paul: good morning. we are counting down to asia's major market open. shery: welcome to daybreak asia. our top stories this hour, french president emmanuel macron secures a second term in a boost to the eu grappling with the war in ukraine. asian stocks may struggles to start the week as investors weigh disappointing earnings and the prospect of fed rate hikes. plus, elon musk set to meet with

twitter executives who may be warming to his $43 billion takeover offer. you are looking at u.s. futures under pressure right now. this of course after the s&p 500 already lost ground for three consecutive weeks. we had some disappointing earnings here and there including from the likes of verizon and amex. but what we are really watching is big tech earnings this week from the likes of amazon, microsoft, apple, alphabet. will that make a difference, given the nasdaq 100 is already down about 9% in april alone? we could be headed towards the worst month since 2008. in the meantime, we continue to see the treasury route and the dollar index also under other the bit of pressure right now, but still very near that 2020 high. of course right now what we are watching is on the others of the dollar, the euro. we saw a bit of a pop after the certainty that president macron would secure that second term. it has been giving up some of those gains that earlier in the session actually, in the sydney trading session, we saw a pop of

around .5% at one point. but it remains a fact the euro has been losing ground for three consecutive weeks. it has really been about dollar strength, and that is really being felt across the commodity space. we continue to see that pressure on wti and brent rises in the asian session as well. already we have seen a week of losses last week for oil prices, because we are also not sure if chinese demand is there to support prices. paul: let's take a look at how we are shaping up for trade around the asia-pacific. no trading in australia and new zealand today, but futures pointing to a weaker opening for the nikkei when we get going. take a look at the yen. that story continuing to dominate. now creeping towards 130 against a strong greenback. we have a bank of japan meeting later this week. and a suggestion there may be some sort of currency market intervention in the works. although with the boj as the

bush as it is it is hard to see that will make difference of the currency. the offshore yuan, 653.09 against the greenback. aussie dollar weakening as well, even though it is one of the best g10 currencies this year. we will have inflation data out of australia later in the week. that is expected to be outside the reserve bank of australia's tightening ban, which suggests tightening might be on its way to australia as well. shery: at least when it comes to the markets. today it seems there is a sigh of relief with emmanuel macron winning a second term as french president after defeating far right leader marine le pen. >> this day of the 24th of april, 2022, a with jordi among us made the choice to entrust in me the presidency of our republic for the five years to come. we have to consider all the difficulties of everyday lives and respond effectively to the anchor that has been expressed -- anger that has been expressed. shery: caroline, let me start

with you. how significant is macron's victory not just for france but for the rest of europe? caroline: it is a relief for france and the rest of europe, given that france will remain reliable partner within the eu and within international alliances such as nato. especially at a time with the war in ukraine could is also a huge relief for macron's camp. given the pause we were seeing before the runoff emerged a tighter race between emmanuel macron and the national rally leader, marine le pen. however, it is not the same victory that we had in 2017 when emmanuel macron gathered 66% of the vote. so clearly emmanuel macron will also have to gather those french who did not vote for him, or

actually voted for him just to block marine le pen, just to block the extreme. those who still feel left behind. those people, especially from the lower income working-class who voted for marine le pen who were tempted by the extreme, he will definitely need to re-conciliate those french people in order to get a majority in parliament two months from now. paul: so a victory for emmanuel macron, but not quite the mandate he had five years ago. what are the next challenges? how is this going to shape france's policy? caroline: over the next few days going to have a change of prime minister, a change of government, but in june for the legislative elections, macron needs to get a majority in the french parliament. if he does not manage to do so, that means he either will have to form some alliances with other parties including the

republicans who are in disarray after their candidate got less than 5% of the votes in the first round a couple weeks ago. or perhaps he will have to forge alliances with the greens, who have very different views than emmanuel macron when it comes to the future of nuclear in the french energy mix. so a lot of challenges ahead to get this majority in parliament. and also of course to pass his future reforms. one reform he has not managed to pass during his first mandate was the pension reform. that was put on hold because of the pandemic. he is going to have to try and do his best to avoid another yellow vest type of protest. shery: at least for now though, we could say there was that sigh of relief across markets. andreea: yeah, there certainly was. you saw the euro pop up this morning in asia and you're

likely to see french stocks and european stocks and bonds supported by this. but while it removes a risk for markets and we have already seen some of those euro gains fade this morning, the headwinds for investors that they have had to deal with are going to reassert themselves. a more hawkish ecb, the war in ukraine continuing to put pressure on commodity prices. inflation of course the biggest story for investors right now. and look, also what is happening in bond markets, which have been roiled as investors are starting to think that the fed is falling behind in its control of inflation. we are not talking about the timing of a fed rate rise. we know that is coming. we are talking about the magnitude. and no sooner had some bond investors become more bullish following the selloff last week,

they are starting to capitulate and abandon those goals. paul: it is going to be another busy week for japanese and chinese markets. what are you watching for? andreea: look, what's going on in china, investors are looking for more policy support. they have been disappointed. you have had the yuan tumbled. how are policymakers going to handle that? there is still a hearing to that covid zero policy, which is having an impact on the economy. it is having an impact on the oil price. we have seen oil down this morning. so that is something investors are looking at. we also have the boj policy meeting later this week. highly unlikely that we will see anything from the boj. they do remain one of the more dovish central banks around the

