♪ haidi: good morning and welcome to "daybreak australia." shery: the top stories this hour. president biden will seek to raise global pressure on vladimir putin it is first phone call with china's leader since the invasion of ukraine. haidi: jp morgan has processed

funds for bond payments. shery: u.s. stocks climb in a volatile session but the chinese abr cools off. u.s. futures coming online under a little bit of pressure after the s&p 500 volatile in today session. we managed to see the biggest three-day rally since 2020. we got a positive call from j.p. morgan that tech biotech stocks and em could be near an end. we sell pressure and the rally in the past week fizzle out and the china golden dragon index fell more than 4%. when it came to wtr, we saw a lift above the $100 per barrel level. we had a little bit of doubt

over the progress between the russia ukraine talks. our focus was in the treasury space because look at this we saw the 10 year yield continued to fall toward 2.17 level. suffice it to say we saw a receipt -- steepening of the yield curve. this after fireworks overnight. we saw a gap fall to the lowest since 2007 and also when it came to the five tens to the lowest since 2020. what have been supporting the markets today was news that we had seen according to bloomberg reports that j.p. morgan managed to process a russia bond payment , the funds went through and that was sent to city.

the caveat is that european bondholders have yet to see the funds. suffice it to say this gave optimism that the technical default could be off the table. we are still watching what it means for the russian bond space and the broader economy because after the markets closed with the s&p coming out saying russia's ratings could be cut further. haidi: one of the speculated economic lifelines for russia that we have been talking about has been china. beijing has sought to tread a thin line when it comes to diplomatic overtures. president biden is looking to raise the global pressure with this phone call with xi jinping on friday. this will be the first conversation since the start of the invasion of ukraine but also the first conversation since back in november when we know that they had a four hour conversation. we have heard a measured tone from beijing.

they've urged for peace on all sides and they have encouraged to foster diplomacy to halt the fighting. we have also been hearing potentially of an economic lifeline through the invasion of western sanctions or a provision of weapons. we had a meeting between two representatives but nothing firm came out of that. a lot of focus on this key focal. shery: the latest we are hearing from the pentagon is that vladimir putin could be making threats against other asian nations. that warning coming ahead of the call between joe biden and xi jinping. in the markets, they are breathing a sigh of relief as russia makes good on bond payments that were due on wednesday. let's get the details from jodi schneider.

what can we expect from the phone call? >> the expectations are that joe biden will seek to get xi jinping to try to agree or to push him to give some assurances that they will try to help the u.s. and its allies to get russia out of ukraine. we have been hearing in recent days from chinese officials that they are trying to reassure the ukrainian people publicly that they are their friend, they will not ever attack ukraine. of course, the u.s. has been concerned given that there has been in the past xi jinping and vladimir putin having warm relations and president putin went to the olympics before the invasion.

the u.s. is trying to suss out where china stands and at the same time, trying to push to get china to try to compel vladimir putin to leave ukraine or take steps to push back, to pull back on the war. we will see how significant that is. this comes as you mentioned the pentagon information agency has come out with a new 67 page threat assessment and basically it says president putin is likely to increase the rhetoric, to escalate this nuclear rhetoric if the war continues. if the ukrainian resistance continues, they say he is almost certain to use nuclear threats and to escalate the rhetoric around those threats. that is something that is somewhat chilling that comes as a backdrop to this key phone

call that will be held tomorrow morning washington time. haidi: also key is the interest payment. we have been watching this as a litmus test toward a possible russian default. what is the latest? >> this is interesting because the steps that we saw where jp morgan processed the payment, these are one of the mill procedural steps but they have taken on huge significance being watched around the world because for a while after russia says it sent in order for the payment of $117 million, no one seemed to know where it had landed. our reporters this morning broke the news that j.p. morgan had processed the payment, got the requisite approvals from u.s. authorities and sent it on to citibank which is the payment agent and they should go want to distribute it to the

bondholders. it is unclear if the bondholders have received the money. we did just see that the s&p downgraded russia's long time foreign currency debt rating citing that is understanding that investors did not receive the payment. the information is contradictory at the moment and once payment was processed, there was optimism it would be paid. >> the abr's we saw a today historic search fizzle out quickly. at the golden dragon fell as 8%. we clawed back from the losses, but we ended the day 4.6% lower.

