>> a very good morning and welcome to "daybreak: australia ." we are counting down to asia's major market open. shery: the top stories this hour -- the white house says talks with beijing on ukraine were substantial in the first high-level discussion russia's invasion. haidi: u.s. stocks failed to hold onto early gains. the s&p 500 falling and the

nasdaq 100 closing in a bear market for the first time since march 2020. shery: the largest china tech etf in the u.s. wipes out nine years of gains as the selloff in chinese stocks intensifies. this is the picture across wall street. u.s. futures coming online, rebounding after the s&p 500 fell, reversing gains earlier in the day. tech companies sank amid the jump in treasury yields, the 10 year yield the highest since 019. -- 2019. the golden dragon index fell to the lowest since july. there is concern about beijing's relationship with russia, the crackdown on tech giants in the growing risk of u.s. delistings. we also have tencent, you can see it tumbled after reports it faces a record fine for violating chinese regulations.

apple closed the lowest 200 day moving average. foxconn also, following a covid lockdown. higher yields as we head toward the federal reserve rate decision. traders already boosting expectations for the amount of fed policy tightening we might see this year. they are actually close to factoring in seven rate hikes be we haven't seen this much tightening expected and priced in since mid february, which was around the time we got u.s. api numbers coming in faster than expected. haidi: when it comes to the other end of the spectrum, we are seeing expectations for calls for rate cuts from the pboc. an analysis saying lockdowns

could threaten gdp growth across half the country. we've got analysts, including morgan stanley, saying they don't expect any gdp growth for china this quarter as a result of lockdowns. we are expecting nine out of -- nine out of seven economists are expecting the rate will be cut on tuesday. shery: markets washing -- watching closely the war in ukraine. the u.s. and china held high-level talks on ukraine, with aging accusing washington of spreading what it called -- aging accusing washington of spreading what it called disinformation. >> the u.s. has repeatedly spread false information on the ukraine issue, targeting china with dangerous intentions. china's stance has been consistent and clear. he have played a constructed -- constructive role. we want to work out a diplomatic

solution rather than further escalating the situation. shery: for more, let's bring in emily wilkins. this was the first meeting since october. how did it go? emily: it was a long meeting, more than six hours. we know it was a substantial and candid conversation. a lot of it did focus on russian in ukraine even of the meeting was scheduled before the current conflict broke out. we heard from u.s. press secretary jen psaki that sullivan made clear during the discussion with his chinese counterpart that china would face a significant consequences if the country provided russia with any support that violates sanctions or supports the war effort. jen psaki did not go into what those consequences would be, but that they would be coordinated with the u.s. and allies. haidi: as you mention, these

talks were scheduled well before the latest developments in eastern europe. what else was covered, especially when the chinese economy is at a delicate point -- did they talk about trade? emily: we know trade will be a big point because it's getting to the point where the u.s. needs to review the trade agreement it has with china signed under president trump. we also know there are numerous concerns right now simply because of where the global economy is at due to the covid-19 pandemic. the u.s. dealing with a number of supply chain bottlenecks and rising inflation. trade with any partners is something the administration officials are considering and looking at. the u.s. and china, given the scale of the economies, a lot to discuss. but the main focus of a conversation today was on russia and ukraine, just because there would be so much concern if

those news reports we heard about russia coming to china for aid, if those are accurate, russia and china have both said they are not, but we have u.s. intelligence saying they know that russia did come to china with a request and really what the relationship with -- between those countries looks like could change the course of the ukrainian invasion and impact the relationship between the u.s. and china. haidi: emily wilkins there. the selloff in chinese stocks was brutal and extended throughout the u.s. session, the largest chinese etf lost all of its gains. let's get to our equities coverage. what is the cause of this, is it concern about the ongoing crackdown and threat of u.s. delistings? >> there is a slew of reasons, as you were talking about earlier.

