haidi: good morning. we are counting down to asia's major market open. shery: welcome to "daybreak: asia asian stocks set to come under pressure since the bear market. the u.s. orders from its reserves. plus, russia and ukraine call

for more peace talks as putin says plans to supply gas to europe are still intact. haidi: we do have breaking news. the australian government has named michelle bullock to the government. she is appointed as the deputy governor of the reserve bank of australia for a five-year period. she becomes the fed's deputy governor. michele bullock had been the assistant governor of the rba with a number of positions in her portfolio. before, she was the assistant governor with responsibilities for their work on financial stability and oversight of the payment system as well. she was also the assistant governor of the business services, including payment settlement. this comes after the resignation

and comes at a time that the rba is juggling issues of inflation and the war in ukraine, and the domestic property market as well. the rba more dovish than its peers, including the fed. let's look at how this is playing out when it comes to the asian market session. what a torrid quarter it has been for global equities. we are seeing that downside being played out in the u.s. session. the first losing quarter since the pandemic bear market. we have threats from hawkish central banks and the ongoing war in ukraine. we are seeing upside in the first few minutes of the staggered open in sydney. we had stocks snapping a rally, but it looks like we will end the week on a more positive footing. new zealand stocks down. shery: u.s. futures, we are seeing some positivity as well

after the s&p 500 lost about 5% this order. that would make it the most since 2020, the start of the pandemic, around march. we had energy starks -- we had energy stocks falling today. we are seeing a little bit of a rebound in the asian session, down to the $100 a barrel level. that as opec-plus refuses to increase capacity and output by more than was originally planned. we are watching treasuries, the 10 year yield closing at the 230 three level. we have the two-year extending names after the biggest jump since 1984. we continue to see these fears of a yield curve inversion and what that means in terms of a possible recession. haidi: we are continuing to watch asian markets after president biden ordered a massive oil release from u.s. strategic reserves to reduce dependence on foreign suppliers, what he calls putin's price

hike. putin says russia will continue supplying gas to europe, even though the country is demanding the payment in rubles. let's bring in our reporter. great to have you with us. if opec-plus stays on the fire lines, what will be the impact of this latest release in the u.s.? jennifer: the immediate impact as a drop in oil prices, but the expectations of many analysts is the reprieve could be short-lived partly because of that resistance from opec. in addition, the president is trying to get tough on a domestic oil industry he size has the obligation to increase output. he threatened fees for having them sitting on oil and not drilling. it could backfire in production, even as he needs to see more. shery: we have seen the

administration releasing spr 's as well. jennifer: we have seen modern decreases in prices from the past releases, one of which is still underway. this is much different in scale. this is an unprecedented release. 180 million barrels, topping the previous record set by biden, more than three times as much. presidents have a history of using fairly slow releases to achieve their ends and deal with supply disruptions. this is nothing like those releases. this is very large. shery: our reporter in washington. let's look at how the order has impacted oil prices so far with emily barrett.

do we see much evidence of the oil prices easing inflation concerns? emily: it does seem that is what we are looking at today. clearly markets are on undone sure footing starting the asian session. there has been this massive police that has brought prices down to $100 a barrel. that seems to have eased the concerns we were seeing earlier. we have seen treasury yields fall back a little bit from their earlier highs, but the thing that is interesting is we still have this inversion of the curve. we talk about this all the time. it is an important signal for many market participants. the point about that being as a recession signal, this is a recession that could be in the next two years. it is an imprecise signal. basing market moves on where the yield curve is sitting at this

point in time is very difficult, particularly after the signal has been messed with a little. basically looking at the market this morning, it seems that oil price drop has released some of the concerns, but we are seeing the worries about whether or not the fed will be hiking much more aggressively than the market has planned for, and we are seeing the idea that volatility does not remove they uncertainty. haidi: it is perhaps unsurprising that we are seeing consolidation when it comes to treasuries. is it sustainable? emily: it is difficult to tell at this point because the portfolio rebalancing tends to drive more demand into the treasuries market. whether or not it is sustainable for treasury yields coming down, it is too soon to call. there are plenty of bowls unwilling -- plenty of bulls

unwilling to call the end of the market. with fed hikes a reality, we have the fed pricing in eight this year. it is still unlikely we will see much of a drop in treasury yields from here. a thing that is interesting is that we have seen some data out of the u.s. showing that inflation adjusted consumer spending has come down since february, which suggests that inflationary pressure may be hitting demand. that is as of february, so that is before we have seen the big run-up's in recent action. it will be interesting to see if that is sustained as a moderation of inflation moving forward. haidi: emily barrett with the latest market moves. we are getting some m&a moves. australia's super led group till o buy axicom. this is a consortium including

australia tower network to buy axicom, a provider of telecommunication services. they own and operate towers for wireless communications, as well as infrastructure management businesses here in australia. we are learning their biggest pension fund and australia power network buying axicom for $3.8 billion australian. it comes on what is a buying spree. earlier this month, they bought half of the share in london's biggest development project at canada water. vonnie: newtonvonnie: president biden -- president biden says vladimir putin may have put advisors under house arrest. he said he does not have much hard evidence come about the comments add to a steady drip of suggestions of distancing putin and his officials. biden hinted on --m ron kohn

says he will face a no-confidence vote. he said he will fight to the last, even though local media reports that there are enough votes to unseat him. public anger is growing over widening costs. the u.s. says china's crackdown on hong kong has intensified the past year. the state department report points to authorities blocking the pro-democracy opposition and criminalizing political expression. the report highlighted a shutdown of two of hong kong's largest media outlets as a reduction of freedom of speech. part two of shanghai's stars friday, when 16 million people will be confined to their homes.

