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asia. >> we are counting down to the major market open. shery: recession of fierce grip investors fearing rally in the dollar. stocks set to come under pressure. oil trades near a three month low with crude slumping to $65 if recession cripples demand. boris johnson digs in as senior cabinet ministers resign and he is forced to resign -- apologize for the government scandal. >> we are kicking off with what we are saying in the bond space. the catch up we saw eight treasuries translating to the most to are saying in the asian session. yields dropping across the board. we heard from the bank of england assigned that the amerco outlook, the picture has deteriorated significantly. -- we heard from the bank of

england on the outlook, the picture has deteriorated significantly. we are looking to see broad-based declines at the open. japanese futures pointing at lower. we do have recession fears in europe, the slide in the euro and the u.s.. that really was what had been holding us in the global economic outlook here. shanghai announcing more mass testing ahead and king dollar doesn't help the situation as well. heidi: we are seeing the bloomberg dollar index has a recession fear leading to the haven slow. not a whole lot of direction when it comes to the u.s. futures are the s&p 500 saw a lot of volatility in the new york session. then i think slightly in the green this is after losing more than 2%.

bond yields are falling worried we saw those highly valued shares starting to rise. we have talked about the strength of the dollar and the haven of lowes has not helped energy prices. -- haven has not helped energy prices. they recession concerns are leading to demand concerns as well -- the recession concerns are leading to demand concerns as well. heidi: speaking of demand concerns, the latest, we heard from j.p. morgan warning of the potential for $380 oil. it has fallen under $100 a barrel. >> concerns about weakening demand, analysts predicting

that the leading economies will post negative growth in the next couple of months and that could wreck the u.s. into recession. look at the five day chart which reflects that we are seeing a rebound in asian trading, it felt at 1.10% in the tuesday u.s. session, closing below $100 a barrel and only rebounding in the asian trading, crude is also down as much as 9% in the latest trading session. you have the pullback coming with stocks which were under pressure in the u.s. session and the surge in the dollar. shanghai launching the mass testing and that adds to concern about recovery in the biggest will consuming districts, city warning that crude could -- citi warning that could could slump

if the u.s. falls into a recession. we have a central banks around the world talk about raising rates, we have also seen a lot of intense volatility, subsequent to the russian invasion of ukraine, physical barrels are fetching enormous premiums. saudi arabia hiked its official selling price to asia. there is a strike in norway and disruption in libya. heidi: as a rising oil prices feeling inflation concerns -- rising oil prices are fueling inflation concerns. shery: lifting the tariffs on chinese goods will not help that much on the inflation front. but as bring in the chief global strategist at barings.

great to have you with us. if you are in the government role, or do you advise on the lifting of these tariffs to help with the price pressures we are seeing in this country? >> i would advise them lifting the tariffs, but not because they will have a big impact on inflation. the tariffs were put on to punish dino for a variety of its economic policies. some of that is really doing much to alter the deficit. i would repeal the tariffs on those grounds alone. it will have a marginal impact on inflation and prevent issues. it is a step in the right direction. not necessarily going to solve the inflation problems which are fundamentally about interruption in supply and a whole lot of economics. heidi: you have been cautious

about the economic outlook but you see the -- say that the u.s. consumer looks strong. how is this going to impact the equity market and the consumer discretionary side of things? >> it is a weird slow down we are in right now because the headwinds are pretty stiff with rising flights is -- prices, interest rates, and signals from monetary authorities. they are focused on bringing prices under control. the u.s. economy is about as strong as you can imagine to withstand those pressures. household incomes are still high and rising. a tight job market. companies have reported earnings and the banking sector is rocksolid. the risk to a recession is rising but it is not our base case that we get a recession this year or next. >> how much concern is it when

it comes to the psychological aspect of the inflationary mindset? perhaps already being entrenched? >> that is the big question and i think is what spooked the fed a couple of weeks ago. some of these surveys showed that long-term inflation expectations were starting to tick higher. that is where they felt they had to respond very vigorously and saying all that they were going to take on the next few meetings with some significant hikes. the psychology of what gets built in, consumer expectations and weight expectations is a hard dynamic to break. i think that is why they are determined to head it off before it -- heidi: the hope was in china, we saw a nice bounce when a concert chinese equities, perhaps at the property risks were contained.