clearly it has to do with questions surrounding china and russia's relationships and china's stance on the war in ukraine. rising covid cases in china as well. definitely having a negative sentiment on the market. there is tencent, the potential for tencent to have a record fine. last week with didi and its hong kong listing. and of course anything with regards to renewed regulatory crackdowns. a lot of this is weighing on the markets for chinese tech stocks and has been for weeks. it is continuing into the market, or it did in the u.s. today. shery: despite the sharp selloff, the ratio remains elevated for hong kong listed stocks as shown in this chart. can we really expect a bottom for the selloff? >> that's a really good question.

ultimately we haven't seen that since february of 2021. the nasdaq golden dragon index, which lists all of these chinese companies that have listings in the u.s., is down more than 70% since the peak it reached and no one seems to be able to see the bottom. j.p. morgan came out with a note today, downgrading over 20 stocks, 20 chinese stocks. basically saying they are not investable at this point because of the crackdown issues. it is really hard to see the bottom at this point. haidi: and of course what happens in china has huge ramifications in particular when it comes to this part of the world, concerns over the economic downside of the covid zero strategy will have an impact when it comes to new zealand and australia. let's look at asian markets. it looks like a day of struggle when it comes to stocks and sovereign bonds a challenging session ahead. the war in ukraine, risk of

aggressive fed tightening weighing on investor sentiment. we've seen quite a bit of action when it comes to bonds, 10 year yield rising above 2.5%. the three year rising, investors anticipating monetary consequences. new zealand keeping its head above water. we are seeing a negative outlook when it comes to the start of trading in sydney. we will continue to watch the bond space, sovereign space in particular. in chicago, nikkei futures up about 1%. >> ukrainian president volodymyr zelensky will make a rare wartime addressed to both chambers of congress in the u.s. in the virtual address, he is expected to ask for more aid. lawmakers on both sides are agitating to do more for ukraine

and punish moscow, but zelensky will not get all of his requests, including a no-fly zone. the london metal exchange will reopen nickel market, after it was closed, after a chinese tycoon announced a standstill with his banks to avoid further margin -- trading will resume wednesday at 8:00 a.m. london time. u.s. democratic senator joe mind -- joe manchin says he opposes an appointment to the federal reserve. he supports an expansion of oil and gas drilling. he joins republicans in existing the appointment because of her stance on climate change. >> it probably does as a practical matter. i'm not aware of any publican --

republican support for ms. raskin. i've not spoken with every colleague, but i am not aware of it. vonnie: australian the netherlands have started legal proceedings against russia over the downing of malaysian airlines flight 817. the dutch government says this comes after moscow unilaterally ended negotiations with the countries. an international investigation found russia responsible for the missile that was used to shoot on the plane in 2014. 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 am vonnie quinn. this is bloomberg. shery: coming up on "daybreak: australia," we speak to nato's former deputy secretary general to get her insight on the response to the war in ukraine. next, a co-cio of investment tells us where she is allocating some of the firms $240 billion in assets under management.

this is bloomberg. ♪

shery: a check on the markets, u.s. futures rebounding after we saw the s&p 500 losing ground in the new york session. we had treasury yields rallying and tech stocks syncing with the nasdaq 100 closing in bear market territory. we are seeing futures rebounding, although oil extends declines we saw in the new york session. we saw a drop as negotiations between ukraine and russia seem to be more substantial. the lockdowns in china giving rise to concerns about oil demand. our next guest says tech has been the defensive play in market volatility the last few years but it will not be the case this time around. with us is dana d'auria.

this chart is showing us how the nasdaq 100 has entered bear market territory. where can we expect tech stocks to go from here? dana: thank you for having me. the comment you made just now i think is the one to close in on. we certainly have seen tech stocks as the defensive throughout the pandemic. why we can't expect that going forward is we are getting to the end of this era of quantitative easing. we have interest rates going up. i certainly don't think it means that tech is to be shorted or you should remove it from your allocation, but not to overweight it like you might have in the past given that these are longer duration equities that are going to be hurt in an interest-rate environment that is rising. shery: is there any sector of the market where we could take

cover, especially with globalization forces and the macro global picture not looking great at the moment? dana: it's a great question and point. we see a lot of assets under management, we get a good view on where people are allocated. i think there's been a lot of -- s&p 500 is the market and it's done so well. i would tell people to look to diversify that, and small-cap value is a place to look. it has outperformed over time. when we move into an environment where fundamentals will matter more with rising interest rates. but you mentioned globalization, i think unfortunately this crisis, one of the collateral damages of the crisis is the idea that globalization brings prosperity and multinational