the area accounts for two thirds of the population. that follows the four-day lockdown in the eastern half of the city, although restrictions will continue in some buildings where infections were recorded. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. shery: still ahead, and asset management group tells us why they are positive equities. and global stocks are on track for their worst quarter in two years amid concerns over a growth slowdown. we will discuss. this is bloomberg. ♪

haidi: can the u.s. economy withstand the aggressive rate hikes passed by some of wall street's biggest banks? the march u.s. drop support may provide some clues. bloomberg's policy editor kathleen hays here with the preview. what are we expecting from the job report? does it change anything from the fed, or reinforce the path they are on? kathleen: the latter is what we expect. people are exciting a recession -- people are expecting a recession. listen to this. as for aggressive rate hikes, goldman, j.p. morgan, morgan stanley 650 basis point rate hikes at the may and june meetings. there are four meetings after that. that is when you get 25 basis points in each meeting.

then finishing the year off with two 25 basis point moves. that is pretty aggressive. the jobs report, this is what it is expected to show. the economy is in good shape and ready to at least withstand part of this. let's look at the forecast. we've got the payrolls forecast, the consensus forecast, up 490,000. half of a million jobs is good in this economy. it is always hard to pin this number down. that is what makes it exciting. march unemployment is more unbreakable, falling 3.7% from 3.8% in february. that would show a tight labor market. that would give the fed confidence to get on the rate hike path, maybe start announcing something about balance sheet runoff. that is what people are talking about. shery: let's talk about the boj because they had a busy week, a

battle to put out a cap on that 10 year yield. ken governor kuroda finally have his victor -- cannot governor kuroda have his victory lap? kathleen: let's remember how this happens because three days. monday, they announced they would do these bond operations. the first day did not have much impact. they can keep it at 0.25%. we will see. the next day, the move had more impact. they came in an hour and a half early, they had a longer tenor of bonds and purchases. then it was the last day, thursday, where they seemed to turn things around. they came in with more bond buying on top of what they had already announced, and extraordinary slight. that is when you saw them come down.

it is around 0.1 9% and change as the trading day gets ready to begin today. also on thursday, the meeting between governor kuroda and prime minister kishida. that made people think, this is serious. meeting the head of the -- the top currency official who works at the ministry of finance met with his u.s. counterpart in the middle of the week. all of these things added up. the government is serious about those, particularly because they don't want to see this sliding. speaking of the yen, this is what is interesting. the boj has shown us they will have the yield cap and any cost. but if you let differentials widened again, what will that do to the yen? we will see how government officials and boj officials will

get together and do something about that. shery: -- kathleen. let's discuss with the head of asia equity strategy. who outperforms and underperforms wind yields rise? guest: what is interesting is you have two things. you have the s&p market, and when you have the combination of the yen and yields rising and the s&p being resilient, you tend to see the japanese equity markets doing rather well. now, you are in a context where the yield curve has flattened or even inverted. in that context, you don't

wish to hold the cyclical part of the market in asia. that means a market like korea, now japan, are going to become more venerable in our view. on the other hand, the market and the sector and the themes that can deliver sustainable income, sustainable dividend, are the ones that could be in better shape. think of the taiwan market, taiwan versus korea. we could expect the gap to widen, for example. shery: how vulnerable are all these markets, given the rise in energy prices and commodities prices? these are big energy importers. guest: yes. you have a very simple line in asia.

you have a number of countries, australia, indonesia, malaysia, and the rest are net energy importers. what we believe is in the second quarter and probably beyond you have a number of markets that are benefiting from this high exposure. indonesia is one very interesting market, not only for exposure, but because when you see a reopening where growth is catching up, the ets growth regular. you see that market doing well in this context.

the energy importer could be in a more difficult situation. very importantly, it is not only the price of commodities, but what we have from the u.s. this the shape of the curve and how it will impact the different sectors in asia. haidi: are you keeping your exposure to china? guest: yes, we do. the month of march has been hugely eventful for asia. you have equities that put the offshore equity market into this situation. there were a lot of things that they wanted to hear, the easing of fiscal and monetary policy, regulatory tightening, with the

zero covid policy which is staying in place. that is why what is happening in shanghai is very important also for the market. if we see any form of relaxation of the covid policy and the second half of the year -- in the second half of the year, you have a risk on china, which would be an upside risk. given extremely low variation on the market and the risk of reaction, we do keep the exposure on china. haidi: do you prefer onshore or offshore? which sectors do you think might benefit, particularly as we heard from the government yesterday pledging stable growth and support? guest: that is a potentially

important element. it is something that goes into the direction of a more stable market, even after some recovery in the second half of march. the valuation of the markets remains extremely low. at some stages, you have them trading five times the price. it has never been seen in the past. tactically, we would remain on the offshore. most particularly speaking, we find a number -- there are a number of things we want to hold on the offshore sector and

onshore vector. the onshore sector would be preferable. haidi: frank benzimra. you can follow more on this story on our markets live blog. that is mliv . you can get the market run down. just click on commentary. this is bloomberg. ♪

haidi: we are tracking the fallout of the global supply crunch. these are our top stories. president biden says he plans to release one million barrels of oil a day from u.s. reserves to help the country achieve independence from foreign suppliers. he expect allies will release 30 million to 50 million more barrels from their reserve. russia's flagship company for

crude oil is increasingly headed to asia as purchases are scaled-back. asia will take about one million tons. a company says that russia's invasion of ukraine is adding to supply chain issues. take a look at the commodities pricing at the moment. oil rebounding still at that $100 a barrel level. that is when we saw crude pricing come under pressure. we are seeing a little bit of upside. opec-plus refused to deviate from their scheduled gradual production increases. we are seeing gold under a little bit of pressure, but after seeing the best quarter in almost two years, haven demand

resumes for gold. corn and soybeans follow. soybeans are cheaper to plant. bloomberg terminal users, you can read more of these stories.

