>> you're watching deprecation coming to you live from new york, sydney and hong kong. >> counting down to asia's major market opens. >> australia has just open for trade, the top stories this hour. asian shares poised open higher after that this comes from fed officials, oil and gold holding gains in the aftermath of attacks on israel. benjamin netanyahu says that retaliation has started against hamas as militants are warned they are prepared to kill hostages. plus, xi jinping meets u.s. congressional leaders facing criticism for china's stance on the middle east conflict. >> look at how u.s. futures are trading in the asian session, not a lot of movement after we saw the s&p 500 gained ground in the new york session. we did have energy companies really leading today given that oil prices were higher in the new york session. we are holding at $86 per barrel

and they jumped more than 5%. we continue to watch the implications of a wider conflict in the middle east. although the u.s. has said that it sees no evidence right now, at least, of any direct participation by iran in attacks by hamas on israel. we are really digesting some comments coming from a couple fed officials that may allude to a more cautious approach to policy given higher long-term treasury yields. we did not have cash markets open today because of a holiday, but take a look at this chart. we had treasury futures climbing, it was that flight back to safety, we saw the same moves in european rates. and we see cash markets reopen in the asian session in an hour or so. we are expecting those yields to stop now. >> we are still tracking that

closely with the opening of tokyo just under an hour from now, but in the aussie bond space you see that move lower along the end of the curve. broadly, that sets us up for supported training sessions today, the 200 online right now, but into its fourth day of gains. it takes another seven minutes or so to be fully underway. features have been climbing to around .4%. in terms of what we are watching in the session today, if you change on now, we have futures looking a little mixed, but feeding through on the impact of the golden week holiday, spending in china concerns around the property sector, monitoring country garden in particular, china is want to watch as hong kong stops -- in hong kong stocks but we are looking higher in the session. one thing to note on monday is that we had japan, korea and taiwan all shot for public holidays. these are markets that are yet to really reflect any sort of ramifications that -- in the

markets. >> retaliation against hamas has only begun as the militant group threatens to kill hostages taken during the surprise assault and this may have overshadowed a rare meeting between the chinese president and u.s. congressional leaders. let's bring our chief north asia correspondent for more on this. what is the latest when it comes to this escalating conflict and how does this balance with the wish to see some of these hostages, if not all of them, to be able to actually be retrieved safely? >> well, as you have mentioned, there have been threats from hamas to execute hostages. there are also, we know, from president biden, at least 11 americans among the hostages,

possibly more. of course, they are in danger because if israel does follow-through to put gaza under cheech and directly attack then they could follow through on those threats. another big question at the moment that needs to be -- but has not been resolved, there were reports that iran helps to orchestrate the attack. that is something that the national security council spokesman in the u.s., john kirby, said that iran was complicit. there is no evidence of direct involvement. israel, for its part, says that it is investigating whether iran had knowledge of the attacks in advance.

>> we are seeing the third israel having to fight a war on multiple drunk -- fronts. we heard of infiltrations from lebanon. >> yes, there have been claims of attacks by hezbollah, that they have fired missiles and mortar rounds into israel following attempted penetration by hezbollah. at the moment, there has not been a full-fledged outbreak in the south israel has called for an evacuation of some areas from towns and villages in the north and one of the big concerns that israel faces now is having to fight a two front war. with hamas in the south and hezbollah in the north, both of which have very strong ties with iran. >> beijing's failure to really condemn this attack is front and

center when it comes to the meeting between xi jinping, and it's highly unusual, with u.s. congressional leaders. >> that's right, and this perhaps derailed xi jinping's agenda with the u.s. congressional leaders, including the senate majority leader chuck schumer, who is in beijing right now. they had a meeting late yesterday, and the weekend's events in the middle east have overshadowed, at least from the schumer standpoint and u.s. delegation standpoints, and dominated the beginning of their discussions according to chuck schumer. xi jinping did not mention anything about the middle east in his opening comments before the meeting and before they were treated to close doors. but they did have a press conference after this meeting with xi jinping. that's not him, that's an older video from a couple days ago. that's meeting the u.s. delegation, including nicholas burns, the u.s. ambassador to china.