greater income. small caps are may be better insulated from that. they also traditionally have done well in inflationary environments in terms of insulating you from inflation. haidi: we are you looking within small caps for value? dana: i would say that cyclicals are, again in this environment, a place where you would want to look. the end of quantitative easing, there's a lot going on in the market right now. a lot of volatility, midterm elections. we know the volatility in markets begets more volatility and we don't think that will calm down. small-cap value tends to be more volatile and generally speaking you want to diversify with large caps, but i think there is an argument to be made for reopening trade. we are definitely moving forward there. haidi: there is a wall of worry

to em at the moment. seven rate hikes from the fed and the panic selling that seems to not yet be bottoming out for china. dana: you are right. even within the span of a week, we've seen conditions in china worsening. last year the way things were going, in terms of political regulations and the timing with covid restrictions. you look at emerging markets, they will suffer to a certain extent in the short-term, especially with more money needed for nondiscretionary essential items. that being said, when you think about the long haul diversification, if they are looking for -- not necessarily being attached to multinational income, i would not turn my back on emerging markets. haidi: would you be fully

invested or are you sitting on a bigger than usual cash buffer? dana: i would say that -- just to be clear, we have a number of portfolios and are not likely to make tactical changes. i think what investors are facing is their own portfolios are somewhat over invested in equities. with the s&p down on the order of 12%, that is getting eroded. i'm not seeing you want to tactically move assets out of the market, you want to make sure you are in line with --. haidi: dana, it is great to have you with us. dana d'auria. you can get around up of the stories you need to get your day going.

you can always tweak your settings so you can only get the news about the news and assets that matter to you. this is bloomberg. ♪

shery: -- haidi: global bonds are extending their route. in australia, the 10 year above 2.5% to top the pandemic hi. that was back in march 2020 when we saw that meltdown. the three year also rising about 1.9%, or just shy of 1.9%. just tumbling. we see that reflected in the kiwi bond market as well. investors bracing for the inflationary impact of the war in ukraine, expecting that to

spur aggressive monetary tightening across the developed world. we see when he markets pressing in seven -- pricing in seven standard rate hikes from the fed this year. this after 10 year u.s. treasuries and german bunds surging overnight. the selloff picking up steam as we also get this additional round of tightening curbs and lockdowns in china that could potentially play into the global supply chain. rba minutes of its march policy meeting, we could get some clues on their views on inflation and timing of rate hikes, remit were there talking about the possibility of moving faster than previously indicated, sometime this year it is possible. rio tinto is offering $2.7 billion to buy out minority owners of turquoise hill, to

try and get a copper mine in mongolia. and more funds to clampdown on misinformation in response to accusations that a company has not done enough to reduce the spread of inaccurate information. shery: citigroup is expected to face an estimated 1.5 million dollar hit from a broader russia exit. analysts and wells fargo say citigroup will probably have to lay down a portion of its investment in a russian a subsidiary -- russian subsidiary. the lender is expanding the scope of its withdrawal from russia beyond disposing of this consumer unit. a u.k. prom at her -- property developer says he has the funding in place to make an offer for chelsea football club. he says he's held discussions

with potential partners, including a businessman, about forming a consortium pure the sale of the club has been complicated i the sanctioning of its russian omer -- owner last week. a chinese tycoon whose short position rolled -- roiled the nickel market has reached a deal with banks. banks led by j.p. morgan agreed not to close out positions against it during a standstill period. talks will also continue to cover the firms nickel margin and settlement requirements. apple shares fell below their 200 day moving average for the first time since june on monday. this after foxconn halted operations at a chinese site when the city went into lockdown. monday's decline wiped more than sickly $7 billion -- more than