the key question is have we reached the bottom, a policy bottom not just floor for equities. is beijing going to deliver on the promises it made and boosting growth and putting an end to regulatory crackdowns? morgan stanley perhaps the most bearish when it comes to chinese stocks saying they take these comments positively but no rush to turn bullish on chinese equities just yet. on the flipside, you have credit suisse saying it's time to be overweight on chinese equities because they offer attractive upside potential as these valuations remain depressed. even with the latest gains, where talking about a tech index that is 50% off the peaks in february of last year. we are looking for signs of the policy shift as soon as next week. some are saying that lpr on monday could be lowered.

in the past after these state meetings, you look back at july of last year, china did cut rates after these meetings. or just a signal that cuts could becoming. again, there's a lot of issues at play. you have the u.s. accounting watchdog saying that beijing should provide complete access to audit the chinese companies. that sets a high bar for any deal that allows chinese companies to remain listed in new york. you mentioned the palooka back lash of beijing warming ties with russia. haidi: thank you to our guests. let's look at how asian markets are shaping up. we are seeing a little bit of

upside. sidney futures looking positive as we get into the end of the trading week. the asian mood is out -- i would characterize it as positive to cautious. lots of focus when it comes to the cooling of the china rally despite the strong gains over the past few days for broader u.s. equities. we are focusing on the furious rally of u.s. listed china stocks fizzling. oil starting to climb back as well. watching the energy sector. the 10 year yield lower this morning when it comes to australia and chicago nikkei futures seeing downside. >> china's foreign ministry has endorsed remarks main by ukraine that said beijing is a friend of kyiv and never would attack the country. the comments on the ukrainian government website appear to distance china from russia's

invasion however it failed to clarify whether that means beijing will guarantee it will not provide military aid to moscow. the taiwan central bank has raised its key interest rate 25 basis points to contain rising inflation. it was the first rate hike since 2011. indonesia's central bank held its policy rate as expected keeping it at a record low after its last cut in february. the london metal exchange says it will allow moves up to 12% in nickel. futures plunged by the maximum for a second straight day. nickel futures have now dropped 58% from a high on march 8 but only a few contracts of traded due to a lack of buyers. global news 24 hours a day on

air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: still ahead, a former u.s. ambassador tells us how the war in ukraine could have a direct impact on north korea's policy behavior. plus, and asset managers says volunteers will stay until the invasion is resolved. -- volatility will stay until the invasion is resolved. ♪

>> europeans will in the short-term confront higher inflation and lower economic growth. accordingly, the challenges facing monetary policy are changing. we are and likely to return to the same inflation dynamics that we saw before the pandemic. >> this is a moment for fiscal policy makers. what we are seeing now is a hit to consumers of energy and food. that needs to be addressed with fiscal measures. >> we have begun adjusting policy so that when the necessary conditions are satisfied, we can take additional steps toward policy

normalization. >> war in ukraine has made things clear. need to accelerate the transition toward renewable energy as much as possible. >> a measure to soothe the bills for lower and middle income class people. >> once a share of the energy demand can be met by renewables, households will benefit from lower prices. >> officials talking about the policy impacts of the war in ukraine. the s&p 500 having its best three-day rally since november 2020. joining us now is an economist and portfolio manager. we are hearing potentially the

next step to escalation may be nuclear threats from vladimir putin. does this mean there is no short-term answer volatility in the markets? should we be cautious will be look at positive gains we have seen this week? >> the idea that vladimir putin would raise the nuclear tool as a possibility brings into question any short-term stability. i think we will see long-term volatility for quite a while until the war is resolved. it's difficult to see how you can have sustained continued growth and markets in a situation of such inherent uncertainty. >> with that uncertainty, you had a very positive confident jay powell. he wants to sound confident given that this is the pathway to normalization that he is setting the fed on. you think there is a potential