again, there's the two gentlemen. that might have caught the president of china of guard because the media on sunday did call for an immediate cease-fire in the middle east, and reiterated beijing's call for an independent homeland for palestine. did not mention hamas by name. it did not make reference to any of the deaths caused by those attacks by hamas, and that is something that really hurt chuck schumer -- bert chuck schumer, and this is what he said, calling beijing to acknowledge that there is a humanitarian crisis. >> we cannot sit idly by and we must address the chinese governments forced technology transfers, theft of intellectual property, required joint ventures, and intimidation of u.s. businesses operating in china. we made a number of specific requests, and they said they would consider those specific requests, and were going to

continue to pursue now that we have established these relationships, we going to pursue them. >> the division is clear right now. are we likely to see a meeting between the president's next month? >> that was the wrong soundbite, that was not chuck schumer talking about for -- prodding beijing to mention the deaths that happened in the middle east. by the way, i'm picking about -- up on the point that chuck schumer wants china to use its influence on iran to end the confluence or its influence on hamas to end the conflict. but back to the main reason that the u.s. delegation is in beijing right now, to kind of pave the way for potential biden-xi jinping summits, it's not confirmed. we don't know if you will go to san francisco next month. but this might be a shift in tactics by xi jinping to talk

directly to congressional leaders, whose contest went -- constituents represent businesses with white interest in seeing an improved relationship between china and the united states rather than, as in the last couple months, with a biden administration cabinet members, like antony blinken, janet young, and john kerry. this time talking directly to the senate majority leader, the democrat from new york, chuck schumer. and also bipartisan members of congress, perhaps that is a shift in tactic to make sure that the business-business relationship comes before the politics-politics relationship because that has not necessarily borne fruit, yet. >> what should we be watching for in the coming days, bruce?

>> the israeli minister of the labonte has declared a siege, and he says there will be no delivery of electricity or food or fuel, another minister -- magistrate or -- administrator says there will be no water delivered to gaza. there is a potential for a major humanitarian crisis there. there other question will be at what point will israel send and ground troops or will they all said ground troops, with a stick with era tax? another issue to be a big focus of the next few days will be hostages. there are people familiar with the matter say that the government of qatar is trying to mediate between hamas and israel over the hostages. their fate will be something that will be faithful to the

next few days. >> r.g. north asia correspondent stephen engle there. we are monitoring international reaction on this ongoing conflict between israel and hamas. the gradient president is urging global unity against hamas which equals a terrorist group. speaking before nato's parliamentary assembly, he drew parallels between the attack of hamas and russia's invasion of ukraine. >> the only difference is that there is a terrorist organization that attacked israel and here is a terrorist state that attacked ukraine. tensions declared are different, but the methods are the same. >> websites have come attacked by hacker groups allied to hamas, one called kyl net blames

israel for the woodshed and is pointing to israel's support of ukraine. another group declared support for what they called the palestinian resistance and took credit for briefly taking down the jerusalem post website. delta united and american shares -- airline shells -- shares fell more than 4%, the major u.s. airlines and flights to tel aviv, multiple carriers have also suspended services to israel. including lufthansa, air france, cathay pacific, and air india. the faa is advising airlines to expect delays and exercise caution before resuming operations. >> still ahead, a big week of earnings in korea and tech. we preview the results with counterpoint, who says the worst is over for the semiconductor slump. first, investment strategies as

fresh geopolitical risks hit market. this is bloomberg. ♪ ♪ is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines.

>> that is not a large jump in the world we live in. an expenditure between 5-10%. it's been less than a 5% jump, and even if you look back a couple of weeks, prices have gone down a lot more than they have recently gone up. it's been a blip. >> the markets are not pricing in an escalation, that has yet to come. >> if we see an escalation and israel names and implicates iran as having knowledge of this attack prior to it happening, that escalation will cause an immediate move higher in crude

to the tune of another 5-7% from here. >> some of the guests on bloomberg to be on the impact of the israel-hamas war when it comes to impacts on oil markets. let's look at the impact on markets in this conflict. this is the portfolio manager at german capital who joins us at the sydney studio. i know you have a unique personal perspective and professional perspective when it comes to the region. i guess, let's get some insights on what is happening. >> there are multiple dimensions to it, tensions have been feeling -- building the region for quite some time. if you think about the current government in israel, they seem to be very right wing, there has been a whole lot of rallies and protests with concerns that the current government might even have wanted to annex the west

bank. there have been more pushes for settlers to continue to move into that area. that's one thing. there have been things at the al-aqsa mosque that have triggered that have triggered the community in gaza, and the whole kind of two-state solution, with the oslo accords in the 1990's, it was since then that has not been a good, equally -- equal arrangement where both parties are happy. the biggest strategic deals that looks likely a week and a half ago like the two major players in the middle east, saudi arabia and israel, were coming together. i would say that is probably unlikely now. in the shorter term. the other thing you want to watch closely is lebanon being a

failed state now. and why that is relevant is that groups of -- like hezbollah controlled the port, the airport, they have had conflict with israel possible times over the years. they have often been criticized for not enabling a new president to be put in place. have started to have criticism within the community in lebanon, and i worry at that will be a trigger for them to work with what is called the axis of resistance, hamas, iran and hezbollah in a coordinated effort against israel now. >> tell us a little bit about what the risks of all of these geopolitical threats poster the markets. we have seen, of course, a little bit of a core reaction over the weekend with middle eastern stocks. but not a lot of movement today.