with that doubling down on covid zero, is there a cap on how much of a recovery we can see? >> we have all been caught off guard for being a little too complacent on covid. there is always some kind of a relapse that we are able to handle and does not require us to impose strict measures. it is encouraging to see the trajectory china has taken the last several weeks. the new reports give cause for worry that it will not be a straight line back to normal. in spite of what the government is doing to show a bit of flexibility and targeted support for the banking and others. heidi: i question that tries to get to the bottom of what we see with crypto -- a question that price to get to the bottom of what we see with crypto, those who think it is worthless, where

do you think the dove falls post-pandemic with one of these pandemic darling as it classes like crypto? >> i am firmly planted in bet ween. i think cryptocurrencies disturbed it -- distributed ledgers will be important in the years ahead. it will have a chic at which is normal for any new technology. one of the questions around bitcoin, even though it is the largest and most popular cryptocurrency out there, it has also shown that it is very much a risk asset rather than a store of value. it is a bet on a business model that has very much yet to be proven. the work that central banks are doing with the fed to bring some sort of digital central bank

currency into the financial system is welcomed and you will see a lot of other stablecoin alternatives that will appear. some will have value, others will evaporate into thin air as that happens with technology. that is where i stand on the bitcoin question. heidi: very balanced answer. good to check, you will be staying with us. we get you the first word headlines to keep you up to date. boris johnson is digging in, he is looking to stay in the position despite the resignation of two senior cabinet ministers. along with a health secretariat, saying that we cannot continue like this. that along with a allegation

that she has appointed a new chancellor. china has started covid-19 testing after several confessions on a sunday and monday i one case found outside of warranty. as a virus continues to spread elsewhere in china with hundreds of new cases reported nationwide including the delta region. hong kong's new leader was able to sidestep u.s. sanctions by receiving $1.4 million in physical cash while campaigning for the city's top job. he spent $2090 on advertising expenses. the u.s. is said to be pushing the netherlands from blocking the sale of chipmaking care to

china. it is to curb the rise in chip production in china. the dutch firm is the leading maker of equipment for producing chips. those are your first word headlines. shery: we speak with the deputy chairman as it enters discussions about a listing of the unit that is coming up in generation, next. we have more on the u.k. with prime minister's future in doubt. this is bloomberg. . ♪

heidi: boris johnson is digging in honor of the resignation of two of the most senior members of his government. he has named a chancellor after the predecessor quit. he has undressed the latest scandal, admitting he was wrong to promote an mp despite having known of the complaint of sexual misconduct. >> i apologize for that, in hindsight it was the wrong thing to do. i apologize to everybody who has been badly affected by it. i want to make clear that there is no place in this government for anybody who is predatory or abuse their position of power. heidi: let us bring in joe mays from london. it has been a very eventful day and night, quick reappointments here for these new positions. the credibility question, the

confidence question remains. what does this mean for his leadership? >> a disaster state for boris johnson. we are seeing the last chapter of boris johnson as prime minister. his authority has been shot by these two major chancellor's and health secretariat. we have had a way of resignations from -- wave of resignations. those who were previously loyal are not supporting him anymore. a big shift of momentum away from boris johnson as prime minister and you cannot see how he gets it back from this point. the writing is on the wall here. shery: who is this new chancellor and who can we expect for economic policy for the u.k.? >> a staunch ally of johnson in

recent years, he successfully ran the vaccine rollout in the u.k., he seems to be a safe pair of hands. the question is what will he do on tax cuts. many mps want to see more tax cuts. that was a place of tension between boris johnson and those who resigned. that could speak to the u.k. inflation question. there was fear of fueling inflation, maybe he will take a different approach. shery: if there is a cabinet result -- revolt, what would happen? that does not trigger a general election. >> the conservative leader and mp would bring it down to two candidates and it would go to a vote to the tory party membership. no general election.

life continues. shery: the latest on the u.k. political scandal. christopher, chief global strategist, we are hearing about what is happening in the u.k. government and overall, a a lot of people we speak to these days seem pretty negative when it comes to the outlook for the economy in europe. we are seeing a dollar parity for the euro as well. what are your thoughts about how this will affect what the ecb doesn't next? -- does next? >> i think the great tragedy is this is the year where europe emerges from the pandemic with fiscal policy and strong growth drivers, particularly on the consumer side. the hit from the war in ukraine not only as a political military

and tragedy, is that there will be inflationary shocks from primarily energy but also food and other disruption to the supply chain that will force the ecb to find it which it has already signaled will do. a very sharp decline in growth follows -- at least to a recession this year or early next. shery: how much of this story is the u.s. dollar? despite the u.s. domestic concerns, is this the entering period were bc king dollar again because of the risk off sentiment -- we see the king dollar again because of the risk off sentiment? >> as i mentioned, the weakness in the european economy put the european central bank in a box that they cannot tighten as much

as they would like to. in a still be significantly lower than what they are in the u.s. right now. that has given additional momentum to the dollar along with what you described in the earlier reports. the safety that is always something that the dollar has enjoyed. i will mention that the problems that the ecb faces were drawn in particularly sharp focus this week when the cpi numbers were 8.6%, that was an average which ranged up to and including spain which came in at 10.6%. when you have that kind of inflationary pressure coming through, eca decline in consumer demand and risks arising in europe. shery: thank you for sticking