for policy misstep or are they on the right track? >> the fundamental idea is that the war in ukraine intensifies what was in play before. we had high inflation, tight labor markets, a slowing economy that was already put in place by the moves by central banks across the world and the u.s. joining the tightening move with its moves yesterday. i think it substantially raises the issue of a policy missed by the fed. it raises the inflation by the commodity prices of oil, nickel, others that have been in the news while also lowering income, lowering economic growth. that is a situation in which it's difficult for the fed to maneuver. they can't raise the interest rate too much to combat inflation without further damaging economic growth. that damage keeps from

addressing the inflation so jay powell was trying hard to be optimistic and confident. there are some reasons for confidence. i don't think that the u.s. will fall into a recession immediately. but it does raise the risks of it. from what i had estimated before the war at 10%, it probably raises it to a 35% or 40% chance it makes it more difficult. >> walk us through what happens when you have these commodity shocks as well. the chart on the bloomberg showing you how we saw financials conditions being stressed before the lehman brothers collapse in 2008, during the gulf war in the 1990's. even if we do have the stock market rebound, how much of the damage is coming from the commodity prices surging? >> the commodity price surges

operate in a couple of different ways. one is in the united states, we tend to export finished goods. we import raw materials and intermediate goods. when you have the commodity prices rising, that's a raise in input prices and that goes all the way through the chain of production. the second element is there has already been a big disruption to currencies across the world. that changes the relative price at which europe by some the united states, the u.s. buys from china and all across the world. that creates a lot of uncertainty for producers. uncertainty is the fundamental element that makes all of this very difficult because when you think about it, any kind of investment is a move for tomorrow that you are making today. we're trying to plan ahead one to three years in the future. even a production cycle of six months to a year can seem very

long when conditions are changing as much as they are from day-to-day. this heightened uncertainty puts more investments on the edge. it puts more production in a wait-and-see way. that tends to exacerbate and a snowball the declines in investment and income that you get. >> could we see the snowballing effect it russia defaults on its sovereign debt? it was encouraging today that they tried to make their payments even if the payments haven't gotten to the end bondholders yet. i think that effect of that russian debt will be problematic. i think it will be highly concentrated in some sectors. there are many investors who have stayed away from russian debt particularly anyone in the ethical or sustainable investment yield because the governance in russia is so problematic. there are certainly a number of

funds and groups that may have an investment, we don't necessarily know how much investment and how concentrated that is. i don't think it's anywhere near the systemic level that the lehman brothers default was that you showed earlier. russia is not quite that central in the world financial markets. not to say that the gas prices are going to hurt a lot. not to say that the oil and other commodities might not be a significant hit. >> adding another level of uncertainty and complexity. >> it is difficult to trace through all of the parts of it. >> you can get a roundup of all of the stories that you need to know to get your day going in today's edition of daybreak. terminal subscribers can customize. this is bloomberg.

♪

>> looking at the day ahead for australia and new zealand. focus turns to the budget after a representative is expected to say the economic momentum means it's time to stabilize than reduce debt. sydney's housing market is showing early signs of turning down. analysts are saying the market psychology is shifting. the sydney harbor bridge marks its 90th anniversary or birthday since its grand opening back in 1932 tomorrow.

this is the history of the most famous landmark. we will becoming live with the celebrations to mark the birthday of the sydney harbor bridge. that is a national icon. shery: gamestop is hosting a surprise earnings miss with an adjusted loss of $1.86 per share. analysts were expecting a profit of $.84. the company revealed the details of its new nft marketplace saying it is aimed to launch at the end of the second quarter. the company has been criticized for lack of business strategy. china's largest insurer saw net income fall 29% last year. the company's performance was dragged down by impairments on its investment in china fortune land development and slumping new business value.

plenty more to come on daybreak australia. this is bloomberg. ♪ if you're a small business, there are lots of choices when it comes to your internet and technology needs. but when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose fiber solutions with speeds up to 10 gigs to the most small businesses. that's virtually everywhere we serve. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™.