world, as does the pboc. paul: all right. thank you so much for joining us. let's get to vonnie quinn now with the first word headlines. vonnie: a ukrainian presidential adviser says u.s. secretary of state antony blinken defense secretary lloyd austin have traveled to kyiv. if confirmed, it would be the first visit by top american officials to ukraine's capital since russia's invasion began. president volodymyr zelenskyy said earlier he would discuss the need for more u.s. weapons and was waiting for the security situation to allow president biden to visit. air raid sirens were heard across much of ukraine early sunday evening, warning of potential russian airstrikes. earlier, russia said it hit a large consignment of foreign weapons in odessa. strikes also continued on a steel plant in mariupol, where some 2000 fighters are holding on. kyiv is still pushing for a cease-fire guarantee from moscow to evacuate more than 1000

civilians and injured soldiers. shanghai reported a record 39 covid-19 deaths on saturday. this brings the total number of virus-related fatalities to 87 since late february, according to shanghai's health commission. the average age of the people, almost 79. they all had underlying diseases. china is sticking with its covid-19 zero policy, with strict lockdowns in the city and beyond. sources say elon musk is meeting with executives from twitter this sunday to discuss is $43 billion unsolicited bid. the social media giant is also said to be turning more positive on a deal after musk unveiled his plan. the wall street journal reports of the meeting comes after musk met privately with several shareholders friday to pitch his proposal. 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, our

conversation with the ceo, sharing how the hot spring resort operator is coping with the country's continued closure to tourists. first, money markets are pricing in 200 basis points of fed tightening by september. we will analyze the impact on asian bonds with alliancebernstein. this is bloomberg. ♪ this is bloomberg. ♪

>> the fed is concerned about inflation. we have made clear that we will be moving accommodation to try and get it under control. but i know they will try to achieve a soft landing. and with some skill and some luck, we will have a very good year for the u.s. economy in terms of the job market this coming year. shery: u.s. treasury secretary janet yellen to bloomberg money markets pricing in 200 basis points of fed tightening by september. our next guest says asian high-yield debt historically outperforms aggressing -- investment grade. let's discuss more with jenny zeng from alliancebernstein. good to have the with us. if you want to get into asian junk at this point, how are we looking in terms of valuations though? jenny: good morning.

yes, asian high-yield, if you look at valuation, there is another developed market, it's q uite attractive. it's been a collateral damage of the chinese property selloff. outside of china, particularly indonesia, india, are very strong. rate remains low. therefore, we think asia high-yield market right now will lead to longer term investors. this is a good entry point. shery: how can you factor in rising inflation though? asia has not had that, as many other countries -- has not had that problem, as many other countries have. and more regions becoming more hawkish. jenny: absolutely. how do asia central banks reply

will depend on where they are in their economic cycles and their ability to smooth the economy. we see this as both risk and opportunity. we think most of asian central banks will look past the supply side shock and stick to gradual policy path. of course there will always be some patient controlled the banks that will need to act faster than others. the likes of thailand. but there will be others who are benefiting from higher inflation. for example, indonesia, malaysia, australia. they are in a better position to pass through inflation. paul: there are a handful of people spoken to a bloomberg survey expect a small chance of recession in china. can you see a scenario in which china's economy actually contracts? jenny: the chinese economy, the

fundamentals of the chinese economy remains quite solid. if you look at recent data it is suggesting it is not really as bad as the market suggests. now, the worry is the current policy support that the government has already put in place may not benefit because of the covid policies. because activities are subdued. we expect that china gradually, as the death rate comes down and case counts come down, the china's government will rethink the covered policy. now that is the key. paul: i just want to take a look at a chart on the bloomberg terminal at the moment. this is the offshore yuan, which has taken a real beating.

sinking again against the u.s. dollar this is not too much of a concern for exporters. might be welcomed by some sectors of the chinese economy. is this speed of the decline something to worry about? jenny: we cannot really look at r&d in isolation of what is going on in the world. if we look at the currency in a basket of other currencies, how it has been behaving last week was purely a catch-up with other currencies. shery: of course -- jenny, do we still have you? jenny: yes. shery: let me ask you about jgb yields. because we continue to see the rally given the broader inflationary pressures around the world, and global yields rallying as well. the boj really not going against

the broader global monetary stance and trying to cap yields. we have the boj decision on thursday. are you expecting to see anything unusual then? jenny: no. yes, the depreciation of japanese yen has been very notable since the beginning of march. this is inevitable and away, because japanese policymakers have no power to stop it. it is one of the most of us central banks in the world -- one of the most dovish central banks in the world. we expect no policy changes. paul: all right. jenny zeng, cohead of asia-pacific fixed income at elian's bernstein. still to come, twitter it might be turning more receptive to elon musk's takeover. this is bloomberg. ♪ s bloomberg. ♪

shery: a source telling bloomberg the elon musk has been meeting with twitter executives today in a sign the social media company has become more receptive to his $43 billion takeover offer. su keenan joins us with the latest. the idea was that the twitter board initially had opted for the poison pill strategy. where is there a change of heart? su: it appears that following that regulatory filing on thursday where a dozen banks act musk to the tune of billions made all the difference. bloomberg is hearing that twitter is now generally more open to discussing a deal than it was previously, and met with the board. new york times giving more detail, that musk and the 11

member board met early sunday morning, and that there is a follow-up meeting later sunday to discuss matters related to a possible deal. the wall street journal had reported earlier that musk met privately with shareholders friday over resume to pitch his proposal. that perhaps added to the change of sentiment. the paper also said musk told twitter chairman brett taylor he will not adjust his $54.20 a sh are offer. now, bloomberg reported last thursday when this regulatory filing was first disclosed that musk appeared to raise a bit more than the actual bid, so there is a little wiggle room. but observers also note the regulatory filing was key, because in 2018, musk famously tweeted that funding was secured to take tesla private in 2018. turned out he did not have the financing. that seriously hurt his credibility. so now the fact he has been able