>> you are right, on sunday, the israeli shares were down 6.5%, they might 1% yesterday. the 10 year bond yield 4.5%, there has been a selloff in sovereign bonds in israel as well. we are seeing the central bank they're coming with a $30 billion plan to try to stabilize the currency, and we had the u.s. treasury market close yesterday. with safe haven bids into u.s. dollar, you might expect gold bids, and energy was up 5% at one stage, and that's coming up. i think the key thing that we would be looking at in the short-term is what happens with energy prices, over recent months, with russia and saudi arabia and production cuts which is a steepening yield curve.

and have contributed with longer narratives. the new narrative now is the energy prices. that will depend on how the conflict would escalate from here, as to whether there was a direct conflict with iran, if israel was to hit iran, you will see the price go beyond $150. so, it's a bit of a wait and see. in terms of investors having some trepidation now, with these rising bond yields, it adds more uncertainty to the global economic backdrop. >> how position given multiple layers of uncertainty? >> we have been in position higher for longer, and in terms of getting out of global bonds we made a pretty big call to settle down treasuries and go

through g7 global bonds 2.5 weeks ago. in light of that kind of concern about continued steepening, we have been underweight on equities for some time and we are defensively positioned in terms of risk allocation to equities, within that hedge fund, those has steepened two months ago. those play well to the theme if we get high for longer energy prices. and if this does turn into something that does hit the global economy, we do have some duration in our portfolios. it's through australian government bonds where we have the primary. >> you can get a roundup of these stories in today's edition of debris, terminal subscribers find it at dayb on the

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>> executives at one of china's largest coverage houses are said to have lost contact with the companies found certain -- founder. it is believed he has been detained for questioning. that's bringing charlie show. -- let us bring in charlie shoe. anytime it -- an official goes out of public view, that might mean news for that company. what does this mean? >> we heard from sources that he was taken away by police for questioning in his home

province. we have no details about that, and we don't know what the reason behind the investigation is. what we know is the company has been the focus of legal action after the company ran into some liquidity issues last year during china's extended covid lockdown. the company's absence from the market has been causing liquidity issues in the copper trade because until recently, a quarter of china's cup -- copper trade, that was a huge financial sector for china, bidding on cash trade, and founder of the company was a towering figure. he created company 993 and turned it into a huge trading

house capitalizing on china's super-strong demand for copper in the last 20 years as the really -- real estate industry was booming. >> what were the sources of the liquid issue here. >> back in 2010, the company diversified into real estate, investing in shopping malls and other kinds of real estate projects. but the industry is in a prolonged downturn, and many developers, including evergrande and country garden are suffering a debt crisis where overseas creditors are looking to get money back. the chances low because demand has not picked up.

we don't know what caused liquidity issues. >> are reported there with the latest and continuing to watch that start. coming up, chipmakers secure a big win as they expand operations in china, more on that story. this is bloomberg. ♪ (aidyl) hi, i'm aidyl, and i lost 90 pounds on golo. i struggled with weight loss and weight gain my entire life. with all the yo-yo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again.

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>> we do have australia consumer

confidence coming through, the reading from westpac for the month of october, rising 2.9% month on month, to the level of 82. consumer sentiment seeing a pump of 3% month on month, current conditions also seeing an improvement of 5.4% from the previous month. expectations being boosted as well. finally finances versus -- finally finances sitting higher. there is some contraction when it comes to expectations with the economy in the year ahead of .2%. we tried to watch that as a gauge of household sentiment and consumer sentiment has been broadly pretty resilient here in australia as we see that stabilization of the property sector here as well. we did see the rba in the last meeting and the first policy meeting with the rba governor

staying on hold with rates unchanged at that 4.1% for the fourth straight meeting there with continuity as usual. we have seen that weakness in the aussie dollar as one of the per aiming themes when it comes to policy assets. let's look at how we are trading in these other parts of the trading session. >> the focus today is really going to be down to what we know from fed officials on monday. this is setting a tone for quite dovish commentary coming through and assets have been reacting to that. just recapping big headlines i came out, we saw and heard from the fed fights chair philip jefferson and he has been watching those moves higher that we have been seeing with bond yields as traders come to terms with the idea that the fed will need to say hi for longer. he says he is cognizant of that, and as a result fed officials can proceed carefully from where they go from here. and also at that same event,