>> we can and should do more. we need more sanctions against russia until they stop blackmailing other countries with their nuclear missiles. >> according to our intelligence, russian units are not withdrawing but repositioning. russia is trying to regroup, resupply, and reinforce its

offensive in the donbass region. haidi: ukrainian president volodymyr zelenskyy and jens stoltenberg. we will take a deeper look at russia's invasion of ukraine. our next guest says sanctions have gone too far. he is one of the world's latest international human rights organizations, operating in more than 90 countries. it is wonderful to have you with us. our guest yesterday expressed a similar sentiment, this idea that as the world continues to call for more rounds of sanction, the economic bins of war -- the economic guest: the sanctions are

obviously designed to prosper price putin. our concern is if you look at what is most likely to affect putin, it is the views of the russian people. peyton has -- putin has been terrified of the people rising up. i think it is important when you think about sanctions, how do we make clear it is the russian military, the people who surround putin who are the targets, but not the russian people? just to give one example, putin is trying to prevent the russian people from knowing about ukraine.

one way the russians are getting around censorship is by using vpns to cut through the censorship. most vpn's are supported by international credit cards that have stopped working because of the sanctions. they are about to lose their access to the internet. one thing they can do to mitigate the effect is someone should step in and say, we will provide free vpn's to russians who want it. this is rather than them being treated as enemies. haidi: ha what is a more effective approach for these -- what is a more effective approach for these sanctions? guest: many of the sanctions are

designed with this. i am happy to see that governments are backing the investigation of war crimes in ukraine, including the united states, which is a real shift because the u.s.'s position is you cannot investigate they country that has not ratified the treaty. nonetheless, the u.s. endorses this investigation. this is a good evolution. the kremlin is putting so much effort into this disinformation. if more war crimes can be

documented, we will try to do everything we can to document and publicize those were crimes, get them to the russian people because i don't think the russian people want it decimated in their name. shery: when it comes to pushing back against autocrats, how important is it to push back against the right allies? we have saudi arabia, the uae, and china, which are not democratically minded, when it comes to pushing back. guest: it is important to keep in mind that what is happening in ukraine is part of a larger test between democracy and hypocrisy. putin was able to do it because he is an autocrat. it is important to keep in mind that the most important

adversary is the chinese government. when this battle is being pursued, it is important that the means are consistent. the saudi government in response to biden's request that saudi arabia pumped more oil to make up for the loss of russian oil, the saudi crown prince was reported to say, ok, i would consider that, but the u.s. has to resume selling us weapons. the part that he did not say is so saudi arabia can continue to bomb civilian. they wanted immunity for the many losses. the answer to these requests should be a flat no. it is no way to fight hypocrisy by funding autocracy. shery: what about china? how concerned are you about allegations of human rights violations and lack of

transparency of? guest:guest: transparency in the country these -- guest: these are not allegations. there is evidence the chinese government has detained around one million uighurs and muslims, forcing them to give up their culture and language. those who are released from detention, many of them are put into [indiscernible] it is disappointing the eu commissioner is still -- she accepted beijing's invitation for a friendly visit. the most important step is the protection act was adopted, which

-- you can rebut the presumption . they are pushing for governments to adopt similar measures . haidi: the australian government has been critical over china's conducting of the closed trial of a tv journalist. i want to bring up the deferred verdict in the trial. if you take a look at the statement that was made, the australian government has said it has lacked transparency, they have never been provided details of the charges, and the australian ambassador was not given access to the case and of the courtroom yesterday. how concerned argue about this and what is your reaction -- how concerned are you about this and

what is your reaction? guest: the concerns are heightened by the fact that the australian ambassador and others are far from the trial. this is classic beijing behavior. they try to presume -- pursue charges. i think what beijing would typically do is announce the verdict some months later after all the attention is made. it is important not just to move on from a single day of a closed court proceeding, but to maintain pressure on beijing to release a range of foreign nationals from being held essentially as hostages to try to push back against pressure on china. it is the worst since the tiananmen square crackdown. shery: it was really good having your insights. the executive director at human rights watch. let's get to vonnie quinn with

the first web headlines. vonnie: the opec-plus has refused to deviate from their schedule. they also opted to exclude international agency data. it reflects a dipping rift between the institutions. asia plans to sell government bonds -- traders say government -- michelle bullock has been named the first female deputy governor , in line to proceed the top

job. bullock was appointed to a five-year term. she joined the rba as an analyst and has held a number of senior positions, including her role as assistant governor. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm vonnie quinn. this is bloomberg. haidi: japan has attractive returns to global investors. we discussed the biggest areas of opportunity. this is bloomberg. ♪

haidi: we are 15 minutes away from the open of the markets in japan. this as we continue to watch nikkei futures sink a little bit. the fourth quarter of tankan survey is out in a few minutes. we will be watching that. bloomberg economics will likely show conditions softening. we get march pmi data in the next hour, including meetings across asia. we will see how factories are gauging the impact of lockdowns across china. japan also marking the start of the new fiscal year. we will see if things calm down after the historic intervention.