around with us. you can get a roundup of the stories you need to know to get your day going in today's addition of daybreak. you can get that at dayb . get the news on the industries and assets that matter to you. this is bloomberg. ♪

shery: we are counting down to the start of trading. over in japan, sources the tokyo electric is considering joining a partnership between depend investments and a local private equity firm in a takeover bid for toshiba. it is said to release the laser earning reports and content square, at the front provider of web analytics is considering raising of a hundred million

dollars in a new round of funding. -- oh 500 million dollars in a new round of funding. the finance minister will also be there. the bank of korea released at the first quarter funds flow, energy will supply cylindrical batteries for the alpha ev truck for four years starting in 2023. heidi: a quick check of the latest business flash headlines. 32% return for the flagship head fund through the first half of 2022 benefiting from the increased market volatility's. investors say that it is pure alpha in june, rebounding after years of struggle, bridgewater has made money in 65% of the market in which it trades. sequoia china has raised about $9 billion to invest in

technology and health care. it raised the money from investors across the u.s., middle east, and south east asia. it spans out as it struggled to raise funds against regulatory crackdowns and pandemic slowdowns. japan's top utility company is joining a partnership in a bid for toshiba's business. it involves investment funds and a local private equity firm. they have also pushed for a potential joint offer but the group has not indicated who it will partner with. toshiba has received eight buyout offers. cohen grew the most in years after a canadian lender toronto dominion bank is weighing a deal. the bank is working with advisors to put on a final decision and it includes

pursuing an acquisition. shery: take a look at the bond space, we are seeing the pressure on government bonds worldwide with the 10 year yield headed towards the 3.4% with the kiwi 10-year heading for 3.5%. we see this tug-of-war when it comes to precision concerns and inflation concerns. aggressive central banks pushing yields higher. rising risk of recession docking yields down which has had people saying that recession is in australia and new zealand as well this year. we are watching that and this is coming at a time when we see treasury yield volatility at the highest since 2020, the height of the pandemic. heidi: recession, from energy in particular with energy prices on the recessionary concerns, away

when it comes to the sort of equity trading in equity. we already see when it comes to australian stock futures, index futures, down a percent. a decline of about .7%. we see u.s. stocks just getting again after 2%. the volatility weighs in when it comes to the asian session. watching energy stocks in particular and weakness across u.s. futures. up next, covid flareups in china , a more harsh lockdowns, that is next. this is bloomberg. this is xfinity rewards. our way of showing our appreciation. with rewards of all shapes and sizes. [ cheers ] are we actually going? yes!! and once in a lifetime moments. two tickets to nascar! yes! find rewards like these

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>> global financial commissions -- conditions have tightened significantly. social banks having tightened

monetary policy. market interest rates and corporate bond spreads have risen, reflecting expectations. developments in ukraine are a key factor. shery: andrew bailey speaking after the central bank released a financial stability report. whether it's risks from here or europe, not the best set up for asian markets. >> we are seeing equity futures pointing to declines. picking up on what andrew bailey was saying, specifically about how big of an impact ukraine is having on the global economic outlook. goldman sachs looking at how significant the disruption has been in terms of energy supplies.

just below what we had -- that would be the second-most disruptive event for oil markets on record according to goldman sachs. asia has been relatively insulated from the conflict in ukraine. we can take a look at the terminal. one third of russian crude exports, the disruptions in terms of other commodity prices, the rally in copper and wheat, corn, has been particularly disruptive for thailand, indonesia who are net importers of these materials. we're seeing inflation spiking across the board. thailand is this line in purple. the key gauges rising at the

fastest level since 2008. china has been one of the more insulated markets from a we are seeing in the global economy. that is not playing out in the stock market. we are seeing a rally but covid could end up being the biggest factor. shery: let's get to the first word headlines. nato members including turkey have signed off on plans to bring sweden and finland into the alliance. the expansion must be ratified by the legislatures of each of the 30 member nations, a process that can take many months. mornings -- rainfall has eased and flash floods are possible. the council of australia has

declared a significant event but has get to put a dollar figure on the cost. for some, it's the fourth major flood in a year. the test of banks resilience to global warming was far softer than many expected. the test did not result in meaningful losses. the ecb tells the test their learning exercise and is due to publish results on friday. industry is said to be seeking advanced payment for fuel to sri lanka as the eye -- island nation runs out of dollars. sources say new delhi has stopped supplying gasoline and diesel to its neighbor on credit and that is holding up fuel shipment. india has extended $3.5 billion of support for sri lanka in the last few months. those are your first word headlines. haidi: china has reported more

