil prices reversing gains we have seen and the volatility in the commodities space. haidi: speaking of commodities, we are expecting an oil price surge to give beneficiary to that sector, that according to bloomberg economics could potentially lead to earlier rba hikes than expected. we are seeing upside in the equity session, everything trading looking quite positive at the moment being led by a health care financials as well as consumer names as well up by over 1%. the 10 year holding steady. treasury futures are retreating at the open in asia on the back

of u.s. equity contracts advancing, traders positioning for the expected rate hike this week. in new zealand, equity features negative, the kiwi could climb above recent high, eco data expected to bolster the expectation for rbnz to become even more hawkish. s&p futures pretty positive, while we are also seeing treasury futures retreating at the open as well after losing 1.5% last week. our next guest from ubs recently downgraded agent equities, saying near term risk reward as deteriorated. joining us now is adrian zuercher. rate you have you with us as always. when you look at the prism of inflationary pressures, commodities and oil, who are the

winners and who are you rebalancing away from when it comes to asia? >> in general, we are less positive on equities, higher inflation will have an impact on earnings growth. the supply shock we have seen on the commodity side will weigh on global growth and of course impact asia growth. we are shifting a bit more. with idiosyncratic factors at play. we upgraded china to most preferred, as we do think china is much less dependent on the whole energy situation. they may also be able to rebound on the global markets are is they are -- markets as they are extracting energy from russia. it is one of the central banks they can afford not to cut interest rates. other asian markets will face

higher inflation out of higher commodity prices. haidi: how much fiscal stimulus is being expected out of china though? that was one of the drivers for the case for chinese equities. are we really expecting that much from the authorities? >> is still a soft approach. tomorrow we will look at more activity data, and it probably will look weak. we have indications from the property sector, which has been relatively weak. we just learned china is currently setting its gdp growth at 5.5 percent for this year, which is actually quite an ambitious target. they will have to start to stimulate a bit further. we will see more rrr cuts, credit easing policies coming through and that will support the equity market, which is

relatively cheap versus some global peers. shery: we have just heard from the china security journal citing china may be cutting the rrr in order to stabilize growth. your at least preferred market according to your notes, malaysia, i am surprised at that they are a net oil exporter. >> absolutely, the issue is they probably benefit economically, because as you said they are a commodity exporter. it is hard to find anything listed on the stock market. if you look at the stock side, a lot of pandemic winners, and they are suffering in this environment. you see i inflation, and so the issue is malaysia, a good part of the economy is not listed on

the stock market so you cannot benefit when you buy this market. malaysia tends to suffer from higher interest rates in the u.s., and therefore we downgraded malaysia at this point. shery: when it comes to the fed diking rates this week, who art the most vulnerable across asia in terms of the markets especially when it comes to valuations being a concern? >> we think it is smaller countries, particularly those who have more fragile currency, indonesia, the philippines. historically these two markets have a negative correlation to high yield interest rates. most investors including most of our investors have been looking at asian markets in solid terms. it plays a crucial role and to be think they have weakness on

the currency side. shery: i keep hearing that given the rise in commodities some of the best consensus call seem to be on the commodities space. what about the energy transition and perhaps some of those calls we have seen already in the past year and especially during the pandemic and terms of renewables and green stocks? >> we have basically a supply of commodities and under investing on commodities, so when the next few years we will see that government have to backtrack a little bit to promote the fossil fuel industry and have investment, so we are bullish on that part. particularly for european companies and european countries to get independent promotion energy you have to accelerate this energy to green energy, so you have to find additional supply of energy, and that is in

the green space, isn't it a missing topic. i do not think it is a topic you should neglect. you probably find good investment opportunities over the next couple of weeks, and that is definitely something we are looking into. haidi: we are getting the treasury five year yield topping 2% for the first time since may of 2019 as we have seen treasuries falling across the curve with the 10 year yield topping 2% for the first time since may 2019. we are seeing that, the two year also up by five basis points to 1.8% as well. this is part of our question of the day, aldous the fed rate hike effect assets including rates? at this point are we positioned

well enough for what a 25 basis point might do across asset classes? >> there are lots of uncertainties, of course, and the fed is an ethical place as inflation will stay high and you probably be stickier that we originally expected especially with the ongoing war in ukraine. at the same time higher energy prices may be a growth stance. we think the 10-year treasury yield probably has to go higher because inflation probably stays more elevated for a longer period, and they think the shorter and has been priced in -- end has been priced in too much. we are long two your where we think we will see a steepening of the yield curve as the fed acts less than markets are pricing in. more from a longer-term perspective rates are higher.