market watchers suggest the timing is adding to the volatility as companies close their books. the start of the fiscal year is where japan makes its first change to its legal age of adulthood in 146 years. the age will drop from 20 to 18 to get people contributing to the society earlier. the working population age continues to fall. stephen engle exploring the implications of this change. . >> every year, japan marks the entry into adulthood for teenagers turning 20. but that legal age is now dropping to 18, the first such change in a century and a half. with its aging population and a declining birthrate, the thinking is it is time to get those teenagers contributing as adults in the economy sooner. >> we are expecting the younger

generation to be more active. >> there are fears many young men and women with little financial knowledge could fall into debt or fall victim to fraud. while the legal age for drinking, smoking, and gambling will remain higher, other activities will drop to 18, such as applying for a credit card, renting an apartment, applying for a bank loan, or buying stocks. >> if those -- [indiscernible] >> the question remains, will the move make a difference for an economy still dealing with covid? >> the limited spending power of young people means it will not have immediate impact.

but with one person, one vote, you could see a significant increase in the political power of younger people, and that could translate into new and different policies. >> japan did lower the voting age to 16 a few years ago, but participation in elections by those teenagers is extremely low. to make adulthood more appealing than old-age politics, the japanese government is turning to a tried and true way to reach dave young, through -- to reach dave young, through anime. similar campaigns may be needed, targeting parents and financial regulators. stephen engle, bloomberg news. shery: let's bring in our next guest, who says they are moderately positive on japanese equities this year. john, good to have you with us. we are seeing the reopening of

the economy and a weaker japanese yen. how much of this is translating into equity market strength? guest: it is helping to some degree. the japanese market is highly correlated to the 10 year u.s. treasury yield and that is rising quite a bit. it has been helpful for the market here. it also tends to weaken the yen, and it has done so until the last couple days. a weaker yen is good for corporate earnings here. shery: why are you only moderately positive? guest: because of the global backdrop. it is pretty challenging. we have a pretty cautious outlook for the rest of the year. we think that global growth will underperform consensus moderately and that inflation will exceed consensus moderately. we call it stagflation lite. there are some troubles in europe and that will impact

global growth. shery: japan is not that exposed to russia, right? how much will that help? guest: it helps relatively. they have some exposure. they have auto factories that are being run by the japanese, for instance. but compared to europe, japan is much less exposed to russia. haidi: the demographics, how do you avoid that when it comes to investing in japan? guest: demographics have been weak for a couple decades now, yet corporate profits are rising strongly during that period, triple or so, while the working age population has shrunk a good deal. we don't find that a reason to not invest in japan. but it is because the japanese are so good at increasing their

efficiency and productivity, and because corporate governance has improved so much. still not u.s. levels, but have improved so much it has helped boost corporate profits. all in all, we are not concerned about that aspect at all. haidi: what do you make of the yen weakness? that correlation between gains and equities, particularly when it comes to benefits exporters had broken down with this recent bout of extreme downside pressure on the yen? guest: it is interesting. a weaker yen benefits exporters, but if foreign economies are getting weaker, especially europe, and to some degree china in lockdowns, that is the counter aspect. it is interesting that it has had a mixed effect on exporters. in general, the yen has stayed

at a tolerable 120 level. that should be good for japanese corporate profits and the stock market. haidi: john vail joining us. you can get more from this interview on bloomberg tv . hear from the leading names in japanese business mondays at 8:40 tokyo time on bloomberg television. ♪

shery: breaking news out of japan. we are getting the quarterly tankan survey for the month of march. large manufacturer tank on gaming in -- tankan coming in higher than expected. when it comes to nonmanufacturing sentiment, large businesses beating expectations and staying in line with the number we saw in the previous quarter as well. the large manufacturing outlook coming in at nine, below expectations when it comes to future outlook. nonmanufacturing outlook softer than expectations at seven. we are watching the all industry

capex and this has also disappointed, coming in at 2.2% instead of the expected 4.4%. it is also a meaningful slowdown from the acceleration we saw in the previous quarter of more than 9%. interesting that large manufacturers are seeing the dollar-yen at 111.93 in fiscal year 2022. perhaps stronger than they expected. we will see how the weaker yen factorusiness decisions. haidi: it is painting this picture of the manufacturing sector and factories in japan struggling to get past the supply side of the past couple months and rebounding. there are concerns that the economy has contracted again. the factory output data we got in the last couple of days showing the slightest bit of resilience, growth when it comes to the factory outlook in three months, but it was not much of a game. the tankan readings giving us

insight when it comes to the psychology and investments we are seeing across big businesses in japan. let's get you a check of the business flash headlines. game stocks surging. at its upcoming annual meeting, the retailer will seek shareholder approval to increase the number of class-a-shares to 300 million. it would provide flexibility. a company posted their best profit since 2014. net income rose to $2.5 billion last year, quadruple previous results. the giant is under pressure to boost output with domestic demand clouded by the new covid outbreak. stocks bumped after a slowdown in revenue growth. that is compared to a 23% growth

in february. the war in ukraine and a covid outbreak in china is hampering efforts to clear out a six-year inventory buildup. shery: markets trading early in the session. kiwi stocks falling 0.4%. this as we continue to see a little downside in at risk off sentiment across markets right now. being led lower by a consumer discretionary and tech stocks. energy is also slightly down, despite the fact we are seeing prices rebounding in the asian session. we are looking at nikkei futures under pressure, 0.8%, which would extend the declines this week to three sessions, while the japanese yen strengthened a little bit. kospi futures in the positive. coming up, we will discuss the u.s.'s decision to release oil from its crude reserve and what that means for prices. credit suisse says the risk off