covid-19 infections, putting pressure on authorities to tame the outbreak before it spills over. for more, let's crossover to the bloomberg shanghai bureau chief. reporter: you may have seen a report that the authority has locked down counties in order to prevent spillover. the authority is taking, increasingly cautious after shanghai emerged from a two-month lockdown that has

taken a heavy toll on the economy. shanghai, starting last night, has started mass testing in half of the city and bill do a couple of more rounds over the next two days. this came after detecting a couple of cases over the past two days. what is clear is china is getting concerned over the emergence of a subvariant. shery: walker the economic repercussions be here? not only is it affecting an important region, but the start and stop reopening's across

china. reporter: what people don't want is a reputation of the lockdowns shanghai has been through. the government understands, early detection, early intervention is important. that is what helps to explain why they are doing mass testing. just to avoid going into citywide lockdowns again. shery: coming up next, in talks about lifting highway units. we hear exclusively from the deputy chairman about that and the challenges presented by empty roads during the pandemic.

shery: discussions about lifting a highway unit. the deputy chair said it's one of the options it's exploring. founded in 1977, the business

spends construction, health care. they spoke exclusively to juliette saly. >> profit was hit quite badly. had a number of movement. we went through a restructuring, through support and confidence of our lenders. just for your information, we restructured the end as you know, we have moved.

traffic has been going up steadily and it looks good. last month has been the highest yet. we had our highest record of traffic by day, but it was tough , covid traffic was wiped out. most pickup came in 2022. >> how did you pivot during the pandemic? talk us through some of the ways your conglomerate managed to pivot. guest: we are into infrastructure. property development, and the

other areas in the last couple of years was tech and health care. health care was done right before covid. we wanted to look at monetization and then covid hit. we saw an opportunity to synergize between assets in this new industry, hence the drive-thru center. it was the first. >> in terms of what you learned, is that something you would spend more time growing? is that your vision? guest: yes and no.

sticks and stones. the basis of the company's infrastructure and property development. we are not leaving those behind what incorporating things into industries. juliet whenndees. you raised $785 million. what do you plan to do with those? guest: as part of the restructuring. it's a total amount. the number has risen up because there is a mechanism to be efficient. that as -- is part of the restructuring.

the highway is a bit more robust. juliette: we saw them missed some bond repayments last year. is that something likely again? guest: that is one of the challenges we faced. i had meetings with holders, they saw through it with me, had confidence in me and without support, i don't think i could have successfully restructured that bond. those were one of the things we solved, together. juliette: other any plans to lift the highway unit on the malaysian board? guest: we are exploring all options.

it would take timing and execution. juliette: you mentioned you are having a lot of discussions about a potential listing. you have 850 employees, a family business. can you tell us about the staffing and expansion plans? guest: i don't see any cutting costs or corners. retraining them his key, i think it is my father and chairman. he built this company over 45 years. some of my employees have been

working here 21 years. it's a little bit of a rescaling of talent. juliette: you were talking about expansion as the biggest piece moving forward. wanting to get -- guest: with any expansion plan, we asked not because he is the boss, but because he has more experience. he gives us his views and we have a middle ground. under my leadership, i would say that is the deep end.

i'm not going to deny that. i still take his advice very carefully because he has done it all by himself. i am lucky to have him and touring me. he agrees, like any other family business. it's all about consolidating. talking about it. haidi: speaking exclusively with juliette saly. you can get in-depth analysis from the daybreak team. broadcasting live from the studio in hong kong. plenty more ahead. this is bloomberg. ♪

>> if we get to a recession, we have severe supply constraints and i think in the case of europe, some russia oil

sanctions they have abated, you can see prices shooting up. shery: francisco blanche on the oil outlook. wti back above 101 dollars a barrel. concerns about recession pressuring the energy space, this is sending haven flows to the dollars. you have a vicious cycle where this is putting pressure on the broader commodities space. copper falling to the lowest in 19 months. copper is seen as an economic bellwether. it's not just copper. talking about the broader base

metals space being under pressure. talk about recession concerns hate u.s. gas prices. the prolonged outage of the key terminal threatening to swallow domestic supplies, there we are seeing natural gas futures above that level. we continue to watch with happening with the green space. perhaps -- we have seen a lot of rainfall in canada, might be seeing a bigger than expected supply of wheat coming out of the country. haidi: we continue to track the fallout of the supply chain crunch. china's demand is nearing a return to pre-virus levels. consumption of major transport fuels without almost 90% of june 2019.