because it was in dallas, we heard from the fed president lori logan, who reiterated those views from philip jefferson saying that high yields may need less need for another rate hike. also the labor market coming into better supply and demand balance, echoed by the vice chair for supervision. he was speaking at a separate event, but said the same thing as logan on the labor market. significant progress has been made on inflation, according to him. this dovish commentary coming through is starting to change the tone of what we can expect at the fed meeting coming up in november. if we change on now with what we see in market pricing is that traders are expecting less of a chance of a hike. just a couple days ago back on october sixth, it had been implied at 30%, and now it's less than 12%. if we change on now, that sets

us up with a positive day for equities and receipt teachers higher across the board. japan coming back online from a public holiday on monday. and australia and new zealand already into the session. next we will be watching chipmakers today given we have good news when it comes to samsung, scoring a big win. the biden administration will allow the -- allow the chipmakers to expand their operations in china. let's bring in more details with technology -- our technology editor. one of the positive implications for this -- what are the positive implications for samsung? >> the decision lifts a huge weight that has been hanging over semiconductor companies since the washington -- washington unveiled its restrictions. they had been given a one-year reprieve.

this prevented them from importing u.s. equipments into the factories in china. that really goes long-term, and they really can't make long-term plans on a one-year reprieve. this is a huge positive and resolves the one uncertainty that was really weighing on hynek's and samsung for the past year. >> but the tensions between washington and beijing continue. what are the risks ahead? >> the uncertainty has always been weighing on samsung and finance. we don't know how far the decoupling will need to proceed.

really, it's more downstream. there is lots of uncertainty regarding and demand for apple iphones in china. the recent indications by the chinese government of government officials and other public related organizations to discourage iphone use might dampen demand. at the same time, we see hallway phones showing that there is a strong push in china to create their own patriotic phone. and create its own supply chain there, independent of of western equipment maker's supply chains. there are a lot of moving parts

in that process with companies like kleenex and samsung really having to pivot quickly and there is one positive sign ahead, and this will be focusing on how ai orders are going to affect or transfer into sales. ai is really boosting demand high-capacity demand. and we will see if that actually goes into the numbers. >> are reported there, and we will be discussing some of these earnings coming up and samsung's this week. our next guest says the worst is over for the semiconductor slump. with us is tom, the research director at counterpoint. right to have you with us.

can you give us your reaction and your take when it comes to bidens concession to samsung and sk hynix expanding in china? >> it's a good sign but it is really not enough. it could have been worse than this. this is definitely a good sign for samsung and sk hynix it's probably at this moment, but china will have to deal with the situation between -- terry will have to deal with the situation between the u.s. and china. it's going to be limited in the future. it does give some time to bear. >> when it comes to the broader semiconductor industry, the war is over for semiconductors. do you believe that the cutbacks

are starting to work? >> it comes out that those reductions were a good move, they were strategic, we see that prices have stopped falling. and the demand from ai is helping the recovery the dram sector. it struggling a little bit. but there are events coming up like a big merger that might consolidate demand. i would say that the worst is over for now. >> going back to where we started the conversation, the wind that we have seen for sk hynix and samsung and the biden administration, does that give you more optimism even if there

are no resolutions to geopolitical risks, there are workarounds that can be found? >> these concessions where the bare minimum. it's not enough, considering the size of factories in china, there needed to be more equipment going to china to operate the facilities. it's actually giving samsung and high next some time to spread out there production and reduce their dependency on chinese factories. >> what was your take away when it comes to the hallway developments and development in chips, there has been a lot of debate as to whether they would produce that at scale, i'm

curious about your view on that. >> the new devices were quite a surprise, and it shows that development in u.s. technology, i would question the profitability of those developments and how this will continue. kind of -- this will be a kind of one time work around for them, but it is not sustainable. it is a surprise and it shows that china does that have -- have the technology and the national power to really focus on creating products with that u.s. technology. but it is not just about creating products but making things profitable and making a sustainable profit.

>> how is samsung doing? we saw those full of all phones released a couple months back. is that a game changer at all? >> the smartphone division, it's a bright side for samsung. it offsets the loss that comes from semiconductors. and this quarter, third quarter, is actually going to pick quite good in terms of astm revenue for the division. we still see that vulnerable's are not major -- for doubles are not major volume drivers. if you look at the top 10 samsung smartphones, the top fives are low-end end models like the a4 teen and the air 54. we will have to see if foldables fall further to make this

mainstream. i do see this as a possible game changer. right now, the price points are too high to become mainstream. >>, great to have you with us. the research director at counterpoint. the conflict between israel and hamas is injecting volatility into a tumultuous options market. details next. this is bloomberg. ♪ ♪ explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™.