sentiment may now be abating. the market open is next. this is bloomberg. ♪

shery: welcome to "bloomberg daybreak: asia." i am shery ahn. haidi: and i am haidi stroud-watts in sidney, asia's major markets have just opened for trade. asian stocks under pressure after global shares either worst quarter since the pandemic bear market. the u.s. orders record oil relief -- release from its reserves. russia and ukraine prepare for

more peace talks. boudin says plans to supply gas in europe are still intact. we have breaking news from south korea when it comes to trade numbers for the month of march, exports year on year coming in shy of expectations, 18.2% growth missing expectations of 19%, a little bit of a pullback from the pace we saw for february, imports year on year higher than expectations, 29.9%, picking up from the 5% pace that we saw earlier, and we are releasing when it comes to trade deficit numbers moving to $140 million, we are expecting no change when it comes to that rating this month. we will watch that in terms of how that plays out in it comes to the start of equities treating -- trading in korea.

shery: the cost act mo -- kosdak moving .7 of 1%. the korean won starts to weaken. we are watching the government bond space in south korea, because the finance minister talked about stabilizing that sector. we are watching the japanese markets as well, look at the nikkei and the topix, the japanese yen has strengthened the bit this week not enough considering the huge move of weakness in the japanese yen, holding at the 121 level. third consecutive sessions of losses were japan, jgb, more aggressive purchases. tankan survey, large

manufacturers have beat expectations, so more bright upside when it comes to these corporations. haidi: take a look at the quarterly picture when it comes to commodities, it will come as no surprise given that we have been tracking big gains not just across energy but industrial metals, precious metals seeing these big jumps. commodities having the largest quarterly search in decades. you see that jump right there, and we are continuing to process the applications for energy markets as we see the u.s. releasing roughly one million barrels a day of oil for a period of six months. we will have implications for the markets. u.s. futures trading at the moment, going into the last burning session of the week, this is what we are saying, just taking it on the chin, seeing a

little more optimism. instability when it comes to the 10 year yield, a bit of consolidation given how fast we are seeing the run-up in rates is unsurprising. a medium-term and the upside pressure remains unchanged given rate differentials. sidney stocks trading lower by 0.2 of 1% after it snapped a seven day winning rally, close to a record high trading in sidney, just two sectors trading in the green, materials and real estate. our next guest is overweight materials. joining us now is john woods, the asia-pacific cio. what trades do you like for the u.s.? >> it is important to note that we entered this year neutral

equities and used the sharp downturn of the early part of march to rebuild an equity position to overweight, as you suggest. right now we are very much focused on geopolitical hedges in the energy and financial sectors, but more broadly focus on value, because that is the area that will benefit in the months and quarters ahead. as our forecasts of peak inflation may be the next quarter. haidi: how much exposure are you beginning to energy given that it is quite tricky to get back here in asia? >> we are still overweight energy as a sector. we prefer brought exposure through the commodities index

rather than explicitly, but in our view the strategy is to remain profitable over the course of this year until we see, first of all, the conflict diminished or tensions around the ukrainian conflict diminished. we see supply getting back on stream from major producers. shery: what about the fact that we continue to have these restrictions in china? what do you make of that market? >> we have remained relatively low weight until recently on the chinese equity complex. we use the opportunity to move to an overweight position in china, and the market has bounced somewhat over the last two or three weeks. the story about china is quite nuanced. we were encouraged to go

overweight, possibly you could describe it as a u-turn toward policy intervention in the market. subsequently we have seen a tilt toward monetary easing. we believe we are in a reasonably positive clinical cycle, and valuations are reasonably attractive. two standard deviations below a 10 year average, and for us that is encouraged overweight view on the opportunity of basis in value. shery: i find it interesting that you like small caps globally. why is that? >> they tend to outperform in a reflationary environment, and that is what we feel we are in right now. i appreciate potentially communicating a different story,

but i want to make a point between an inversion point into recession it can take between two months and two years, and if you look at the data over the last 20 or 30 years equities tend to outperform during that period by 20%. during that time we tend to seek a performance of small caps and mid-caps, so this is a strategy we are promoting alongside financials and energy. shery: which asset will outperform in the new quarter? >> look, i think the glimmers of these we are seeing -- peace we are seeing through the fog of war are likely to remain just that. in such an event geopolitical tensions will remain high, and given the maneuvering of russia by its gas supplies in europe

right now, i actually think overweight in commodities in particular and energy stocks in general will outperform in the coming quarter. haidi: we heard from roubini saying we are getting closer he feels to a big risk shock to the global economy. is this one of those events that you cannot predict? does there seem to be an unusual level of calm given that we do still have an ongoing war in eastern europe? >> i am not entirely sure how big the risks the global economy have already experienced. we have had a pandemic, a war and date substantial hike in inflation and interest rate expectations that the market and the opportunity to pricing.