global natural gas, soaring prices and further supply cuts discouraged consumption. the iea says gas use is expected to slip as reduced economic activity in asia and a sharp drop in demand will boyd markets in north america. major regions in eastern australia are facing the prospect of reduced wheat consumption. growers are assessing the damage. the states fourth major flooding incident in 18 months. terminal users can read more. even as we see the energy market recovery, covid looms large in shanghai. daily cases surging to 24 cases. on the upside, the city says new

cases were found within quarantine as the city launches mass testing across nine of 16 districts after detecting cases over the past two days. there are concerns the hub may find itself locked down. we will be monitoring developments. pressure on authorities to tame the outbreak given it is situated in an economically critical area. shery: we will be watching with happening in china. the start and stop economy not helping the outlook. we are getting an a half hour the hong kong pmi numbers, for june hong kong has been trying to mount the recovery after the omicron wave pushed the economy into contraction. we have seen some signs of improvement but we will see what

happens. wherever mainland china goes in terms of restrictions, we know that hong kong might follow. we are watching those numbers closely. here is a quick check of the latest business flash headlines. the deal for vmware will move forward after a rival bidder failed to emerge. vmware had 40 days to solicit rival offers. jp morgan is set to be considering a bid for the asset management arm. a potential deal could value the business. they have been weighing options including a sale of the asset management unit.

sources say the firm told investors the alpha two fund climbed 4.8% in june, rebounding after years of struggle. we are told bridgewater has made money in 65% of markets in which its trading. bloomberg learned a company in china raised $9 billion. the firm raised money from investors across the u.s., europe, the middle east and southeast asia. the cash infusion stands up as peers in china struggle to raise funds against regulatory crackdowns and pandemic slowdowns. haidi: this is what we are watching when trade opens in japan.

it will reportedly supply batteries for ev truck. coming up, recession fears boosting the dollar. we are getting analysis. the market opens our next. -- are next. this is bloomberg. ♪

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shery: we are counting down

major market opens as we brace for volatility. we are seeing the wildest treasury markets since 2020. tug-of-war between inflation and recession concerns. we are seeing that, king dollar reigning supreme. haidi: in the oil market, again a tug-of-war. another sign markets are looking at a recession. >> we have brent crude coming online, japan, korea and australia. the other focus will be on how treasury yields come online, we did see the catch-up rally. treasury now opening like this.

we are seeing the nikkei come online to the downside. let's turn to the open we have in korea. we are seeing it hold up this morning. weakness in the currency, sk securities saying with recession fears in place, we could see further pressure on currency. turning to the open and australia, the staggered start for the asx, keeping an eye on brent crude. catching up with what we saw wti at the start of trade, around a 10% slump in the previous session.

shery: the head of asia strategy, it's good to have you back. you are seeing emerging markets, king dollar is reigning supreme. oil starting to lose some of its luster. guest: depending on dependency in the u.s.. the china equity market has less

dependency, compared to what we the u.s.. with em, a lot of hurdles. you also have some valuation, yields, this is where we are seeing we may be close to the peak of pain. shery: will that buffer hold strong for chinese markets when at the same time, we keep talking about the start and stop reopening, more lockdowns across shanghai. cheaper evaluations, higher

yields. fran: number one issue, the zero covid strategy, no discussion about that but we are seeing growth, signs of recovery. we're seeing the way chinese authorities are taking the pandemic very early. something that maybe we can see shanghai style lockdowns is reduced. we see risk everywhere, but what we see on the valuation of the

chinese markets, the growth prospects and earnings is pretty encouraging in our view. shery: we are getting comments from goldman saying the selloff has overshot. the comments coming after the selloff. there has been that conflicted picture for oil. just a few days ago, jp morgan was warning $300 is not out of the realm of possibility. what does that tell you about the inflationary mindset and how that is driving more than the fundamentals of this market? frank: what we are seeing is inflation. the negative surprise on

inflation in the last two to three months, it's much too early in our view. we are seeing it, the narrative is shifting. i think inflation is the number one issue. if we go into a recession scenario, we could see the price of oil below $90. the inflation concerns would be fading. that is going to remain for a while. in the second half of the year, we are remaining with the inflation trade in place.

haidi: there are number of markets where the correlations is tired. are you concerned given what we have seen? frank: on the other hand, the property market in china which has been a drag for most of last year, now we are seeing some recovery. it is depending.

haidi: let's take a look at some of the movers we are watching. the situation, uncertainty where we go with oil prices. >> you were just mentioning the conflicted picture we see for oil. we see brent crude moving higher, some of the biggest oil producers in china or asia. they are looking lower. copper is slumping to a 19 month low. we did see a province reporting 222 local cases. we saw more cases in shanghai. we are seeing copper producers slumping. moving onto look at the tech space, we understand the u.s. is pushing for asml to stop selling

chipmaking gear to china. at the netherlands agrees, it would constrict the availability of chipmaking. we are seeing asian chipmakers lower on that report. checking in on japan, we are waiting for the stock to trade to the upside. we understand the company has received priority reviews. shery: let's turn to some of the first word headlines. boris johnson digging in despite the resignation of two senior cabinet ministers. the chancellor quit with a health secretary, saying we cannot continue like this. earlier johnson publicly apologized.