to show this financing and these banks were backing him, it really gives credibility to the offer. twitter by the way trading about 10% below the offer peice -- price musk came up with. that indicates many on wall street perhaps are still skeptical about whether a deal actually goes through. paul: su, we've also learned more about elon musk managing to get a dozen banks to back and very quickly. what sort of argument did he put together? su: the deal them together in apparently three days over the easter passover holiday. that is a lot of money to put together quickly in the very package -- in the various package they came up with. we are told it was a number of zoom calls some of the bigger lenders, that musk himself was on the call, was very engaged. and what was critical because the packaging for financing involves a lot of debt, is musk had a specific plan where it would not be so much debt as to

tip twitter it into junk financing. and so that apparently was crucial. apparently he also shared some ideas of how he would run the company. reported by people close to the matter saying he was very engaged, as you can a matter -- as you can imagine. we do not know what ideas musk has other than that he supports freedom of speech, he wants authentication for users, and he proposed board members would not be paid. any details on how he would actually run twitter if his bid were to prevail have not been provided, but stay tuned. paul: all right. su keenan there. let's get a quick check of the latest business flash headlines. foxconn is keeping its iphone city campus in central china open, even with the covid related lockdown. the plant is a major a similar of iphones for apple, and is located in the airport economy zone. the area is now under lockdown for an indefinite period,

although workers for key businesses can still commute with permits. two of china's state banks are reportedly countering deposit rates monday as the urge lenders to support smaller companies with lower financing costs. bank of china will lower its two to three year time deposit rates by 10 basis points, and bank of communications is looking at similar moves. it is not clear if other state banks will follow suit. indian billionaire has ditched a plan to buy a future group's assets after prolonged legal challenges from amazon. reliance industries said the deal could not be implemented after future retail failed to win creditor's approval. amazon has argued that contractually, it had first right of refusal to buy future, which used to run india's largest grocery chain. shery: take a look at u.s. futures under continued pressure. this of course after the s&p 500 already saw three consecutive weeks of losses. but really the question this

week will be what happens to big tech, because we have earnings from the likes of apple, microsoft, amazon, alphabet. that will decide where these companies are going, where the big tech sector is going. the nasdaq 100 right now under some pressure on the futures market. it is already down 9% so far in april and is poised for the worst month since 2008. and take a look at the fx space as well. we continue to see a little bit of weakness in the u.s. dollar. still holding at that 2020 high. what we are really watching is the euro which continues to hold onto some gains against the u.s. dollar after the jump we saw and the early sydney trading session. with more certainty that president macron would secure that second term. we had that reaction in the fx space. we are watching the japanese yen. look at that, another session of weakness. near a 20 year low. what will the boj do this week when it comes out with its policy decision on thursday? it is all about the yuan as

well. july lows at the moment. this of course given the economic pressure on china. beijing setting -- shutting down part of the city to curb the spread of covid. we will discuss. this is bloomberg. ♪ s bloomberg. ♪

>> this is daybreak asia. i am vonnie quinn. russian jets flying to syria. the move is seen as a show of solidarity with nato and adds pressure on moscow to end the war but restrictions are unlikely to hold the movement of russian assets to syria as moscow will likely use iranian airspace. and turkey's finance minister says the request was made in

washington. the imf has largely agreed to -- details will be worked out next month. the imf suspended the loan to pakistan after the ousting of a prime minister. south korea's incoming president says he will send policy experts to japan if he tries to -- biden is expected to visit in coming weeks. the administration is counting for hell -- counting for help on several issues. acute hepatitis has been found and the who says 169 have been afflicted by the disease. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

shery: shanghai's covid outbreak is showing few signs of abating even as they enter their fifth week since the first out break began. let's bring in stephen engle. it's been more than a month. what is going on? >> no sign of abating and frustration is definitely bubbling over. more than 21,000 new covid infections in shanghai. most of them are asymptomatic. on saturday we will get sunday's numbers later and probably the number that sticks out is the record number of deaths in shanghai, 39 new fatalities so 87 new fatalities reported in

this latest wave. what is alarming to residents is that there are no signs that zero covid will be relaxed and the city government said friday they will enact nine new -- nine new actions to achieve the goal of zero covid at it ruins the hopes of the people locked in their home with inadequate food and medical supplies. paul: we know that parts of the city in central china where foxconn makes most of the iphones was locked down last week. how does that affect production for apple? >> foxconn put out a statement yesterday saying they are still operating normally and the site continues complying with government measures to curb the spread of covid, essentially

iphone city makes the bulk of iphones globally and there were targeted lockdowns throughout the economic zone where it is located and the many residents of that city or in some form of lockdown. the concern is if iphone city was able to keep cranking out phones for distribution but manufacturers are using a closed loop system where the workers are kept on-site to keep pumping out product. there was concern that if there was a spreading lockdown that the port and airport would be affected because you have to get the phones out to the world. the airport is working fine and cargo is getting out and in. paul: stephen engle updating us on the latest on lockdowns in china. let's look at iron ore prices

trading out of singapore, a steep drop at the moment off by more than 9% at the moment, a very steep drop. we will not see any reaction to that in the australian markets today. we are closed for a public holiday but iron ore futures, steep decline in singapore, off by 9.2%. janet yellen says the white house could be open to scaling back tariffs on imports from china and that it is worth re-examining the duties to help provide americans relief from the inflation. >> judging by the u.s. unemployment rate now and other measures, the performance of the labor market, it has been decades since we have seen such a strong job market with such