shery: edge been circular, it -- adrian zuercher it was good having you with us. a top toy the supplier we will be watching at the japan trading session confirming it was targeted by ransomware attack last week. we had toyota lowering its production plans for the april to june quarter as it continues to struggle to boost output. softbank's founder no longer will be an investor in indonesia's $34 billion project to build a new capital in borneo, something losing .3 of 1% while japanese lenders are pulling the top staff out of russia. let's get to paul allen. paul: russian missile set for date militating -- military training facility killing 35 people and wounding more than

100. the strike came after russia warned that convoys' military aid would be considered legitimate targets. the eu is discussing sanctions on the order of the chelsea football club and more than a dozen prominent regimens. the list of 15 individuals and nine entities includes several energy and mining executives as well as media figures accused of propaganda. china is placed the southern city of shenzhen into lockdown for at least a week with its near 18 million residents said to want three rounds of government testing. virus cases nationwide double to 3400 over the weekend. the outbreak grows, officials also reportedly discussing whether to divert international flights. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

i am paul allen. this is bloomberg. haidi: i guest will be joining us to talk to the recent rally in industrial metals and the impact in the war in ukraine. the u.s. and china are about to old the first high-level talks after russia's invasion of ukraine. this is bloomberg. ♪

>> we will now come forward with the full package of sanctions.

these sanctions will further isolate russia from the global economic system, increasing further the cost of putin's invasion into ukraine. shery: the european commission president on the bloc's next round of sanctions against russia. russia of austria's as the country has lost access to almost half of its reserves. he also says russia's partnership with china could help moscow mitigate the impact of sanctions. those impacts come ahead of beijing at the u.s.'s talks. let's get the latest from stephen engle hong kong. what do we know about the impending eye level meeting between china and the u.s.? >> i think it is important to note that the white house as

gone to great length not necessarily to callout china as specifically for its barely neutral stance for its -- specifically for its fairly neutral stance on the war in ukraine. they want to use that level on a moscow to influence boudin -- putin to end the war and to abide by and support those sanctions from the other states and other nations around the world. it is the first high-level, in person face to face meeting between the west and china. the top diplomat of china, he is a senior member and jake sullivan, the national security advisor, it will be meeting today, monday, in rome. the three top agendas will be the war in ukraine and what china can do to influence

moscow, if at all. china has been reluctant to condemn the war in ukraine. they have stated that they respect ukrainian sovereignty and they wish for a peaceful solution, but they have not condemned moscow. on the sanctions front it was interesting to hear from the premier and is sending to the national people's congress. sanctions are only going to hurt the world economy. at least publicly, they are taking that standpoint and not condemning moscow, but we will see what happens behind closed doors with jake sullivan. haidi: [indiscernible] would shut her -- shutter that majority. >> that is a big if.

they suspect moscow as requested arms were some sort of weapons or military equipment from beijing. remember, vladimir putin and xi jinping have a note limits relationship that was cemented before the olympics. will that limit the relationship? providing military hardware. this is not new footage obviously. in 2014 when moscow and next crimea, beijing took an official neutral stance on that invasion. if indeed beijing is supplying any type of weapons or military support, that would take the veneer off that stated point of neutrality for sure. haidi: sting of an angle -- stephen engle in hong kong.

gave -- kyiv's -- we spoke with ukrainian foreign minister in this exclusive interview. >> it is hard for me to understand what kind of progress president putin is referring to. >> from your side there are been no positive movements at all? >> i see that the russian army is still in ukraine, they are destroying our cities, killing our children, it speaks to one side only. we continue talking with russia. it does not have an impact on the behavior of the russian army. >> president putin said he wanted to demilitarized ukraine. he also wanted a new government

in ukraine. did you get the sense from sergey lavrov that those are still russia's lines when it comes to this negotiation? >> mr. lavrov mentioned demilitarization once, literally once. without going into details. and he said nothing about the change of government in ukraine. in fact, the russian position changes all of the time depending upon developments on the ground, and since the blitzkrieg failed because of the resistance of the o'grady people, they are adjusting their demands to the new reality. if you put all of their demands together, they demand an ultimatum of surrender of ukraine rather than a negotiated -- negotiated position. shery: japan advisories exchange