he has appointed a new chancellor. nato members including turkey have signed off on plans to bring sweden and finland into the alliance. turkey signed protocols while renewing its threat to block expansion if the nordic nations do not extradite people it considers terrorist. the expansion must be ratified by the legislatures, a process that can take many months. india is set to be seeking advance payments for a supply of fuel to sri lanka as the island nation runs out of dollars amid its worst economic crisis. bloomberg sources say new delhi has stopped supplying gasoline and diesel to its neighbor on credit and that is holding up some fuel shipments. india has extended $3.5 billion of support in the last few months for food, medicine and fuel.

haidi: talking about oil prices. we're hearing the outlook with goldman sachs saying it's been in overshot. we will get more analysis in just a moment, but coming up next, more on the drama in the u.k.. questions over boris johnson's future, the pound and euro are under pressure as well. this is bloomberg. ♪

haidi: take a look at how we are trading so far. our recession fears sinking their teeth in stocks? in particular when it comes to energy, reeling from the fact we are seeing oil fall under $100 a barrel. goldman sachs saying perhaps the selloff is overdone, there are fundamental supply issues still unresolved globally. taking a look at some of that break down, we are seeing energy stocks trading along with materials sitting a lot lower. shery: let's get the latest on oil prices with su keenan. recession fears being felt

across the oil space. it seems the outlook is all over the place. su: we are seeing oil rebound better than 2% in the asian session, steadying above $100. it comes after the sharp drop in the u.s. session where we had oil down as much as 9%, closing below 100, brent crude down sharply. slowing demand replaced what had been concerns about tightening supply. a lot of analysts are predicting the world's leading economies will post negative growth, that will drag the u.s. into a recession. you have mass testing and shanghai. these are oil consuming regions. all of this has prediction oil demand would collapse.

there is a lot going on. volatility has been ongoing in recent months as central banks have been raising interest rates , the invasion of russia by ukraine which is tighten supply, the trend is a question, and what we do know in history is recessions can crimp oil prices. we saw oil drop and then shoot higher. haidi: what does this tell us? su: we are seeing in easing from record prices. we are in the 21st day of steady

declines. i have not seen that since april 2020. copper is also taking a big step back. back to you. haidi: su keenan the latest. let's take a look at the futures and europe. a tumultuous session, all of the political action in the u.k.. we saw european equities falling to the lowest since january, 2021. the same themes. investors fretting over recession risks, inflation concerns ahead of a key earnings season. really unable to gauge whether profits will be able to withstand some of these risks. talking about the pound. these were some of the stories we have been watching for volatility.

boris johnson digging his heels and after the resignation of two of his senior members of government. he named a new chancellor and health secretary. he also addressed the latest scandal rocking his government, admitting he was wrong to promote an mp despite having known about a complaint of sexual misconduct. >> it was a mistake. i apologize. in hindsight, it was the wrong thing to do. i want to absolutely clear there is no place in this government for anybody who is predatory or abuses their position of power. haidi: let's bring in david. the fall in starling was

relatively subdued compared to the price action in the euro. there are fundamental reasons why this is facing a problematic outlook. david: it's not adding to the strength at all. in this circumstance, even if he holds on or goes, it's unlikely a new election will be called. the parliament will dissolve in december, 2024. two and a half years away.

data is starting to weaken. if it thousand, not a good sign for starling. shery: haidi alluded to the weakness of the euro. we have seen talk of euro-dollar parity. this chart showing the ecb is expected to hike in july. the biggest hike coming in september. guest: how high do they go? if you look toward the end of the year, the expectations come off a bit. obviously, the ongoing scenario in russia and with oil is

weighing on the eurozone. all of these factors are having, risks remain that way. shery: the latest on the european currencies. it's all about king dollar. take a look at the index. talking about two-year highs. haven flows going into the dollar. everything else getting pressure. the korean won passing that 1300 level, we have seen it hit a 23 year high for the month of june.

we look ahead to the meeting next week. the japanese yen, a little bit of strength against the dollar. the 135 level. this of course as we continue to weigh the sentiment when it comes to lifting of tariffs against china by the u.s.. the aussie dollar not doing much after the rba had the first-ever consecutive 50 basis point rate hike. coming up next, the u.s. setting up a push to blunts china's chipmaking ambitions, asking the netherlands to block the sale of key equipment. details ahead. this is bloomberg. ♪

shery: the u.s. is said to be pushing the netherlands to asml from selling gear to china. let's bring in our tech editor.