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i built this. and it was easy, with a partner that puts you first. godaddy. >> oil prices remain highly volatile as hostile activity continues in the middle east and asia trading futures have held onto the biggest jump in six months. let's bring in su keenan. we have established that there is not an immediate that the supplies, but after the worst weekly loss since march for oil prices, it adds to the volatility. >> we saw oil pill -- pullback in a big way, brent being close to the $100 mark in london trading, and surging forward. we see gains hold in asian trading so far. let's drop into the bloomberg, because the renewed instability

has added what many traders call a war premium to brent, which has been trading between 88 and 89. again, edging back higher, once again. take a look at the amount of oil that comes out of the middle east and you will see why there is a concern and why traders are focused on what is called the straight of hormuz, where 17 million barrels of oil a day or transfer. the fact that iran has control of that is concerning at this point. let's listen to the head of global commodities research at morris about how things have been working so far. >> expenditure at five and 10%, less than a 5% jump, and even if we look back a couple of weeks, prices have gone down a lot more than they have recently gone up. it's been a blip, it has not been the kind of response that you would expect after a big event. >> he is calling this big jump

in price that you see right there in the two day trading of blip, a bit of a jump, that said, he does believe that israel's role in the global oil supply is limited. the threat to oil from the u.s. and iran is really the concert. he sees the conflict weighing on all markets for some time. another analyst also believes that while oil is prone to overreaction, we have seen a measured response so far. and this situation, one analyst says, could be the exception. notice natural gas, by the way, big spike. there was a shutdown of a major gas field by chevron at the direction of the israeli government. they confirmed that they were asked to shut down their oil platform, which is in the mediterranean and they were asked to do that by the government out of security concerns. this chinese oil refineries are confident that flows from iran will continue uninterrupted.

>> the chinese independent refiners have been buying a lot of iranian oil, and statisticians point out there is been a huge amount of exports coming out of iran in the last two years and more recently in chinese independent refiners known as teapots, or confident that they will continue to see a steady flow of oil out of the islamic republic. mema, the treasury secretary said to me preparing a crack down on a vision of the price cap of russian oil, this was a price cap proposed by the g7. xi jinping will be meeting with other finance heads of the g7 later in the week in morocco. a lot of green on the screen in the meantime. >> su keenan there with the latest on craig. aviation analytic for -- analytics firms said that airline capacity will surpass 2019 levels this week. that would be a major milestone

in the recovery from the cupboard pandemic which forced airlines to park their fleets. this also comes as china's golden week holiday wrapped up and they recorded 826 million domestic trips over the eight day break. although chinese travelers remain hesitant to embark on overseas trips. while the travel rebound is good news for the airline industry, it's not going to help global decarbonization efforts. let's discuss that side of the equation with the any of oil analyst wayne 10 dashcam. how strong his the air recovery story been so far? >> china's domestic air travel has already surpassed 2019 levels by 50% here today. during the golden week. -- during the golden week, the number of trips was 6% higher than what we saw in 2019. most of those trips were actually domestic trips. for international air travel, although it's recovery has been

very robust, despite headwinds, it is about where was in 2019. an international trade on average consumes 10 times larger fuel demand that domestic trade. the demand is still below 2019 levels. we expect that it will take at least another couple of years to reach pre-pandemic levels. the middle east conflict, we don't think that it will have a material impact on global jet fuel demand. is more of a supply story there. >> let's talk more about court -- the carbonization when it comes to oil refineries. what are the options in order to decarbonizing -- remove carbon from oil refineries in china? >> wynne lee -- when we consider

that, there are two things to think about, the specific process that you want to decarbonizing and where the refinery is located. our focus is on the former. generally speaking, there are different refinery processes with different admissions intensities. but processors make up about 4% of those emissions, and there is this election, hydrogen production, and other utilities. that requires a lot of heat, such as crude distillation and fracking, other fields can be used. processors that have a large and concentric stream of carbon emissions like hydrogen production or cracking, carbon capture can be used. giving the lights on can be substituted with renewable power. i have listed some options to