operator said to hold one of the last russia focused etf's trading this week. more details ahead. this is bloomberg. ♪

haidi: as the war in ukraine continues we continue to monitor what is going well and when it comes to coverage of russian assets as well. we are looking at developments when it comes to the coverage of some of these russian related assets in asia. we are just getting some breaking news when it comes to

unimicron, the company halting production due to covid. it does exacerbate some of the supply chain issues that we continued to see, some of its customers are pretty big names like intel, apple. this is really an unprecedented situation. this shenzhen lockdown as we see covid cases really wrap up. a hub when it comes to production for bingo -- bigger global tech names. shery: you were talking about the headlines and covid, but at the same time we have a question assets in focus as the war in ukraine continues. we are hearing from a japan exchange group saying their last

russia focused etf trading will be halted. let's bring in our analyst. how investable are at these russian assets at this point? >> the last russian etf is listed on the japan exchange. the ticker is 132 four japan. the last day of trading will be this week. certain etf's have been halted all around the world, and in that providers are reclassifying and moving russia, so this is impacting the ecosystem. haidi: what is the impact of removing russia from funds? do they presume they will get added back? >> russia represents 2% to 5% of

emerging market indices, roughly $10 billion in global etf assets. this is between u.s. assets and $4 billion etf's with 100% russian exposure. the total is roughly $30 billion in impacted funds. if we look at active funds, they mean more than passive funds. this equates to roughly $13 billion. in terms of active and passive funds combined, it is roughly $12 billion. shery: it was good having you want bloomberg intelligence. we continue to watch the market

reaction across asia as well as we see geopolitical tensions, not to mention we are headed toward a 25 basis point rate hike from the fed. a little bit of a mixe at xfinity, we live and work in the same neighborhood as you. we're always working to keep you connected to what you love. and now, we're working to bring you the next generation of wifi. it's ultra-fast. faster than a gig. supersonic wifi. only from xfinity. it can power hundreds of devices with three times the bandwidth. so your growing wifi needs will be met. supersonic wifi only from us... xfinity.

>> the situation in ukraine once again proved that protect the country not only with assistance from the international society is necessary, but also the unity of all the people. shery: the taiwanese president showing parallels between the war in ukraine and the threat china poses. this as we watch implications, a bit of a mixed picture with the nikkei gaining more than 1%

after losing more than 3% last week as we continue to see weakness in the japanese yen, rate differentials playing a key role as the japanese can is at a five-year low as we had toward a fed rate decision as well as the boj. we continue to watch the treasury space with the 10-year gilts at the highest since february 16, the 2% level being topped. the global bond selloff continuing as we had toward rate -- head toward rate decisions as we also look at commodities pricing. wti under pressure after the first weekly losses the invasion of ukraine. our next guest sees the prices of metals remaining elevated in the first half of the year. and sanction uncertainty creates volatility and speculative biting.

we have seen such volatility and such a frenzy when it comes to the commodities space. which metals are you watching for more moves? >> russia is a major exporter of a number of metals. these would be metals like aluminum, copper, nickel. we are watching for moves in these as well as gold. these are the best times for gold to soar to previous record highs or pause. shery: how much of this is about psychology and but we are seeing in the physical markets? we are continuing to see volume from russia and ukraine falling sharply. how much of this is priced in? >> it is a mix of gold.

prices are being affected by investor sentiment. whatever it is would restrict physical export of goods out of russia, out of ukraine. there is a panic of supply crunch going forward, but there is also a fundamental aspect. we have seen exports from ukraine being restricted. there is a mix of fundamental and sentimental aspect. haidi: in terms of the fundamental drive, which metals in particular do you see as really seeing that sustained pressure on the supply side even if the geopolitical side was to be alleviated. >> right now most metals are

hovering around their lowest levels in terms of global stocks. global stocks of aluminum, copper, these metals are facing a huge deficit. the long-term outlook is very strong for copper and aluminum. also because these are metals being used for the green transition. in ev batteries you need nickel. also we will need copper in batteries, aluminum and letter vehicles. these metals have already had a very positive future, a very positive outlook. this geopolitical issue, this is pushing prices even higher. haidi: when it comes to gold we

are seeing haven demand as to be expected rallying within a few dollars of a record high. does the fed outlook potentially change that? >> the market has most likely already priced in this. we are expecting five rate hikes this year, so i would meet the main drivers of both the staff of the lead the russian invasion of ukraine, how it unfolds over the coming months, how it evolves, what kind of weapons are being used in the war. this war is definitely going to be a main driver, also inflation. inflation will be driven somewhat by the war as well because of high oil prices as a result of russia's major role in the oil markets. also commodities in general.