how much of an escalation with this be? reporter: it's a loss -- it is less belligerent, but it has echoes. the dutch government put an export ban on asml, everything from smartphones, electric cars, defense manufacturing, etc.. shery: what are the implications

for the company itself? guest: we don't know. china itself is a significant customer. haidi: in terms of how essential these machines are, can you give us a bit of context? reporter: extreme ultraviolet is the most advanced. but it is also premium stuff. the chipmaking equipment in question now feeds into the other industries, and if you want to talk about the electrification of vehicles,

smart homes, defense equipment, they all use more mature technologies. if china wants to build its own chipmaking industry, that's where it's going to start. the u.s. is looking to prevent that. haidi: our asia tech editor there. a quick check of the latest business flash headlines. japan's top utility company is reconsidering a partnership in a bid for toshiba's business. the consortium includes jrc and a local private equity firm. foreign firms have also approached about offers, but the firm has yet to decide who it will partner with. sources say broadcom steel for vmware will move forward after a rival bid failed to appear. vmware had 40 days to solicit rival office -- offers.

it helps broadcom secure the original agreement. coming up next, covid flareups are fueling fears of more harsh lockdowns. we will get the latest on china's coronavirus situation up next as cases emerge not from shanghai, but cases in hanoi province where we see the source of the new outbreak. the latest is next. this is bloomberg. ♪

haidi: breaking news out of hong kong. global pmi numbers for the month of june, 52.4 which is a slight deceleration from the dubious

month when it came in at 54.9. third consecutive month the pmi numbers are in expansionary territory. hong kong still has a long way to go after the omicron wave pushed the economy into contraction. we are seeing some signs of improvement whether it's retail sales, june pmi numbers with a little bit of easing, but still in expansionary territory. let's check on the markets. annabelle: keeping an eye on oil this morning. brent crude recovering slightly in early trading. supply remains unresolved. lots of concerns about global recession risks. andrew bailey weighing in on

this, it slumped to a 19 month low. gold drops to the lowest in six months. the dollar rallying to the highest into years. not seeing the same moves translated to energy sectors across asia, we are seeing steep drops across the board. china is another factor that complicates, because it was something holding up commodities, we are seeing lockdown concerns resurfaced, more cases in eastern provinces. haidi: china has reported more covid-19 infections.

let's bring in our shanghai bureau chief. what are the implications for policy? reporter: after discovering hundreds of cases, the province has reacted by locking down in the past two days. this is to prevent spillover into the rest of the delta which is hugely important to the chinese economy. it accounts for one quarter of china's gdp. shanghai noticed 24 cases. this is the highest in nearly one month. shanghai, starting last night, started mass testing in half of

city districts. that is a surprise to a lot of people. people are mindful, this is the way to avoid a citywide lockdown again. early detection is key. that's probably why mass testing has been organized for most of the city.

covid zero is hugely disruptive to the economy. this is a national strategy. they are willing to sacrifice short-term economic growth. haidi: our shanghai bureau chief. let's get you caught up with the first word headlines. the city says the business should reopen in five days. on expansion of the campaign to curb the rising chip production.

the restriction is a leading maker of equipment for producing. hong kong's new leader was able to sidestep sanctions while campaigning for the top job. in total, they expect $290,000 despite youtube and facebook suspending sanctions. thousands of people will remain in place across new south wales. rainfall has eased, flash floods are possible. the council of australia has declared a significant event but has yet to put a dollar figure on estimated costs. the ecb landmark [indiscernible]

the climate stress test did not result in meaningful losses. the ecb called it a learning exercise. those are your first word headlines. shery: we are following the malaysia central bank decision, expecting it later today. it is said to deliver its second straight rate hike as we see concerns about inflation, our global economics and policy editor kathleen is with us. what is driving the decision? kathleen: inflation. there are a lot of things going on. inflation is definitely the reason. here's what's expected. 18 out of 19 economists surveyed

see the rate hike to 2.25%, a surprise move took it up to 2%. when that happened, it was the first rate hike since january of 2018. i admit, in april of 2017, it was nearly 5%, and 2021 it was 4.7%. starting to move higher, the economy is reopening, more demand in food prices, up very shortly. near the highest since october of 2011, the government has extended price caps, but you have a weaker imported food

prices. all of these reasons. the finance minister saying without the food subsidies the government has in place, may inflation, food price could have been 11% year-over-year. it's a clear problem. not as bad as u.s. or other places. at the same time they are talking about cutting back the food price subsidies.