decarbonizing the refinery, but how refiners actually prioritize those options depends a lot on whether -- where the refineries located, because the location of the refinery drives the cost of the income but feel, the low carbon utilities and carbon incentives. >> our analyst day. we have breaking news out of japan, we have the current account surplus number coming in for japan will at two point 279 trillion yen for the month of august. this is a smaller surplus than previous months, and it is also missing economist expectations. when it comes to the adjusted surplus, it is 1.6 trillion -- 1.6 trillion yen, below estimates. and the trade balance turned into a surplus, and we have been in the black for the last two months, and fallen into a

deficit of ¥749 billion. and we have seen japan still at the mercy of searching energy import costs magnified by the yen's weakness. perhaps one reason why we are seeing that trade balance falling to the red and at deficit after two months of being in the black. be sure to tune into bloomberg radio to hear more from the days big newsmakers, get in-depth analysis from the daybreak team broadcasting live from our studios in hong kong, listen through the app radio plus or bloombergradio.com. but tomorrow had, this is -- stay with us. ♪

>> take a look at how early markets are trading at the moment, we see an upside for the asx 200 led higher by utilities and real estate. every sector on this benchmark in the green at the moment, and even to be ground for the first time in three sessions. we have a more positive session in new york with u.s. stocks rising. we had more fed speak perceived as dovish. the s&p 500 erased earlier losses. we have u.s. futures holding steady at the moment as we see nikki futures jumping more than 1%.

of course, this at a time when we are going to see japan and korea coming back from holidays. and these are the stocks we will be watching when they return, issue chipmakers after news that the u.s. has allowed samsung and sk hynix to acquire equipment needed for chinese operations, and asian energy producers, the conflict between israel and hamas continues to rattle oil markets. coming up in the next hour, we have more fallout from the conflict in the middle east with acxiom and the commonwealth bank. the market opens in seoul and tokyo are next. this is bloomberg. ♪

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>> this is daybreak asia counting down to asia's major market opens in what is shaping up to be a more risk on session after wall street finished tire, of course, we have markets taking in fed comments more devilishly, we are watching treasuries cash trading resuming in asia. >> a lot going on as we continue to watch the ongoing impact of the middle east conflict, the direct consequences of what we see as escalation now. over the weekend we saw the hummus attack -- hamas attacked into israel as investors continue to juggle all these elements. >> we have the open now for japan, south korea and australia, and the reopen of cash treasuries. we are monitoring at the open here if we do see that slide over the 10 year yield which we do see reflected in dropping 17

basis points as we come online. more than what futures had indicated for 15 basis point drops. but this had -- was a chance of reacting to geopolitical events and feeling that flight to quality. on top of that, you have that risk of backdrop coming through with the likelihood that the fed will not need to hike when it needs -- meets in november. we have a serious -- series of dovish comments coming from the fed. philip jefferson saying that officials are in a good position to tread carefully and also echoed by the dallas fed president. both of them speaking at an event together and taking that risk of another fed rate hike in november. a little bit more off the table so we can see that being reflected in cash treasuries as they come back online because they were shut for a public holiday on monday. you see a drop there.

you have moves feeding across because we have the japanese yen firmer against the greenback here, we do have the nikkei coming online at 1% to the upside. let us change on, because we have korea coming back from public holiday and we see that we are likewise seeing gains of over 1% as we come back to the public holiday. again, it really is that reflection of lower treasury yields and the weaker dollar. but there are other stories that are also in focus on korea in particular, because we have sk hynix and samsung very much in focus because the biden administration is allowing both of those chipmakers to acquire the equipment that they need to expand their chipmaking operations in china, that is being seen as a victory for these two names and we are watching sk hynix at samsung

higher as we get the session underway. also monitoring those moves in the korean won there, against the greenback. >> we have brent crude just treating fairly steady. -- fairly steady. there are risks there could be further spill over the region. essentially, we have seen the competition watchdog in australia conditionally approving a takeover of that company by the private equity firm brookfield. 12 billion u.s. dollars. that will be the third biggest takeover this year. as we get trading underway, is that focus on treasuries and the jump we have just seen, the 10 year yield dropping as we came

online? shery: let's bring in our next guest who says global markets are facing a trifecta of potential triggers this week. with us now is the head of applied research. always great to have you with us. we mentioned the geopolitical risk around israel and hamas. we are starting another earnings season. i have to wonder, is this still all about the fed? we got comments that sounded a little bit more dovish. olivier: we have good comments because yields have risen. the market is doing a little bit of the work for them. our concern is that a lot of the yields gained and were done in the last couple of months or weeks and it's more speculative in nature in the sense that with volatility and stock markets very low this year, there has been a lot of basis trade speculation. shorting treasuries, shorting