excellent employment opportunities for people. you can see that in the high quit rate and enormous level of job openings. so the fed is concerned about inflation and will remove accommodation to try to get it under control but they will try to achieve a soft landing and with some skill and luck, we will have a very good year for the u.s. economy in terms of the job market this coming year. >> you referred to china last week, saying you want them to help the united states bring pressure on russia to stop the travesty in ukraine. what can the u.s. do to get things done? what about secondary sanctions? could it urge china to move in

our direction? >> i do not see china at this point as undermining the impact of our sanctions. as far as i can tell, chinese financial institutions are avoiding, they very much value their access to the u.s. financial system, into their economic relations with the u.s. and europe, and i am not seeing them as taking steps to undermine sanctions. we have made that clear that it would be unacceptable to us. and we made clear it would be unacceptable to help russia add to their stock of arms to conduct the war. we would like to see them do more to take advantage of their relationship with russia to try to bring about a diplomatic and to the war.

nothing would be better for the outlook for real growth throughout the global economy or for inflation other than stopping the war. paul: janet yellen speaking with david westin. still to come, the week yen might help reinforce japan's tourism economy. we will get the take on japan ahead. that is next. this is bloomberg. ♪

>> it is my view that the boj should continue towards achieving that price target of 2%. shery: it is time for the plan ahead. japanese markets open in 20 minutes. you heard from the governor on the ultra dovish switch that sends the japanese yen near 20 year lows near the u.s. dollar and we continue to see downside pressure given that the boj

conducted limited bond buying operations to cap yield. the 10-year yield trades toward .2 .5% and we will wait for the bond opening market and nikkei futures pointing down one point 7% after losses in the previous session. paul: the weak yen is continuing to cause concerns and could cause trouble when they reopened to tourist. machinery resorts is a 107-year-old company famed for beautiful retreats across japan. the ceo turned the business around when he took over 20 years ago by acquiring and reinventing struggling spa of

reports but last year with covid, he was forced to put expansion plans on hold. he joins us from tokyo. thank you for joining us. weak -- i mentioned the weak yen being a problem but the bigger problem is the closed borders. how is this harming your business and other tourism operators? >> right. the domestic consumption is huge in japan. 83% of the total consumption of japan is down by japanese people traveling to japanese designation so the last of the -- the loss of the international travelers is big but not critical. it is more important to gain back domestic demand to

business. paul: how is domestic demand looking? has it returned to pre-covid levels or is there still some way to go? >> we -- golden week is coming up, a big holiday season for us and the volume this year is much higher than last year. i still expect 20% down from 2019 but it is coming back and we have another big holiday season the summer and expect a full recovery of the domestic market this year. shery: have you already started to see some fallout from the yen in a sense that japanese households, positions get weaker

if you have a weaker domestic currency, not to mention that we continue to see prices rise across the country. for the first time in decades we are seeing more price pressures. >> the weaker yen has not impacted our lifestyle yet. i do not know what comes next but usually it will impact the domestic tourism business. japanese people traveling outside japan, we had a huge market for before covid but they tends to shift to staying in japan when the yen is week so weaker yen at this point is not

impacting the tourism business in japan and it should do ok this year, this level of the yen. shery: are you having conversations with the japanese government? what are business leaders telling the administration at this point? >> regarding the yen versus the dollar? shery: tourism and covid restriction. >> we are not really talking about [indiscernible] but japanese government has been planning to have a promotion targeting huge domestic demand in japan but it has been postponed.

they planned to do it last year and tried to find opportunities to execute the promotion budget but we have not been able to do it. i am expecting, we have a golden week. we do not need any help from the government to boost revenue during golden week so perhaps they will implement that plan between golden week and summer vacation, which is may, june, and july. i think that is something they are thinking about it right now. paul: is there any policy change generally that you see japan needing urgently in terms of reform in japan? >> policy change regarding border restrictions? paul: regarding anything at all.

>> when we have inbound coming back is the next big issue for us and as you know we have very strict reporter -- very strict border restrictions at this point but we will have to follow what other countries will be doing. they have already started easing the policy already and i expect some inbound tourists coming back after summertime and we are having a big promotional event the next year and expect the expo in 2025 so we have to start working on the recovery of the

tourism market sometime this year. the government understands that and we are ready for that. shery: any update on expansion plans? you mentioned last time that saratoga springs was a potential option for you to set up shop. >> yes. we are good at managing and planning of the authentic experience and popular by japanese people but also well received by international tourists when they come to japan. so we are thinking about taking this product overseas and looking for locations right now where we can plan and build the hot spring in's. that is our plan and we are still working on it.

with the united states and canada, there are so many sources of hot spring so we are trying to find a location for the project. shery: it would be great to have you in the studio if you come to new york. thank you very much. you can get more from this interview on tv . every week you can hear from the leading names in japan business. that is on bloomberg tv. we have other top stories we are watching in japan. renault is considering selling part of the nissan stake which could raise billions of euros for electric vehicle shift. and we will have a conversation with -- regarding carlos ghosn

straight ahead. and janet yellen discussing the yen swaying in their meeting. plenty more ahead. oomberg. ♪

shery: we are getting the latest

covid numbers out of shanghai. 51 new local deaths on sunday. another record. the previous was 39. 19,455 new covid cases for sunday. shanghai has been under lockdown for the past five weeks and we continue seeing the outbreak, the worst since the onset of the pandemic. 51 new local covid deaths for sunday and shanghai. paul: we have been told reynaud is considered in -- is considering selling some nissan stock. carlos ghosn says such a move makes sense if the light alliance is in shambles with no collaboration since 2018. >> i told you two years ago that