$67 billion of capital from apple but analysts see limited impact from a short-term production halt. haidi: let's look at the day ahead when it comes to the equity session. hanging over sentiment will be the selloff continuing when it comes to chinese adr, panic selling gripping chinese stocks. the biggest plunge since 2008. that was in hong kong, which led through to the u.s. session. we are looking to see if that extends to another session in asia today. new zealand stocks just keeping their head above water. sydney futures looking like a softer open as well. both stocks and sovereign bonds facing another challenging day. that continued war in ukraine, the risk of more aggressive fed action tightening inflation, undermining sentiment at the moment. the s&p looking a little positive. coming up, a key possession at

the federal reserve in doubt. those details are just ahead. this is bloomberg. ♪

>> russia -- >> the invasion of ukraine -- >> bleeding through into enroll consumer price inflation. >> we will include the geopolitical development that will have bearing. >> really erred to the risk of inflation expectations giving way. >> the effects on the u.s. economy of the invasion of ukraine, sanctions and events yet to come, remain uncertain. >> close to stagflation.

it is not out of the realm of possibilities we can face, so we need to adjust our policies. >> the ecb stands ready to take whatever action is necessary. >> this event seems to be one that is a game changer and will be with us a long time. haidi: central bankers speaking about the impact of the war on ukraine. governors of the philippines central bank spoke with haslinda amin for the asean business summit. >> we are in net commodity, so while we would be affected, we do seem to benefit from the surge in commodity prices. at the same time, further

interest in commodity prices would upset risk inflation. policies are placed by the government. over the medium term, we could see international trade and global manufacturing also being redirected to the region. >> i'm wondering whether you reassessed the number of times the fed is likely to raise rates this year. when i spoke to the governor, he maintains the three rate rises for 2022. has ukraine change that, has the fallout in markets change that? >> i think the russian invasion of ukraine and how it has

developed will certainly change the fed numbers, instead of a 50 basis point adjustment, it could be 25. instead of five, it could be three. we are waiting for the option. that's why think it is necessary to be patient, and for our part we will be patient. we are not like latin american countries. we have already adjusted upward your rates. except for south korea and new zealand, most asian countries have not yet adjusted their rates. haslinda: what assumptions are you make for 2022? >> when you look at the market,

and the impact on adjustments and emerging economy, we expect it to remain manageable for a variety of reasons. we have worked very hard in the asian crisis. we will continue to support conditions, and more portly, price adjustments in the market. with the economy on a tract, any adjustments, the volume should provide a good opportunity for investors. haslinda: could china be a bigger risk than the russian attack on ukraine? >> i think so. it is more connected with the

world than russia. i think the contribution of russia to the global economy is much less compared to china. whether a growing china could have a bigger risk than russia and ukraine. shery: the governors of the philippines central bank and malaysia. you can watch the full conversation of the bloomberg asean business summit, you can register virtually at bloomberglive.com. in the u.s., sara bloom raskin's chance of becoming the next fed chair of supervision looks dimmer after a key democratic senator says he's not backing her nomination. kathleen hays joins us with more.

why is senator joe manchin opposing this nomination? kathleen: joe manchin is a very powerful democratic senator. sara bloom raskin is a former fed governor who is now nominated to be the vice chair of supervision, meaning she would oversee bank regulation. she has publicly supported that the fed should consider the impact of climate change, what it means for a mixed islands sheet and how it comes into regulation. joe manchin, from west virginia, and energy producing state, in favor of oil and gas and coal drilling, he is joining a group of republican senators that say they will not vote to confirm her. because the senate has this 50-50 division, you lose one democrat, you have lost the vote. senator pat toomey is a republican who is the ranking

member of the senate banking committee. he was on balance of power with david westin today when the news broke of joe manchin's opposition to raskin. david asked him, what does this mean? does this mean she will not get nominated, or confirmed i should say. here is what senator joe manchin said. >> it probably does as a practical matter. not aware of any republican support for ms. raskin. kathleen: senator manchin also said ms. raskin is not addressing the need to finance the u.s.'s critical energy needs. with the war in ukraine, there's concerns about getting oil in the market, so that might put power behind that statement. raskin said the federal reserve has no place in allocating capital in industries.