>> you are watching daybreak australia. president biden and xi jinping are set to hold their first call since russia's invasion of ukraine on friday. officials struggled to discern china's position on the war. the u.s. is warning the vladimir putin could threaten to use

nuclear weapons if russia's invasion of ukraine drags on. officials say it is threatening moscow's manpower and reducing its weapons arsenal. earlier, the kremlin repeated reports of cease-fire talks with ukraine. the former president of peru will be freed from jail. the constitutional court approved the release. he was jailed in 2007 for atrocities committed during a war with rebels in the 90's. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: we are seeing a little bit of downside for u.s. futures. nasdaq futures falling half a percent. we saw the s&p 500 rising after

a lot of volatility. it was fluctuating between gains and losses throughout the session. it managed to gain ground to see the best three-day rally since november of 2020. we have optimism russia may not default on its bond payment. we are watching closely what happens in the asian session. haidi: with this volatility, let's get some morning calls. china's record stocks presenting a buying opportunity according to credit suisse. it is raised to the rating to overweight. shery: the hong kong dollar's recent rebound may be only temporary according to a strategist saying while the china rally is lifting sentiment, there is still risk that currency touched the weak

side. the u.s. interest-rate differentials remain unfavorable for hong kong. those rate hikes coming as inflation is rising and central banks around the world. an unexpected rate hike in taiwan. kathleen hays is here to explain. it was a rate hike from the boe but a dovish one. >> is because of how it was presented. let's look at what the bank of england did. at 25 basis point hike. they have done three in a row. it was in line. inflation is the driver. it has been surging over the last year up to 5.5% year-over-year. a 30 year high. what's interesting is the

outlook for the economy and inflation in particular. how would the bank of england portray it so we can get a sense of how aggressive their next rate hike would be. people have been pricing in a 50 point hike in june. they have said the warren ukraine has caused supply chain disruptions it could get worse. they went on to say the inflation spike means a squeeze on people's incomes is going to be materially larger. it's going to cause more inflation, but that's going to eat into people spending. when the bank of england governor said that a rate hike in the future might be appropriate instead of saying it is likely as he has in the past, traders completely priced out the june rate hike and hans rally. -- bonds rallied.

the bank of taiwan -- the central bank of taiwan the rate hike was unexpected. 25 basis points to 1.35%. they move in small increments. this was their first rate hike in 2011. they're looking at inflation. it sees the inflation rate over 2%. they also talked about the fed's recent tightening. they are probably worried about capital outflows or at least pressure on their currency and the commodity prices from the war in ukraine. not big move. not something that rippled anywhere, but it's interesting that even with low inflation and

a low interest rate, the bank of taiwan felt they had to move out. haidi: when it comes to the bank of japan even if we get a bunch -- bump of inflation next month, the governor doesn't think that sustainable. >> the same question for everybody. if you have high inflation, if it is rising, what does it do? it pushes up prices but particularly in japan where people like to save, the concern is that they will spend less if their wages are rising in the same way. they are supposed to keep everything unchanged. the focus will be on the governor and the boj out of -- outlook for the economy. the third quarter was slightly negative. the fourth quarter was positive. the virus is still an issue in japan so all of these things are weighing on the economy now the major earthquake that just hit.

they are expected to make no changes, some talk about the yen. our economics team saying a week yen is good because it helps our exporters and raises our import prices. this time, a former official said he will be very careful to not speak exactly like that will we see how much the end has been weakening lately. haidi: coming up next, a former u.s. ambassador with a long history of dealing with north korea tells us how the war in ukraine could influence foreign policy in pyongyang. this is bloomberg. ♪