the alliance became a zombie because at the heart of the alliance is trust between nissan and mitsubishi and japanese authorities and french authorities, which happened to be a major shareholder. this trust was broken and when that happens, there is no meaning for an alliance like this to continue. we heard a lot of stories told by the new management at nissan that everything is ok and being done in a brotherly way and all issues will be made in consensus. that is baloney because no cooperation has taken place. there was some ridiculous long term plan not announced to the press. now the alliance is in shambles. they sold some shares from a partner and are dismantling the russia holding, which makes sense if you do not want to work

together. and don't forget that when the alliance was signed, the reason was for the company sharing platforms and technology and working together. it worked well for 18 years except since then -- since 2018, there is an apparatus of the collaboration that is not taking place. shery: carlos ghosn speaking with bloomberg since -- from bay loop -- carlos ghosn is speaking with bloomberg from beirut. the world's largest ev battery maker says a decision was made on a principle of prudence and wanting to assure quality.

icici bank posted a profit in the march quarter after a drop in growth from lending. the bank has substantially stepped up growth in recent quarters, outpacing its peers. paul: let's look at stocks we will be watching when trade opens in japan and korea shortly. korean and japanese steelmakers will be getting gullwing as iron ore features see double digit losses. toyota construction has received a buyout offer from a family office that managers -- manages the wealth of nintendo's founding family. still to come come up morgan

stanley says we are entering a phase where policy normalization is an pace but first we will speak about an aggressive fed rate hike. market tokyo opens next. this is bloomberg. ♪

shery: welcome to daybreak asia from new york. paul: our top stories, emmanuel macron serves a second -- secures a second term and a boosted eu grappling with the war in ukraine. asian stocks may struggle to

start the week. shanghai hardens their covid zero approach to step out cases. shery: japanese stocks coming online. losses ofore 1.5% for the topix and nikkei as we continue seeing the japanese yen get weaker against the u.s. dollar. levels around 20 year lows against the greenback and all eyes this week on what the boj this week. thursday the market expectation is the policymakers will leave things unchanged but at the same time, will they try to stop the canal apps -- the collapse of the japanese yen? this is we continue seeing boj operations to cap yields but the 10 year yields continues being high at the upper level of tolerance, .25% given the global bond rout. the kospi saw weakness in the

previous session. korean won getting weaker for three consecutive weeks. weakness continues against the u.s. dollar and weakness in the korean stock space down more than 1% for the kospi. a strong u.s. dollar, more hawkish fed is affecting risk sentiment across asia. paul: just ahead, trading in u.s. treasuries began as the markets in japan open. let's look at how we are going. the yield on the 10 year, 288 nine at the moment. we heard from james foley last week saying the bond market does not look like a very safe place to be right now and we see yields continue to grind higher. equities do not look like a safe

place either. snp futures off by about one quarter of 1%, nasdaq futures looking weaker. commodities prices, crude showing some weakness although long-term picture looks more uncertain. euro gaining after french president emmanuel macron has defeated his opponent marine le pen, but not with the majority he enjoyed five years ago. the euro rising on the numbers list. it has been pines -- it is been a painful time for chinese markets over growing fears of covid. the offshore yuan heading into a weaker part of the year, attention has turned to what pboc could do next. jeff joins us. he is a market analyst.

chinese stocks are back to where they were before beijing intervened in mid-march. where do you see future for stocks? lower or intervention coming from policymakers that the market is hoping for? >> this is the challenge when you intervene. there was a lot of promises made but little substance occurred. we are seeing stocks running out of steam. there are widening lockdowns across china. they are tightening up in shanghai again. this will cause logistical problems that affect not only china, but the rest of the world. we are seeing no sign of change about the covid zero policy from the government and little in terms of material stimulus

measures we judge their activity from in previous years. they are still -- this points to lower china stocks and seeing a weaker yuan going forward. paul: 500 chinese companies reported earnings against the backdrop of the lockdowns. the outlook for consumer discretionary is bleak. what do you anticipate in this earnings season in china? >> i think it will be tough. the export facing companies will hold up. attack is an ongoing issue with regulatory risks. we still have the train wreck of the private sector, property developers and i am not seeing

material progress on deleveraging. so i would say there are substantial downsides to the outlook of sentiment that will show up in the pmi's later this week but also because of restrictions. shery: are you factoring in that market reaction from the french election, given that it gives more certainty to the european market reaction as well? >> the arrow is up 20 basis points when i last saw it. president macron's league -- lead widened last week and we saw option vulnerabilities -- volatilities come back to normal levels. the market had already started pricing a victory for him and that is how it played out so i anticipate this being a very

minimal event on market. the euro closed with huge negative signal and this goes back to 1985 so i think there are challenging times for the euro and europe. shery: are you bracing for change is coming from the boj thursday? we continue to see the yen weakness. while the governor have to act and what will that mean for the market? >> i think it would be a huge surprise. i say that because they were intervening so aggressively last week to cap yields. i cannot imagine they would have been that aggressive if they

were going to change their policies somewhat or tweet it. it would've been a nice way to hinting to the market that some changes could be on the way but i am expecting them to hold fast with their monetary policy and it should lead to another bout of weakness in the japanese yen as yields around the world continue climbing higher, notably in the united states. shery: let's get to vonnie quinn. >> macron has defeated marine le pen in the french presidential elections. he is bolstering the block as it tries to deal with the war in ukraine. zero lows after the results.