why is this important beyond sara bloom raskin? there are four people waiting to be confirmed at the fed. the chair, vice chair, and william jefferson for the board of governors. it is something that holds up important nominations. it doesn't mean the fed cannot do its job, but there is a lot going on beyond sara bloom raskin. haidi: markets are pricing in seven standard rate hikes this year. is this the messaging we expect from the fmo see on wednesday? kathleen: you can understand why people are saying six or seven rate hikes, inflation through the roof, could get to 10% in the coming months. at the same time, there's a lot of uncertainty. what are the risks from the ukraine more and all of this follow. why am i showing you the dot plot again? in 2021, there was a big shift

at the end of the year in the december meeting. the fed updated its economic forecast and that's when they make their forecast, where they think rates will be in keeping with where they see the economy and inflation going. when you get to 2022, there are 10 out of 18 people on the federal open market committee who think there will be three and maybe four rate hikes. that was signaled in december. the march meeting, every three months, they update their economic workouts again and they update the dots. this is what traders will react to, what are the dots telling us? we will be looking at powell's presser. he will be a barrage of questions, and of course, how aggressive are you going to be? he talked about preserving optionality, a more cautious view from jay powell. those are the things we are waiting to cepheid the dots --

we are waiting to see. the dots are where it is out. haidi: that's get you some calls ahead of the asian trading day. bonds and attractive hedge as traders brace for the tightening fed this week, according to morgan stanley. expected fed rate hikes plus the war in ukraine put global growth at risk. long dated bonds and attractive hedge in this low growth environment. shery: we continue to see the selloff in chinese adr. we are hearing it is still too early to buy the dip. that is according to an international strategist saying investors should not catch any falling knives yet, even though the market shows signs of perhaps a little capitulation. he is saying the hong kong market needs to take more time to heal and indiscriminate selling means a technical redound -- rebound is too difficult.

chinese adr sinking to the lowest since july. next, the psychology behind russia's actions and potential outcomes for ukraine with a former nato policy analyst. this is bloomberg. ♪ ♪

>> representatives of our countries are holding daily talks via video conference. we are doing everything to arrange a meeting amongst the presidents, which i'm sure people are waiting for. it is a different can't -- difficult path but we need the path. haidi: ukrainian president volodymyr zelensky. let's get to the first word headlines. vonnie: the u.s. and china are holding what the white house calls a substantial discussion about the war in ukraine. in a meeting that lasted six hours, u.s. national security advisor jake sullivan and china's top diplomat discussed various topics. no specific agreements were announced by the white house be at the european union is set to announce more sanctions on

russia. according to a draft obtained by bloomberg, there will be sanctions on russian steel and energy projects. they will also ban the sales of luxury goods and cars to the country. it is set for approval later tuesday. russia has started the payment process of two bond coupons do this week in what is becoming the most closely watched debt settlement since the start of the war in ukraine. the finance minister issued an order to pay euro bondholders $117 million without specifying whether it will be issued currency or rubles. if it is rubles, it might poise the nation for default. india says it is keeping options open to see how much oil it gets from or new suppliers. the government is pledging to provide relief to consumers as prices of gasoline and diesel start rising. india is discussing cooperation

with russia. it sees the prospects of raising imports of crude oil to india. 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 am vonnie quinn. this is bloomberg. haidi: let's get back to our top story. the ongoing war in ukraine. our next guest was a deputy assistant general for nato. she says one of the key questions in the situation is how the west can begin to roll back russian global ambitions in the short and long-term. stephanie babst joins us from germany. great to have you with us bit that start with the short term. is there an offramp given we have seen these rounds of talks not yielding much of a compromise? stephanie: first of all, from what i can see, it will be a long trek, i am afraid to say.