the key takeaway is to bear in mind the market is driven by early birds right now. this is momentum behind price appreciation and the relative selloff we have seen the last month or two as improved relations somewhat. i expect there to be rotation across sectors and geographies. it may be in the future very difficult to predict a black swan event, but the markets have had the opportunity to focus on the u.s. growth outlook, its earnings outlook and adjust prices accordingly. for us the u.s. burning story remains a positive one, and well we are inundated and overwhelmed by geopolitical shops, nevertheless, the market is taking it quite well, the rise

in interest rates. shery: good to have you back, john woods. let's get the vonnie quinn. vonnie: thank you. president biden says russian leader vladimir putin may have fired some of its -- his advisors. biden told reporters he did not have hard evidence but as student stated suggestions of distancing of food and top officials. russia has refuted his remarks. the opec+ group has refused you deviate from its schedule of gradual production increases, gratifying a 400,000 barrel a day hike in may. it opted to exclude an international agency from estimates. it is intended as a public step to the agency that reflects a deepening rift between the two

institutions. russia plans to keep supply gas to european companies. intel televised comments president biden said the country values its business reputation and will comply with contractual obligations. putin signed a decree that said shipments will be stopped friday for those who do not. the crackdown in hong kong has intensified over the year. a state department report points to authorities -- in highlighted the shutdown as two of hong kong largest independent media outlets as examples of reduced freedom. 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 vonnie quinn. this is bloomberg. shery: still ahead, we will analyze where opec will go from here.

it could stifle drilling just what we needed the most. we will assess the viability of the president's penalty program for idle users. this is bloomberg. ♪

haidi: let's get a check on how futures trading is opening in europe, futures looking like this, brought downside, .3 of 1%, msci europe trading higher and also down when it comes to dax futures. european stocks posted their first quarterly decline since the early days of the pandemic, so much uncertainty around the war in ukraine souring appetite for risk assets. we did see stocks closing lower wrapping of the first quarter with the retreat of 6.6%, that snapped the longest quarterly running streak since 1998. we did see over the past two month investors fleeing equities globally as these worries overt

growth, inflation ended now the war took hold. president biden is ordering a massive oil released from u.s. reserves to reduce its dependence on foreign supplies in what he calls putin's price hike. our reporter joins us now. jennifer, talk us through the short-term implications and if this is going to have much of a longer-term impact if we do not see other players coming. jennifer: clearly this is having an impact in the short-term but lowering oil prices. the goal is to create a bridge for you a supply until the fall when domestic production is anticipated to increase. the concern is u.s. drillers who are keeping a lid on production will continue to do so. if anything they were very negative today, with a biden

ramping up this release of oil. you have the headwind with opec rebuffing the administration's request to crank up assets further. clearly the impact may be muted over the long-term. shery: how much of this risk is undermining president biden' s own green energy transition he wanted to see during his administration? jennifer: this is clearly a balancing act for this president. the president and his aides insist is moved to address this acute economic problem of high gasoline prices does not jeopardize his longtime renewable or climate ambitions. this is a remarkable shift for president, in the space of a week not only has he done this released today but last week he sought to boost gas exports to europe. he is trying to balance two very

difficult things. he has promising there will be long-term action to come, and even today he took the separate action to produce -- boost the production of minerals key to battery production. shery: jennifer there with the latest from washington. the war in ukraine will figure prominently when european and chinese leaders meet in a virtual summit on friday. let's cross over to stephen engle. is there anything that could move the dial on the ukraine issue in the stocks? stephen: this lead up to the china-eu summit underscores the role china potentially could play or is playing behind the scenes. it is a stated ally of russia, but it has been -- its narrative publicly around the world has

been a bit conflicting at times. of course they have supported vladimir putin's rationale for the war in ukraine and at the same time as expressed concern about civilian casualties and are pushing for talks to end the war in ukraine and acknowledging ukraine's sovereignty. it will be the european commission president, the european council of president, they will meet virtually and what i understand to be two different virtual sessions on friday with the premier of china followed later by resident xi jinping, -- president xi jinping. the stakes are high for all orders. china will want to talk more about bilateral trade. europe and china have huge interests on that front. i am sure the european delegation will want some

answers, the eu will likely warn china not to assess russia with military aid or sanctions evasions. we are hearing official suspect china may be ready to supply semi conductors and other tech hardware to russia. how hard will eu leaders push their chinese counterparts and how hard will beijing assert its independence from eight eurocentric vision on the war in ukraine. state television report that europe had repeatedly been stabbed in the back by the u.s., and in the precursor to the stocks, we got strong comments from germany's finance minister. he essentially said china does not respect the principles that germany stands for and is a systemic rival to germany's economy.

china does not respect our social model, our understanding of liberality and recognition of international law, strong words ahead of the summit today. haidi: stephen engle with a preview of that. still ahead, japan has lowered the age of adulthood to 18 from 20. we will take a look at that next. this is bloomberg. ♪

shery: japan is making first change to its legal age of adulthood for the first time in 146 years. a gauge will drop from 22 18 -- 20 to 18.

the working age population continues to fall. stephen engle scores implications. stephen: i were your japan marks coming-of-age take on a national holiday celebrating the transition into adulthood. that legal age is changing to 18. with an aging population and the declining birthrate the thinking is it is time to get those teenagers contributing as adults sooner. >> economic growth and so forth. we are expecting the younger generation to be more active. stephen: there are fears many men and women with little financial knowledge could fall into debt or fraud. while the legal age for drinking, smoking and gambling will remain at 20, other areas

will be drug to each team, such as applying for a credit card or mobile phone contracts, applying for a bank loan, or buying stocks. >> [indiscernible] stephen: the question remains, will the move make much of a difference for an economy still climbing out of covid. >> limiting spending power means it will not have a lot of economic impact. with one person-one vote you could see an increase in the portable power of younger people and that could -- political power of younger people and that could translate into new policies. stephen: participation by teenagers elections is extreme of the.