a ukrainian presidential advisor says lincoln and austin have traveled to kyiv. it would be the first visit by top american officials to the capital of ukraine since russia invaded. zelenskyy said he would discuss the need for more u.s. weapons and waiting for the security situation to allow biden to visit. shanghai has had 51 covid-19 deaths on sunday. they are in their fourth week of strict lockdowns. some residents have been confined to their homes for longer. frustration has been building over a lack of access to food and medical care. elon musk is meeting with twitter executives to discuss a bid. the social media giant is said to be turning more positive on a deal.

wall street journal says the meeting comes after elon musk met privately with shareholders on friday to pitch his proposal. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: big movers in japan. automakers nissan, toyota, seeing pressure with broader market losses we see across japan. nissan and toyota done more than 2% each as we head towards nissan's fourth order earnings. the expectation is for the conservative guidance we got and we are watching the latest saga surrounding carlos ghosn. ana losing almost 4%. the preliminary net loss was larger than expected did. paul: still to come come up morgan stanley tells us how

central banks across asia will have to join in on policy normalization. as more on what is next for france after emmanuel macron has secured a second term as president. this is bloomberg. ♪

>> today, the majority among us made the choice to give emmanuel macron the presidency for the next five years to come. >> i cannot help but feel terror for the french and european leaders. paul: emmanuel macron and marine le pen speaking about the election result. for more we are joined by our international correspondent based in paris. how was the atmosphere at his election night rally? >> thank you.

that was the first will -- that was the fenced war that emmanuel macron said -- that was the first word emmanuel macron said. there was a sense of relief at the seat of the eiffel tower where he celebrated his victory tonight. there were a few thousand people chanting, one more time, five more years of macron but clearly it was not the same level of enthusiasm we saw five years ago when he first won the election in 2017, at the time the youngest french president ever and elected on a pro-business platform of reform. this time the margin was not as wide.

the difference between him and marine le pen was tighter. so he will have a lot of work to do to reconciliation france over the next several months before the elections and also over the next five years. shery: he talked about europe, about france's link and connection with the continent. what does that tell us about what will happen with france's relationship with the eeo, nato, an ongoing war in ukraine? >> the second time, he used the european anthem to celebrate his victory. he already used the same anthem back in 2017 to really show he was the candidate of europe and during his campaign he was really telling the french, this is a choice, a referendum for or

against europe. the national rally leader le pen was very clear that she wanted to distance from eu partners and reelection by micron means continuity for the european project as he still presides over the rotating council of the eu for the next few months and even the situation in ukraine, the war and proximity of a man -- emmanuel macron with olaf scholz as it comes with russian sanctions will be key over the next few weeks. shery: it is great to have your insight. thank you. we are seeing downside pressure

really broad after seeing relief with micron's victory over marine le pen but now in the equity space we are seeing downside pressure in european futures. broad selloff in asian markets and this seems to be a continuation from the friday selloff in equities, given the mixed bag of hawkish boe. bond space is one reason why that u.k. 10-year yield surpassed the 2% level, holding around that level. french stocks and bonds have been supported in previous session given that the president's margin over le pen has widened, although it contracted going into the vote count but as i said the euro continuing to hold on to gains although paring back some of the rally we saw in the session but still interesting that it comes

after three weeks of losses against the u.s. dollar. paul: antony blinken and lloyd austin are reportedly in kyiv for talks with ukraine's president. let's cross over to bruce einhorn for the latest. volodymyr zelenskyy urging the u.s. not to come to the meeting empty-handed. what are they bringing? >> i think the significant thing right now is the symbolism of the visit. the highest level visit that zelenskyy has had with american officials since meeting with vice president harris in germany before the war started. it comes at the same time as the visit by ukraine's prime minister to washington where he met with biden and pelosi and others leaders. biden last week announced a

package of aid to ukraine, u.s. is shipping more weapons, more types of weapons including a heavy artillery and other items. i think it is fair to say that the americans are arriving in kyiv with some things the ukrainians want. the question that will be, when will biden go? boris johnson has gone, vendor lay has gone to kyiv. now there are questions about if biden will go. at some point that security criteria involved are different so it is a big concern now and as austin and blinken are there, they are aware of everything going on across the country so just a reminder that this is a

country very much under attack. shery: turkey has closed their airspace to russian jets flying to syria. how significant is this and what are the implications in this shift in turkish policy? >> practically it is not a big issue for russia because they can fly around turkey using iranian airspace. turkey and russia are on opposite sides of the war in syria and this move by the turkish government is assigned to nato allies that turkey is on board with the rest of nato. turkey has a complicated relationship with russia. we talk how germany and other european countries are dependent on russia for energy supplies. so is turkey. they get half their natural gas from russia so it is vulnerable to retaliation by the russians.

president erdogan is meeting with the u.n. secretary general to talk about the ukraine-russia war and then will meet with pugin and zielinski later this week. shery: we will be watching. you can get a roundup in today's edition of daybreak. go to tv . this is bloomberg. ♪

paul: we are tracking the fallout of the global supply chain crunch. the prospect of europe getting disconnected from russian gas looms and the ongoing standoff of payment could lead to a cut in supply. drought has forced u.s. cattle

ranches to reduce the herds which means more beef now but less in the future. a smaller beef supply is set in stone and the world supply of cooking oil is getting smaller. indonesia is banning exports of palm oil. the supply is impossible to sue place -- the suppliers impossible to replace. shery: palm oil futures gaining ground and other types of oil like soy bean oil have rallied. the best run in five years. in commodities, watch what happens with china. the demand picture, iron ore futures falling to the lowest in two months in singapore because of demand concerns over china. fuel consumption's of the country is expected to drop 20%