so i would believe that going forward would mean it would definitely be this war as well as inflation, and said rate hikes have already probably been priced in. haidi: fitch solutions head of commodities analysis, we appreciate your time. u.s. officials have expressed concern that russia is asking china for military equipment and warning that they will not tolerate any aid for moscow. >> we will not stand by and allow any country to compensate russia for its losses, there will absolutely be consequences for large-scale sanctions, innovation efforts or support for russia. we will not allow that to go forward and allow there to be a lifeline from economic sanctions were many country anywhere in the world. haidi: the ukrainian ambassador

to japan told us that beijing must rethink its relationship with moscow. >> it is abundantly clear the position of china is immensely important. i do think putin set a trap for china signing this declaration on february 4. on february 4 he already knew she would invade ukraine and he already knew the visibility of china would have toxic consequences for china's image and economy because of the wave of sanctions. i do hope china will be smart enough to understand very carefully and estimate very carefully the consequences of this toxic relationship with the blue -- putin, because china is much bigger and much smarter. they have no reason to maintain and support war in europe.

europe was the destination of the on eblet-one road project. they just go to the basket. if putin will use nuclear weapons as he threatened us or blow up nuclear power plant's, there will be no europe. there will be consequences much wider than ukraine. what happens in ukraine will not stay in ukraine. what is happened in europe will not stay in europe. internet must very carefully consider those were lysed from russia. this is a toxic relation. we just moved -- we just need to wait and see. haidi: how difficult is it do

you think for japan to balance what it has been taking a traditional path. it has sent some equipment to ukraine, it would surprise some analysts. do you think that corporate japan should be doing more given the corporate response another economies? >> as i said, the support -- japan will supply nonlethal equipment for the first time in history and for our military. this is important for us. this is a sign a full understanding of what is going on. we follow japanese law.

the japanese constitution forbids japan to be part of any voluntary conflicts. at the same time, we do appreciate efforts of the government to be a part of g7 efforts, international committee efforts and to do our utmost to maintain the sanctity regime against russia. we will continue looking into those tuples that are still there. it is always an immense amount of data to evaluate and to understand your own country because this is clearly an adjustment time out of covid. everyone needs a revival, and this war is complicated. shery: we heard last week from your colleague, the capacitor to south korea and he was telling

us he believes beijing knows the consequences of this war in ukraine for its own country as well. what sort of change you want to see in china policy towards ukraine? >> i think, this is a moment of truth, a moment of choice. you have to understand carefully. chinese authorities must understand, this is an event of huge scale. it will reverberate for years if not decades. shery: ukraine's ambassador to japan speaking with us earlier. a resurgence of covid affections and china is prompted a lockdown in the tech hub shenzhen. this is bloomberg. ♪

haidi: russia faces its first currency bond abatement since its invasion of ukraine on wednesday. failure to big could put russia on track for its first default on foreign debt in over 100 years. let's look at how the default could go and its consequences. >> russia faces its first coupon payment on the dollar bond since his invasion of ukraine, a total of one $170 million -- 170

million -- $117 million. failure to do so could be the first step toward failure of the russian federation. that is that happened in over a century ago. by the are dollar-denominated and do not include bonds that would love for payments in rubles. boudin has claimed payments would be allowed but only in rubles. a 30 day grace. bank begins. during that time credit rating agencies will view the situation of will begin to initiate, but with who. with the major companies cutting ties with russia, the nation would have to find some underrepresented. if present that's my fault -- if russia does default how would that be enforced. if the state defaults companies will likely follow. there was about a quarter trillion dollars of russian

sovereign bonds outstanding. defaults good luck russia out of international capital markets, making it immensely difficult to raise money. the international community is already made a rush of the most ancient country in the world. china has showed a willingness to continue working with moscow, but could default change all of that? shery: we will keep you updated on a crucial week for the russian economy. let's get to paul allen. paul: a u.s. official says moscow is asked beijing for military equipment to support a invasion of ukraine. russia currently sells far more arms to turn it that it currently buys though china has been producing more advanced weapons. it is unclear what equipment has been requested and how beijing might respond. the u.s. and china are said to hold their first dog since russia's invasion of ukraine. jake sullivan will meet with a communist party member in rome

on monday. president biden's top advisers have been working to increase pressure on china to enforce tensions on russia's economy. mumbai has become the first city to phase out carbon emissions by 2050. officials laid out exhaustive changes to the managing of energy, water, and air in the city of 19 million. it puts it two decades ahead of indy's national will. malaysia's ruling party and secured a super majority in local elections for the second time in four months. the national organization and its allies will renew pressure on the government to announce a national monsoon. in early election it may stand to benefit the former premier, whose party credited him with success in the state. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am paul allen.