>> the pentagon says that russia is not acting like it wants to settle. a press secretary spoke with bloomberg today at nato headquarters in brussels. >> they are fighting bravely.

we would say also creatively. they're using their superior knowledge of the terrain and their own geography as well as their nimble behavior in terms of using the systems they are getting quite effectively. they have essentially stalled the russian advance. the u.s. is going to contribute to the effort by them. you saw president biden contribute more. we know that they are good at using the systems in the field. >> president putin yesterday gave a speech. he talked about russia will prevail and we're going to meet our goals. how concerned are you about the response from russia? >> for all the talk of wanting to find a diplomatic path forward, we have not seen them act on that.

there are talks going on and we support that. we want to see a negotiated settlement. what you are seeing by the russians on the ground is a full commitment to military operations. they continue to hammer the cities with long-range fires. bombardment by missiles and rocket systems. you see it for yourself how much damage and death and destruction they are causing. while they say they want to find a negotiated settlement, they are continuing to press for an advantage and causing an amazing amount of death and destruction. the fighting continues. you guys can see that for yourself. what we would say is one of the options vladimir putin still has available to him is a peaceful negotiated settlement. we would like to see those efforts bear fruit in some sort of earnest way. >> that was a pentagon press

secretary speaking with number. south korea's president-elect has warned his country isn't the only one closely watching the situation in ukraine. so is his northern neighbor. he has predicted provocation from don young with another missile test. we are joined by north east asia expert and ambassador. thank you for joining us. we have seen ukraine be one of the largest nuclear armed countries three decades ago. they gave up their weapons and now they are being invaded by russia. what message does this send to north korea? >> good to be with you. i can only imagine this is a very positive development for north korea. they are watching all the

developments very carefully. for a long time, north korea survived by exploiting gaps in big poor relationships. they have done that successfully for now for 60 or 70 years. the first lesson i believe north koreans will take away is do not give up. their security borders would be given secure assurances if they gave up nuclear weapons. from north korea, to see what happens with a small country if

you give up your note -- nuclear weapons. that's the basic lesson and that has made denuclearization of north korea even more difficult. >> this is already a challenging issue. it for decades, we haven't been able to denuclearize north korea. does there need to be a change in policy toward north korea from the biden administration from the new conservative korea administration? >> of course, we have tried a long time. we have tried in many ways and not succeeded. the last one who put in a lot of effort was president trump. he met with kim jong-un three times. he exchanged a number of letters may over 30 letters. he called him a good friend. he called those love letters. still, we have not seen any result from that engagement.

i believe in order to avert a major crisis, we have to concentrate on engaging north korea. reach them diplomatically and that can only be done through high-level engagement. i think the time is right for president biden to give some kind of sense where he believes this issue will go. we have not seen that from washington yet. the last few days, they have been testing missiles. they have been testing and meanwhile they are increasing their nuclear material. we're are just asking for another round of crisis like the one we saw in 2017 if we do not engage them at a high level reasonably quickly. >> as you mentioned, this comes during one of the busiest

testing rounds from north korea. is this indication that they are abandoning the moratorium when it comes to icbm? >> we are coming very close to that. president trump got an agreement from north korea that there would be a freeze in icbm long-range missile tests and nuclear test. the latest indications are that they are trying what's called satellite launch. that has exactly the same tech knology as an icbm. as far as the u.s. is concerned and allies are concerned, it's the same thing. for them, they have a good excuse. it is the right of every country to do civilian satellite, civilian space launches. south korea does them, japan does them, so do many other countries.