in april from one year ago so wti and brent are both headed to $100 per barrel. same story for copper. terminal users can read more about the stories in our news letter. let's get more on the pandemic across china because shanghai has reported 51 covid-19 deaths sunday with more than 19,000 new local cases. for more, let's bring in stephen engle in hong kong. we continue to see records being set across the country. >> that's right. the additional 51 deaths on top of the 39 reported saturday, which was a record high for the latest round and really shanghai's first major episode

of the outbreak, predominantly omicron and predominantly asymptomatic but lockdowns persist, entering their fifth week since it first happened. frustration has been growing. there was some hope among the lockdown residents that there could be gradual easing but authorities are now bowing to strict sleep enforce nine new actions announced friday by the municipal government and we have seen photos. i cannot confirm exactly but footers have been circulating of at least two meter high fences going around certain neighborhoods or across roads to help contain people and their movements. everyone has seen the video of people being frustrated as food supplies and medicals lies are

committed. beijing, it might be your turn. show young district is going to start mass testing this week. paul: more

>> this is daybreak. i am paul allen with first word headlines. red sirens were heard across much of ukraine early on sunday evening with the warning of potential russian airstrikes. russia had a large consignment of foreign weapons in the desert. strikes continued in mariupol where some 2000 ukrainian fighters are holding off. they are pushing to evacuate more than a 1000 soldiers.

sources say the restrictions are unlikely to halt the movement as muska will likely use airspace. the imf has largely agreed to extend the current program. the details will need to be worked out next month. the imf suspended his loan to pakistan after the disaster. south korea's incoming president has sent a group of lawmakers to japan as he tries to revive relations. warming ties between tokyo and

seoul as president biden expected to visit the countries in the coming weeks. this is the first word headlines. >> we are getting a little bit more insight into the text messages exchanged between elon musk and the fund when it came to taking tesla private back in 2018. that was the infamous funding secured tweet back in august of 2018 while the series of text messages and the managing director of the public investment fund coming to light. this is showing the text messages include musk in one exchange say you are throw me under the bus, really showing the details of his thinking as we are now seeing him make

efforts to buy twitter at this point. you can find more of the bloomberg terminal and his dealings with those text messages exchanged and some more information there as you check out the bloomberg story. when it comes to the data front on the eco-side of things, it will be a pretty busy week. growth numbers from the two largest regions of the economy revealed impact of the war in ukraine for the first time. the u.s. but this is first quarter gdp while europe follows on friday. with the rise of inflation reports, our next guest says central banks across asia will need to join in or speed up the pace of policy normalization. let's bring in the asian economist at morgan stanley. it is good to have you with us.

when are we going to start seeing inflation get out of hand across asia? at this point it does not look like it as of yet. >> i was asking about the inflation picture across asia. what do you expect to see? >> we expect inflation to maintain at current levels. the peak would be around now or in the third quarter of this year. i think there are a lot of concerns about the commodity prices but our view is that the higher cost is unlikely to lead to demand for pressure and asia because of the fact that the gdp in asia is still below trend. there is still a gap so we don't expect inflation to go to that territory. >> after we saw the u.s. real

euros, we are worried about those high valuations. what are your expectations for some of those companies that are also in the likes of korea or taiwan which are pretty tech heavy? close i am not a equity expert. i am more of an economist. but if you look at these markets, they have started to underperform relative to the broader asian and japan market. i think gdp growth -- we are expecting gdp growth at 2.8%. i think what will help the economy is the fact that the covid situation has improved so vaccination rates have actually been rising.

" we will also have pmi's out of china later on this week. as the economy there been weathering these lockdowns? we have not seen the sort of intervention we have become accustomed to in these sorts of situations. >> i think chinese policymakers want to balance between maintaining the public health and well-being. i think it seems like right now they want to maintain a covid zero strategy. that means there will be more policy easing in the pipeline. especially this meeting taking place in april and july. there has been 2% expansion.

fee cuts, tax cuts. we expect to see property market using. it suffices to say that there would be more growth with china given the rolling markdowns we have seen on supply chain disruption. >> do you think that growth target will get revisited because it will look more and more unrealistic? >> for china, the growth target for this year is 5.5%. our view is that it seems like given what has already happened and what is likely to transpire, they may come in to this business and the full year gdp numbers with china could come

into a bed forecast overall here. that is kind of the growth expectation we are expecting. we are now seeing close to more than 20 of these in china. this has led to supply chain disruption that even though policymakers are wanting to allow and revise production, the reality is it will be difficult for them to mitigate the supply-side disruptions. shanghai, china believe that even with these measures, it seems like the production will only get up to 40 or 50% by the middle of the month. i think there is still near-term growth for the china economy. correctly you are, the asian economist.

>> u.s. treasury secretary, janet yellen says the white house could be open to scaling back tariffs on imports from china. it is worth re-examining the drop your duties to help provide americans a relief over four decades. >> judging by the u.s. employment rate right now and the measures, it has been decades since we have seen such a strong job market with such excellent employment opportunities. you can see that in the enormous job openings. the fed is concerned about inflation. they have made it clear they will be removing accommodation to try to get it under control. i know they will try to achieve a soft landing with some skill

and luck. we will have a very good year for the u.s. economy in terms of the job market this coming year. >> they basically are saying that if you wanted china to help the united states bring pressure on russia to stop the travesty going on in ukraine, but can the united states do to get things done? what about secondary sanctions? could that urge the chinese to move in our direction? >> i don't see china at this point as undermining the impact of our sanctions. as far as i can tell, chinese financial institutions are -- they value their access to the u.s. financial system to the economic relations with the united states and europe and i am not seeing them as taking

steps to undermine sanctions. we have made clear that would be unacceptable to us. and we would make clear it would be unacceptable to help russia to conduct this war. we would like to see them do more to take advantage of their relationship with russia to try to bring about a diplomatic end to this war. nothing would be better for the outlook of real growth throughout the global economy or for inflation other than stopping this war. >> janet yellen speaking with bloomberg's david westin. next, concerns about the demand outlook in china. this is bloomberg. ♪ ♪