this is bloomberg. haidi: virus cases are spiking across china with the 17.5 million residents of shenzhen put into lockdown until march 20 . we saw earlier that some of these component manufacturers to the likes of intel and apple are being affected in this major decor. what is the point of this lot and again they achieve what they are trying to do? >> the point of it is to stop the flow of transmission. it is a sign that are very concerned about the scale and spread of the outbreak. china has had omicron outbreaks previously but they have not lockdown increases like shenzhen. the fact that they have locked down shenzhen and with very

little notice does show that they are concerned about it and they want to nip this in the bud . we are starting to get through some of the compacts, omicron, one of the critical players in the semi conductor sector. they are holding production as they cooperate. we are reaching out with the main manufacturer for apple, obviously with a lot of iphones made in shenzhen and nearby hubs. shery: there was a lot of speculation on hong kong, where are we at now? >> that definitely seems to of been put on the back burner now

that the outbreak has really exploded. there were a lot of questions as to whether it would have any use when you have got such widespread gaze levels, over 31,000 new case levels over the weekend. even though there was support from beijing for them to lockdown, that is not the way they have gone in hong kong. the fact that the outbreak did explode is probably why -- i think they are trying to avoid a hong kong like situation in shenzhen. shery: our bloomberg managing editor for asia business. we do have more to come. this is bloomberg. ♪

haidi: a check of business less headlines, tub supplier as admitted to being a target of a ransomware attack. the other part maker says its networks were compromised last week in germany. denso responded to the contact but did not explain what actions it took. adm says it is taking steps to comply with an order. it will ban the platform from

taking on new customers. it is another setback for the company in shrub direction sentence november debut. a group has put a planned ipo on hold. the offering could have raised $3.5 billion worth shopping mall unit. the chinese conglomerate delayed because of market volatility and challenging conditions and china's real estate sector. shery: the recent roller coaster ride in chinese equities has sparked worst outflows in two years. we spoke to our colleague stephen ingalls. expectations building from some form of easing. what is possible at this point? david to go you have -- david:

you have to look at the front page and them signing analysts, we could see interest rate cuts. even before the case count over the weekend, what you guys talked about, it is also about weak credited it that came out. you had up massive gap down on 10 year yield swabs moving down substantially. strictly price action suggests that the map this week does look a little bit different from the pboc. we have an mlf tomorrow. haidi: what are you watching out for when it comes to benchmarks? david: who knows, we have given

up watching levels to watch. this market in hong kong has been at this as long as dentists have been at wisdom teeth. mike this pause in the selloff we are seeing help? it might, but there are idiosyncratic risks to the chinese markets, and we have not even gotten into the virus story and the full impact of what that might mean for sentiment and shenzhen locking down into various parts of shanghai as well. watching various parts of the market. shery: the virus issue, a tech crackdown, growth slowing down and china, not surprising goldman as credits valuation

target for costs. david: they have, they just came out with a note this morning, and we will be joined later on in the show about one hour from now. someone from goldman sachs joins us. they went overweight in december. when you look at the asia onshore market it does provide you a bit of a hedge, but on the margins they are adjusting expectations given of course i would imagine the developments over the weekend, and we will keep on top of this in the next hour. haidi: our coanchor will be back with us in a few minutes. these are some of the stocks he will be watching ahead of the china open, lots of names as virus cases surgeon china, take your pick, everything from major airlines to casinos to restaurant operators could all see pressure at the open. that is just about it for

"bloomberg daybreak: asia." shery: standby for bloomberg markets china open. this is bloomberg. ♪

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david: good monday morning from hong kong. it is 9:00 a.m. here in the city and in shanghai. welcome to the china open. let's get you to your top stories. china locking down its tech hub of shenzhen as covid cases surge. the city is home to tencent, huawei, and a key facility for apple's partner. as the fed gets ready to tighten essential bank