to make adulthood more appealing japanese government is turning to a tried-and-true way to reach the young, through m&a -- anime. similar campaigns may be needed targeting nervous parents and financial regulators. haidi: a check of the latest headlines, toshiba's largest shareholder has agreed to tender its stock. the capital management company said it will tender its entire stake if bain offered to acquire more of toshiba. it has led to speculation of a future takeover but the bank says nothing has been decided. stock shares surge in late trade after gamestop announced a stock split in the form of a dividend. it will seek shareholder

approval. it says the split will provide flexibility for future corporate names. western shanghai goes into lockdown for four days, restrictions easing in the east. we g

vonnie: this is "bloomberg daybreak: asia." oil drilling around $100 a barrel after president by an order to release roughly one million barrels a day to contain rising energy costs and its reliance on foreign energy suppliers. biden also criticized u.s. oil company set have a reluctant to increase production and said he is hoping other countries will supply. pres. biden: i am also waiting to see or not our allies, exactly how many barrels they

release from their supplies. my guess is it could be aside as between 30 million and 2 million barrels -- 50 million barrels. vonnie: australia has made its first female deputy governor. in a statement, it is indicated she was appointed to a five-year term. she joined the rba as an analyst at sl the number of positions at the bank including the role of assistant governor. the u.s. china's crackdown on democracy in hong kong has intensified over the year. state department points to authorities blocking pro-democracy -- the report highlighted the shutdown as two of chunk's largest media outlets.

india says it plans to sell $112 billion of government bonds starting in april, 59% of the for your target and largely in line with traders. record supply of $90 billion may push out local yields already under pressure from higher oil prices and u.s. rates. 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 vonnie quinn. this is bloomberg. haidi: let's look at some of the other pmi's breaking, asia, we continue to see this decorative recovery depending on which of the economies you were looking at and covet restrictions and where they are at with the return to normal. taking a look across the region, taiwan still robust though clawing back, well into growth territory.

malaysia falling into contraction territory for 49.6, you are seeing a pullback when it comes to vietnam as well. in indonesia a bit of a pickup and in south korea the weakening pulse as well. the philippines largely unchanged, just a bit to the upside. shery: all of these pmi's depend largely on the chinese economy as well. we are seeing china lift its lockdown in the eastern part of the city and focusing on the western avenue. bloomberg's chief asia economist joins us now. it is not because of eastern or western shanghai. we are coming off the lockdown in shenzhen. what will be the economic fallout? >> it is very worrying, the

lockdown scenario you are describing. it is very damaging. we note shanghai -- know shanghai is the biggest city in china. if you continue to have a lockdown the economy is going to be badly it has already been badly hit but it is the worst since the beginning of the year. so far, the impact is limited largely to domestic players. if the lockdown is expanded to global supply chains will be affected. remember shanghai and shenzhen are very open cities.

haidi: what does the lockdown in shenzhen tell us what lies in store for china's covid policy? >> it shows us china is not ready to spring from their current coping strategy to be different strategy. we see the covid zero policy to continue for much of this year. the government may fine-tune its policy and technical details. in that scenario we could see rolling lockdown's throughout the country, across the country. that is going to be very damaging for the whole economy.

you can think of a better scenario if the government started to gradually move to a different strategy, experimenting with gradually opening up to wider ranges and eventually the whole economy, we could get better results for the economy, not necessarily this year but beyond 2023, 2024. we can see clear issuance doing the two parties. unfortunately you can see nightmare scenarios if a local lockdown does not work, and the whole economy will have to shut down, and that is going to be really damaging for the whole economy. you will see a replay of the first quarter of 2020. haidhang shu reporting from

hong kong. goldman says the possible release from the u.s. will not solve the oil market deficit. we are getting that reaction talking about the administration's plans to release extra supplies into the economy to combat inflationary pressure and rising gas prices. goldman's call of when $35 -- $135 has been lowered to $125. they lowered that on account of not really thinking that the release will not necessarily solve that oil market deficit we see. they had earlier in the month said they saw oil reaching $150 without russian supply, but the release of strategic petroleum

reserves will not solve the structural deficit. human rights watch says the west's economic sanctions against russia have gone too far. we spoke with the executive director. >> you are trying to deprive the kremlin of the means. many sentients are designed to do that. in many ways the most precise sanction is criminal prosecution. i am glad to see the investigation into war crimes. [indiscernible] russia never ratified the icc treaty. this is a movement away from the

u.s. position to say the icc was wrong to investigate american war crimes or is really were crimes -- israeli war crimes in palestine. the more were crimes can be documented, have investigators on the ground, we are trying to do everything we can to document and publicize these were crimes, get them to the russian people because i do not think the russian people want their fellow slavs to be decimated in their name. i think it is very important to keep in mind what is happening

in ukraine is part of a larger global contest between democracy and autocracy. putin would never have invaded ukraine if you were subject to [indiscernible] because he is another quite himself. shery: coming up, we will look for what biden's oil release will mean for prices. that is next. this is bloomberg. ♪

shery: we have seen prices headed for the worse we can two years, look at that fall as we are seeing rebound in asian trading at the moment, but still very close to the $100 level. we have seen oil above that level since russia's invasion of ukraine, but given president biden has announced the release of one million barrels a day of u.s. reserves for the next six months that could total 180 million barrels of oil as was done prices.