>> here is a quick check of the latest business flash headlines. this indian billionaire has dished a plan to buy future growth assets after prolonged legal challenges from amazon. blinds industries said the deal could not be implement it after they failed to win creditor approval.

contractually, it has the first right of refusal to my future which used to run india's largest grocery chain. these banks hosted a 59% rise in profit in the march quarter. helped by a drop in bad loans and the income from lending. net income for the first three months ended march compared with early $600 million a year ago. they have stepped up credit growth in recent quarters, outpacing its peers. foxconn is keeping its iphone campus in central china open. even with the covid related lockdown. the plant is a major assembly of iphones for apple and is located in this economy is on. the area is under lockdown indefinitely. the workers can still commute with permits. >> all futures in singapore are slumping to a two month low,

concerned growing over demand outlook in china with the economy strained by covid lockdowns. for more, we are joined by the bloomberg commodities reporter mark ritchie. this is quite a steep decline. what is driving this? >> yes. good morning. iron ore has actually held up well over the last two months. it has been weakening with the state of the chinese economy recently and this morning we saw the news about the growing outbreak in beijing. it looks like that has really spooked iron ore this morning, going toward $113 a ton. when you have these growing outbreaks, there are these curbs on mobility. that will hit construction. that is iron ore's main market. this is just a bit of a

capitulation this morning when you see these pretty scary headlines from beijing. >> what are we seeing in terms of china's export of metals at this point? >> that is a separate story we had this morning. in the past couple of months, it has been a bit of a surge in metals exports. a bit of aluminum, copper, zink and some extra still. that speaks to the relative weakness of china's market verse the rest of the world. there are always a lot of bad headlines around at the moment but metals markets are actually quite tight. supply is very low. inventories are declining. that has put prices up near record levels. that spread quite a lot of exports because it is more profitable for some metals to be

sold overseas rather than inside china. >> that was martin ritchie with the latest on the metals space and chinese demand is very important for energy because we continue to see wti and brent losing ground after a week of losses already. there have been concerns about chinese demand already. bloomberg sources telling us that china's fuel consumption in the country is expected to drop. we have already seen the losses continue in the energy market on this early morning asian session. energy is one sector leading the declines across equity markets across asia. look at the nikkei which is down 1.5%. every sector on the japanese index is down. led lower by consumer discretionary and consumer services at the moment. the cosby is moving around for a second consecutive session and

we are talking about those we have not seen in about two weeks or so. u.s. futures are also pointing lower at this point given that we have already seen consolidation in the last three weeks with some disappointing corporate results out of the u.s.. we actually saw the s&p 500 with its worst day in more than a month. we will have more on the markets coming up on daybreak asia. this is bloomberg. ♪

>> we are counting down to the start of trading. hong kong and mainland china. investors watching the pboc very closely right now. they have the rest week since the valuation back in august of 2015. we are talking about the offshore yuan trading. we have not seen this since july. we are watching whether the pboc will set its reference rate higher or weaker than what economists are expecting. that will really set the tone for the currency train this week. we have already seen the general sense of caution approaching the upcoming earnings result. weaker chinese economy which is being solved across the current space. how much of all of this has already been priced into the market? >> to a large extent, that is a

very good question. the earnings that we will get today will be first quarter earnings. some of them will be combined. to what extent have markets figured out what the slowdown means for the current quarter -- this will be attributing this here. valuations are cheap. we have not turned into the desk moved into the earnings season. consumer confidence is a big one to consider. we have a lot of the big developers. we have some of the big banks. just to give you an indication

of the estimates out there. quite apart from earnings, what else are we paying attention to? >> you guys just covered a very big part of that. in a couple of minutes we will get the initial indication of what the chinese aren't were contracts will do. oil has been pulled back. not to trivialize the public health tragedy taking place there. this might be something to consider for markets.

what we are trying to figure out is to what extent inflation starts blowing up. this takes some of the sting of just a look at some of these things we are tracking their. we are looking at the government bond yields. that is not testing the highs. that specific level is very close to march 15. that was the day before beijing and the state council came out with that massive promise that they will be there to support the markets and economies. >> that was david ingles. let's look at the stocks to watch. we will also be keeping our eye on singapore reopening stocks as

the government has vaccinated travelers. singapore airlines here with the luxury hotels. restaurant stocks like the jumbo also on the move as we get away in singapore. we are watching currencies as well. the yen is pushing toward there. that is a theme at the moment. we have a dovish boj. the fed continuing to tighten. the finance minister might have discussed with janet yellen -- let's look at the aussie dollar here.

that is expected to come in higher. we are expecting a reading of 3.4%. that makes future meetings live. >> we are watching the japanese equity space and the korean equity space at this moment where we are seeing every sector in the red. the kospi is also down. we see the weakness after three weeks of losses. we are seeing a pullback on government bond yields. that is moving away from the upper limit of tolerance as we continue to see treasury yields and futures and the equity space across the u.s. also down.

that is it from daybreak asia. we will look ahead to the start of trade and shanghai and shenzhen. . this is bloomberg. ♪

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♪ david: good monday morning from hong kong. it is 9 a.m. in the city. welcome to the china open. i'm david. let's get your top stories. this monday morning fears of waiting chinese demand as covid related deaths rise. that is in shanghai, also beijing is closed on alert. risk event to watch this