futures. a lot of that has put weight on the bond market and lifted yields up artificially so to speak. it has to be seen if this event creates a spike in these trades have to be done quickly. what happens then? >> do you worry a higher oil price continues, fanning inflationary concerns and taking yields even higher? olivier: oil is something we want to keep an eye on. this conflict spreads to more regional if we have sanctions imposed again on iran and other producers. there will be a spike in oil prices and oil had already gone back up to near $90 and that will start putting pressure on inflation again and the fed is going to start thinking it whether or not it should keep raising rates because inflation is something that needs to be tackled from their point of view. anything that will add to energy price pressure on inflation is

negative for the market. >> what has also been negative has been the ongoing drag on chinese growth. have the numbers across golden week moved the needle at all when it comes to prospects of recovery in confidence? olivier: the first numbers we see have not been that promising. people try a little bit more but it was not the same kind of revenge travel, revenge spending that we saw in the u.s. and europe after sanctions were lifted so it's definitely going to need to be more. property as an investment has a huge impact on people's wealth management so obviously, the property sector being in the doldrums right now is impacting how people think about spending. clearly, they have held back some during this week and more stimulus measures will need to be seen before the market can turn around. >> what can policymakers do at

this point? we know there has been something like 200 individual measures that have been taken to incrementally support the economy. do you think that more direct stimulus is required, household payments, to be able to build the confidence side which is really one of the areas that investors and economists are most concerned about? olivier: it's a two-pronged approach. they have to keep an eye on the potential for credit default crisis among the higher yield property developers that have debts that are maturing in the next 18 months. with interest rates in u.s. dollars and euros the way that they are, much higher than when the first bonds were taken out. this is something they really have to pay attention to so that is phase one. prevent default crisis. phase two has to be investing. stimulus by investing, by increasing liquidity rather than being restrictive and being, you

know, right now more geared towards control rather than -- and punishment rather than stimulus. we need to see investments in key areas. we need to see some success stories. people need success stories to believe the stimulus is working. we are looking for more targeted investments, targeted stimulus to get consumption back up from the authorities. >> how do you feel about the tech sector across northeast asia? we are seeing right now gaining ground on the china chip waiver that they got from the biden administration. we have seen a semiconductor slump continue which has really pressured taiwan, south korea, japan as well. do you see a change from here on out? >> the asia tech story is still there because we have this, you know, we went through globalization for 20 years and now we are going to deglobalization and especially

moving the supply chain, the tech supply chain away from china and that has benefited the rest of asia and i think that is going to continue. it is a trend that is almost structural in nature because of the geopolitics, so i would expect that to be a safe kind of long-term bet to make for investors. >> we have seen a calm return on the geopolitical front. how long can this continue when all of these challenges that we have talked about, macro economics, the china slump, the semiconductor slump, continues, especially more vulnerable economies and markets such as ems? olivier: certainly the timing of this event is not good at all for markets because as you say, we have so many other question marks on the economy, on energy prices. we have high interest rates. global trade is slowing down, so this is not welcome.

sometimes, geopolitical events are very localized and don't really affect other asset classes. this one could be different because of where it is spirit obviously, if it becomes a broader, more general regional conflicts, oil prices will get affected right away which will obviously domino into other asset classes and other worries so that is really where we are right now. we don't have enough information to know where this is going right now. it seems to be as contained as can be at this point with involvement. other countries also in support, global -- verbal support. right now, things are localized and maybe the market took a little breather today but let's see where it goes in the days ahead and the weeks ahead. we still have a hostage crisis on our hands to deal with so let's see how that works out. >> head of applied research, always great to have you with us. let's get you back for a look at

some of the movers and we are watching some of these japan and korea defense stocks today. annabelle: japan and korea were both shut for a public holiday on monday but to the events of the weekend, the israel-hamas war working out. a lot of defense-related names in korea in particular as we get trading underway but that does follow the gains we saw in the u.s. session because a lot of defense stocks jumped as we saw israel linked stocks falling globally but that is one sector we are focusing on. we did have both of those markets shut monday for a public holiday so the first chance to react to the israel-hamas war. another sector seeing the effects has been the airline industry. we saw the surgeon on monday. take a look at some of the airlines in japan and korea. we are seeing names sliding as we get just over 10 minutes into the session now. we did see oil prices jumping

yesterday and the session. there is that risk that this war spreads further afield in the middle east so that also would put pressure on oil prices and lead to a surge further. what else we are seeing is a lot of major airlines are starting to pull back on flights to israel office war. we have korean chipmakers in focus but we are seeing gains across the board after that biden administration allowed samsung and sk hynix to acquire the equipment they need to sustain and expand their giant chipmaking operations in china so this really removes a layer of uncertainty that had been hanging over the korean chipmakers level of uncertainty so that is really being considered a victory. we are seeing both of those names moving higher in the session today. >> also moving higher, watching treasuries at the moment. this is the picture and we will