let's discuss the latest of elements with tamar essner. we have seen the price of oil drop every time the administration has moved. i long-lived get this would be? >> this one is bigger in magnitude. in the past oil prices went down and rebounded ultimately to a higher levels. strategic petroleum reserve releases are temporary measures, but the question is if they are coupled with longer-term solutions such as incentives for more production they can help the margin to stop the upward momentum in prices and provide short-term relief. shery: where wilt relief come from long term, because opec+ refuses to increase production by more than what they had originally planned? >> opec remains adamant about

that. that raises questions about their capacity and ability to produce more. they are producing less than their quota right now. it comes down to what incentives the u.s. administration can provide to domestic companies to produce more. we see from plans prior to the russian invasion of ukraine, production was expected to grow year-over-year about one million barrels a day, that is helpful but not enough to lug the loss of supplies from russian sentients -- sanctions. we tally it at 2 billion barrels off-line. you can get that number up to 1.5 million barrels a day of production growth but it will be a tight market. haidi: i that tightness -- and

that tightness not being helped by saudi capacity being reached. >> it is interesting to see, aramco had their results announced they basically said that by 2027 they will increase production capacity by one million barrels a day, so that leaves the market with a lot to be desired. opec members are already producing less than their allotted quota, so we are at that razors edge in terms of production. we estimate opec as to million, maybe 3 million barrels a day -- 2 million barrels, 3 million barrels a day. it is possible they are waiting for another crisis. same with the spr release in the u.s..

at the end of the six-month period there will be nothing left. haidi: these extreme swings we see in the market to, volatility, is that keeping u.s. shale producers at bay? >> that is part of it. if you look at prices two years ago they were in negative territory. companies need to believe prices will be higher on sustainable levels in order to get license from their shareholders. the administration has been no friend to the industry in terms of a reentry regime the industry has been its own worst enemy having a decade of locked returns, losing shareholder capital. issues that are plaguing every other industry globally are plaguing the u.s.. a shortage of labor, drivers, so

it is actually quite difficult to increase production just because administration tells energy companies to produce more. shery: just before we let you go we are seeing more flow of russian oil to asia. historically that is not been the case. china and india are some of the big buyers. how attractive is the grade of oil that russia provides to asian consumers? >> that is a key question, we want to note in particular how much incremental barrels china and india in particular absorbed from the russian markets to help alleviate the situation from sanctions. there are some indications on what india can take on in terms of what refiners get absorbed of the russian -- can absorb of the

russian grade. there is only one pipeline from russia to china, so that will limit anything additional from that pipeline. it will have to be shipped from lng. we think india and china will buy incremental barrels on the cheap, but it will not be enough to plug the gap from the molecules of gas that will be left. haidi: tamar essner joining us. more chinese firms are under pressure, dozens of firms in hong kong facing trading pressures on the results of delays. we get the details next. this is bloomberg. ♪

shery: here is a check of latest business flash headlines. an australian group is buying a domestic company in a deal with $2.7 billion. in a statement they said it would take an 82% share in the business i'd the tower network will take the remainder. axicom runs telik mitigation sites across the country. asian slump after reporting a

slowdown in growth. -- the war in ukraine and the covid outbreak in china are weighing on the outlook in its effort to clear out a six year inventory buildup. sources told bloomberg volkswagen as chosen goldman sachs and bank of america for its planned ipo. j.p. morgan chase and citigroup are among global coordinators for the sale. the listing plan for the fourth quarter will provide vw with the funds for its push into electric cars. -- china as posted its best profits on the back of rising energy prices. net income rose to $14.5 billion last year, quadruple the level in previous results. the chinese giant is under pressure but domestic demand is

quoted by coming up breaks. haidi: almost 100 chinese companies under fresh bond repayment pressure. the companies are facing deadlines in the coming days. we really do know the property developer side of this, how deep is the problem, and what are the delays we are talking about? >> when it comes to thinking about the immediate problem and debt that needs to be refinanced, china's is deep with onshore and offshore bonds coming due for some of china's most depressed developers. the offshore market it should business and we see deals for refinancing, and there has been chatter about other deals that might be coming through, but you left seen issuance be very low

still and we have seen much more issuance from state firms rather than from private firms. a lot of private developers are in for quite a tough april and through the rest of the year. focusing on whether or not we will see more concrete measures for real estate that has been promised by various parties -- bodies in china. as you said we now also have all of these delays in earnings. shery: what does that mean for trading sentiment in hong kong then? >> it certainly is very tough, when it comes to developers, we have had so few results coming through for many of the major developers. investors would like to see, 73

firms in hong kong after laid, a big chunk of those are developers. there will be suspension in trading as a result of those in the short term, and in the longer term if we continue to see firm developers not submitting audited results, there is a rising risk of default, so we could see rating downgrades, which would force prompt acceleration it payments. some have clauses that if they do not declare the results after a certain period of time that could trigger default. the other part of this is the auditors, auditors have really been in focus because derek been so many resignations of auditors think they have not been able to receive the information they need. it underpins so much of this crisis over transparency i do this huge problem of hidden debt .

they do not understand what payments might be coming ahead of them. shery: choong wilkins with the latest on trading across china. some stocks we would be keenan and i on -- we will be keeping an eye on, look at hong kong stocks related to hospitality and travel as the government lifts the incoming airline ban and restrictions in the city. cathay pacific in focus. haidi: the president of a hospitality company joining us to talk on the lifting of the flight ban. our guest discusses what the chinese -- china covid zero policy means for businesses. that is it for "bloomberg daybreak: asia." we look ahead to the start of trading in hong kong, shanghai,

and shenzhen. bloomberg markets is next. this is bloomberg. ♪

>> good morning. 9:00 a.m. welcome. yvonne: up stories -- top stories, shanghaied lifting the lockdown not completely with some sealed off, and they will shut down to curb the words covid outbreak since the pandemic began.