the next big thing we will see will be satellite launch which is as i said the same as an icbm launch and that will be the end of a freeze on low range missiles. >> if north korea is closer to its nuclear ambitions than before, is it too late for a diplomatic over shout from the west? is it not in their best interest to wait until they have achieved what they want then try to wrestle concessions in those talks? >> the reality is that they have already achieved their nuclear ambitions. they have two paths. plutonium and uranium which gets them to nuclear weapons. the last device they tested was 200 times the size of explosion in nagasaki and hiroshima. they are already there. that makes the path that much

more difficult. i think we need to be realistic in the short-term. we reached a real genuine freeze. we begin inspection. then we do step-by-step denuclearization and in order to do that, we have to be clear in our minds what is it that north korea wants? clearly, they need security assurances. they need economic assistance. some opening, political normalization, economic normalization. that's a long list. it's going to take a long time to get there. we on our part, we have to be consistent and not change go back and forth from one policy to another. that's seen as big weakness. >> has china's policy toward north korea been consistent and

what are you learning seeing their stance toward russia when it comes ukraine? >> i think china's policy has been a lot more consistent. china wants north korea to denuclearize. at the same time, china wants north korea to be a friendly country. to be there client state which is what it is. china is going to be supportive of north korea and they will not force them to denuclearize. as long as u.s. china relations are bad as it is, china has no incentive to stop or to get north korea to do anything that is likely to destabilize the north korean regime. it's a difficult thing at the moment. for washington to ask beijing can you do something about north

korea. the answer from the chinese will be that's her problem. -- that's your problem. the nuclear ribbons are not pointed at us, they are pointed at you so you have to deal with it. by the way, why don't you be nicer to north korea? it's a difficult thing. when i was working on this issue, we tried hard and when washington and beijing relations were good, then we got some traction. when washington beijing relations are bad, not much traction. the moment, we are not getting any traction or getting help with china or north korea. >> we appreciate your time with us. coming up next, another australian casino amid new

allegations that it hit almost a billion dollars in credit card debt. this is bloomberg. ♪

shery: russia's biggest lender has secured a license from the central bank to issue an exchange digital asset.

it says companies will be able to buy digital assets and make other transactions on its blockchain platform. the state owned bank is under sanctions by the u.s. and eu following russia's invasion of ukraine. toyota aims to assemble a monthly average of 800,000 vehicles globally. that is up from a year earlier but short of the plans to make up for lost production due to covid and chip shortages. earlier this month, toyota said its manufacturing situation was at its limit and announce it would cut output. haidi: sydney's only casino operator could be at risk of losing its license after evidence was delivered on the first day of government inquiry. the australian casinos can't stay out of the headlines. what have we heard? >> evidence of money laundering.

an inquiry is being run by the liquor and gaming commission. we heard from the treasurer talking about how it accepted payments from union pay cards at hotels and those payments were then transferred to patrons gaming accounts. that gets around china's capital control program. it gets around union pay laws. 660 million u.s. dollars were processed this way. the bank noticed this going on and asked for an explanation. the assistant treasurer said the reasons given to explain it were utterly misleading. she went on to say the very top and this was standard practice at star. >> what are the chances that

star will get to keep its casino license? >> even after day one, it is not looking good. this hearing is due to go on for a few weeks and the evidence is fairly damming. this mirrors what happened at the rival crown casinos. crown has undergone a severe hearing. it did not get a license to operate a casino in sydney. the casino in melbourne is operating under tough restrictions and the management got cleaned out. star retained its monopoly in sydney, but you have to wonder for how long. the assistant treasurer through the executive under the bus yesterday and they have yet to take the stand. it's going to be a painful hearing on they give evidence later on. >> paul allen in sydney with the latest on star out -- star entertainment. daybreak asia is coming up next. it's shaping up to be an

interesting session given that we have the strong lead from the u.s. session overnight. futures are looking wobbly and a great deal of focus when it comes to the fizzling out of the china equities rebound. this is bloomberg. ♪

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haidi: a very good morning. i'm haidi stroud-watts in sydney. counting down to the major market open. shery: i'm shery ahn in new york. welcome to "bloomberg daybreak: asia." asian traders set for a cautious end to the week. wall street in a volatile session. chinese adr ends with a deep loss. president biden and xi set to hold their first call since russia's invasion of ukraine.