that could make food inflation even worse. they could see malaysian cpi rising above 5% in the third quarter if the government has to do this. again, it's weakened against the dollar. starting to get worse. this is another thing that would help potentially, having said all that, traders are going to look at policy statements, what expectations are for food prices and all of that in the future. haidi: kathleen hays. the bank of thailand assistant

governor is our guest, speaking to the indonesian governor. stay with us. so critical as we continue the debate on inflation. shery: for more, let's bring landmark on field. just as heidi mentioned, we're in that middle of the debate. where-year-olds are going. this tug-of-war in the bond space. how long will this continue? guest: we are seeing a serious collapse in oil prices. there has been some divergent forecasts in the past few days. people suggesting oil could gate -- go close to $400. for the near term, much more

concerned about recession, that's why you saw it dive below $100 per barrel yesterday. it recovered a bit today. the central bank bring back the focus on the inflation question. haidi: not backing away from the haven tray. says that continue? reporter: that is a recession straight. historically, when there is a, typically in a recession

scenario, it's good for the u.s. dollar. de-risking the united states is relatively high. risks in europe are getting stronger as well because of germany and the situation in terms of energy. shery: we are seeing options trader hedge downside risk. what are the implications for asian currencies? reporter: you heard malaysia, the korean won, thailand, they will all be there as well.

the week euro might actually help the yuan to some extent. that might help stabilize expectations. that may countdown a bit. the major indices, that will go out against the aussie, qe, british pound. haidi: coming up, ubs says the politics is -- positive outlet -- outlook for commodities. more on that next. this is bloomberg. ♪

shery: take a look at the commodities space. seeing a rebound in oil prices, wti up to $100 a barrel. concern about the global slowdown perhaps impacting demand, being felt across not only the energy space but the

likes of copper and broader base metals as well. we saw natural gas under a little bit of pressure, still above the 5.6 level, after we saw were session for years -- fears. haidi: let's get some more analysis. we are seeing a bit of a rebound with crude prices. it over spite with retail gas prices. whether this comes for the driving season, may the inflationary mindset is more baked into the u.s. consumer already. what do you make of price volatility? does it reflect that we don't see a fundamental change in the supply-side dynamic?

guest: we thought commodity prices -- the couple of key things i would raise, supply-side is worse, not getting better. we have seen a number of issues in north africa. opec missing production targets. even the demand-side, some of the stories we are seeing out of china, refineries picking up pace.

there has been pressure on households due to the higher energy prices and cost of goods. demand is holding up well. when you think of high-level indicators, working out things like congestion, miles traveled, all of those things are holding up. this means crude prices will march higher once we get past the current bout of risk off. haidi: when you take a look at some indicators, where would you think a reasonable level would be? guest: that is the point. we saw $100 a barrel. markets were starting to price in a mild recession. obviously, prices getting down

to $90 per barrel is where you would be pricing in a prolonged recessionary, $100 is a good floor. seeing wti downs back little bit. the risk off part of the market continues to carry on. we could target higher oil prices as we go into the third quarter of this year. once people see demand is holding up very well in the face of all of this, focus on the supply side. shery: how do you factor in king dollar? the strength we have seen in the rally of the greenback. guest: in the end, the greenback

is symptomatic. in the end, what you will find is some of the other currencies are under quite a bit of pressure, australian dollar is back down at levels we have not seen since the outbreak of covid-19. when you think -- look at the fundamentals, the australian dollar is trading at elevated levels, you are holding strong -- all of these things speak for currency starting to outperform. we think the exceptional resilience the u.s. is seeing will start to fade relative to other countries, so consequently

we think the dollar could top out and then you start to see some recovery. shery: given that macro picture, what do you think of gold? the to buy all sides. -- it is hit by all sides. guest: gold is a haven in line with how we expected it. we had a target. we were not buyers of gold. that's largely because we talk real interest rates which start to move higher, indeed they have. breakeven in the u.s.. they are going to focus on

growth, in that consequence. shery: thank you so much for being with us. plenty more to come. this is bloomberg. ♪

shery: here is a quick check of the latest business flash headlines. jp morgan is considering bids for an asset management arm of the thailand bank. the second biggest lender is set to kick off the former sales process. i deal could value the business at $1.5 billion. the bank has been weighing options including a sale of asset management. bloomberg has learned sequoia china has raised about $9 billion to invest in tech and health care. the firm raise the money from investors across the u.s., europe, the middle east and southeast asia. it stands out as peers struggled to raise funds against regulatory crackdowns. haidi: some stocks we are watching. china gas will buy millions of

tons of energy for the next 20 years. barclays is saying they could be best positioned to benefit from the reopening and economic stimulus after the carmakers achieved the quarterly delivery targets. watching semiconductor shares. they could move on a report the u.s. is pushing two asml from key tech to china. watching gaming stocks. wynn, galaxy. this is bloomberg. ♪

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♪ >> good morning. it's 9:00 a.m. in beijing shanghai and here in hong kong. welcome to bloomberg