i don't see light at the end of the tunnel. vladimir putin doesn't seem to have changed his endgame, which is to bring ukraine back to russia. i must admit, i don't see a quick way out of this crisis. haidi: if this is less about grievances that might be able to be addressed by compromise on the ukrainian side and more about legacy or empire building, how does the west even begin to manage those expectations? stephanie: so far, nato in the european union have worked greatly together and i think this is something president putin has completely underestimated. he must have based his assumptions on the rather weak and uncoordinated response by the west and the opposite has

been true. he must've also underestimated ukraine's military resistance, and underestimated the way that president zelensky has been able to moralize ukrainians behind him. all of that is to say that this is a discrepancy that the west has embarked on so far, which is to support ukraine politically, humanitarianly, with military equipment. i think it is very important that we need to be super careful that's the conflict does not spillover. shery: we are seeing attacks closer to poland, and nato member. is there anything specific nato can do at this point? stephanie: we have started to upgrade our own deterrence and defenses, as you have probably

seen. u.s., french, german, and other nato allies have beefed up forces in lithuania, poland, old area. basically -- poland, bulgaria. basically the eastern front. when you look at the current situation, today the russians announced another military exercise in an enclave that borders lil wayne you and poland -- borders lil wayne you and poland. shery: we've just seen high-level discussions with the u.s. and china as well, the white house trying to enlist beijing's help with president putin. what do you expect from chinese policymakers at this point? stephanie: i think at the end of

the day, the chinese need to make up their mind whether they would like to sit in a boat together with russia, which is completely isolated and run by a man who is threatening nuclear escalation, which happens to be a rather unpredictable partner. beijing is so concerned with safeguarding its national objectives, its business objectives, including europe, and i think they need to make clear which side they are on. i really hope -- at least behind the scenes, that they will work together with western partners influencing partners -- influencing putin. haidi: can putin achieve his new world order without beijing, and if ukraine falls, what are the

implications beyond europe? stephanie: if ukraine falls, an iron curtain will fall and it will be the beginning of a new hot/cold more that could become globalized and easily have ramifications for all types of interaction between states, businesses, you name it. that would be really bad news for us. we would have an aggressive russia coming directly closer to nato borders. to prevent that, we need to make sure putin strategically fails, and what we have come up with so far in terms of a strategy, sanctions and push back over time. shery: thank you so much for staying up late for us and sounding the alarm about the

implications about this war. coming up, the london metals exchange set to resume trading in nickel contracts on wednesday after a weeklong suspension caused by a massive short squeeze. this is bloomberg. ♪

haidi: when nickel went vertical last week, the metals industry plunged into crisis not seen since 1985, and london suspended trading for the first time in a decade. it resumed on wednesday. let's bring in our metal reporter. how did we get to the point of the market being closed for a week after this 18 minutes of sheer chaos? joe: the 18 minutes of chaos, the market opened up at 48,000 dollars per ton, and in the space of a few minutes, it went to $60,000, $80,000 and then $100,000. when the dust settled, we realize there was a big short position on the market from the

largest nickel producer on the planet. they were getting squeezed out of the short position. it was so crazy that they finally had to shut down the exchange and they canceled trades going back to midnight new york time. that's what led us to this multi-day closure, coming up on a week in the next few hours. shery: of course trading scheduled to restart wednesday, 8:00 a.m. london time. what can we expect? joe: that's the biggest question in the market. there are some people out there saying you could continue to see the squeeze happen. if they start trading back down at $48,000 or whatever the closing price was on monday, you could see something similar. then again, maybe lme has straighten things out in the past week and you see more

normal trading. but the traders i am talking to right now say they are waiting and seeing. haidi: what have you seen the past week? joe: they have gone out and -- like today, one of the big news bits was they had gotten approval by the banks backing him that they would put a pause on margin calls. they've basically been shoring up their position and saying they are not going to get out of there short position, which is interesting. they are betting the short position they put on is still the position they want to be in, and that was back in the fall when they were making that that the rallies up to that point would probably cool off at some point in 2022, and to some degree, typical hedging a

producer will want to put on its positions. although this was massive and i think people are still trying to figure out more. haidi: joe, our metals and mining reporter. daybreak: asia is next. this is bloomberg. ♪ his is bloomberg. ♪

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♪♪ ♪♪ >> a very good morning. i'm haidi stroud-watts in sydney. >> welcome to "daybreak asia." our top stories this hour, the u.s. presses china to use its influence in moscow to help end the war in ukraine and warning there will be consequences for supporting russia. stocks and bonds face another challenging session in asia, traders assess