get a little bit more and treasuries in a minute but of course we continue to look at that outlook for oil volatility jumping amid the renewed instability we see in the middle east. first, escalating rhetoric between israel and hamas. u.s. congressional leaders confronted president xi jinping over china's stance on the war. we will bring you the latest developments as well. and taking a look at treasuries, we did see the jumped after the dovish comments from federal reserve officials and of course as anticipated as we saw at the start of the week, the conflict in the middle east is fueling that flight to safer assets and a bit of a reprieve in the huge selloff across treasuries we have seen in recent weeks. yields on the 10 year falling 18 basis points at the open up a cash market after the u.s. holiday on monday. the yield slipping 16 basis points as well. investors on one hand really boosting bets that the fed will

keep rates unchanged through the end of 2023 despite that very complex situation. we could see that hold at the next fomc meeting. this is bloomberg. ♪ ♪ is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines. at ameriprise financial, our advice is personalized,

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>> breaking news when it comes to china's former largest company builder. country garden. we are looking at a potential holistic solution to address a debt risk, taking various measures to alleviate liquidity. they wish to address the debt risk with a holistic solution. they are ensuring deliveries and operations as financial advisors. they reiterated the importance to offshore liability management. they have taken various measures to alleviate the liquidity pressure to minimize the impact on project construction and

operations but the long-term healthy development of the group requires extensive support and that best efforts are being made. we are also seeing some comments about the cash position being under significant pressure but remaining committed to debt repayment obligations. shery, we have been hearing that a group of creditors have been in discussions with these financial advisors, looking to form a group ahead of a debt restructuring by country garden. we continue to monitor that company for you. >> benjamin netanyahu said military the retaliation against hamas has only just started and the conflict in the middle east may have overshadowed a rare meeting between chinese president xi jinping and the u.s. congressional delegation. let's bring in bruce einhorn and our chief north asia correspondent, stephen engle. bruce, let me start with you because the death toll continues on this fourth day of fighting between israel and hamas.

what is the latest? bruce: you are right. the death toll is rising so the latest number is more than 900 people in israel, mostly civilians died since the fighting began on saturday. in gossett, the government says that about 500 people have died. there are many israelis who were taken hostage. among the hostages, according to u.s. president biden, there are likely about a dozen at least americans being held hostage as well. israel has called up retzer wrists, -- reservists, 300,000 reservists, and has talked about putting gaza under siege. the defense minister in israel has said that there will be no electricity, no food, and no fuel sent to gaza. the minister added they would also be no delivery of water to

gaza. the question -- one of the questions now will be what will the israeli military do next? will there be a full-scale ground invasion? that is something that we will have to keep an eye on in the days ahead. >> a lot of what happens depends on what develops when it comes to iran. are we hearing about any evidence linking iran to the attacks? bruce: that has been a lot of speculation about iran's role. for its part, the u.s. has said there is not direct evidence. the spokesman for the national security council, john kirby, when asked about this, said iran is complicit, the word he used in the attack, but as far as evidence that iran helped orchestrate the attack directly, he said there is no evidence yet. the israeli government is -- has

said it is looking into evidence that iran at least had foreknowledge of the attacks. iran, in addition to being a supporter of hamas in the south, is also a supporter of hezbollah in lebanon and there is the possibility that could be an additional front in the war. hezbollah has fired mitchell's -- missiles and there were reports from the israeli defense force that several hezbollah fighters were killed while trying to infiltrate. >> this is also becoming the top story to come out of xi jinping's meeting with u.s. congressional leaders. steve: it has kind of forced the beijing government to essentially go off script a little bit even though xi jinping prepared comments before they retired behind closed doors

in that 80 minute meeting with chuck schumer yesterday, essentially did not mention -- xi jinping did not mention the activities over the weekend in the middle east and chuck schumer, obviously, did. and it kind of became front and center of his discussions with xi jinping because he was angered by the ministry of foreign affairs statement put out on sunday that i called for a cease-fire in the gaza strip between hamas and israel and also reiterated beijing's stance that there should be an independent palestinian state. it did not mention hamas by name but what irked chuck schumer was the fact that beijing's statement made no reference to the loss of life and the humanitarian crisis that is going on. is what chuck schumer had to say following his meeting with xi jinping. the first time xi has met with u.s. lawmakers in some eight years.

>> i also made a request, direct request to president xi that the foreign ministry strengthen their statement on the middle east. which did not even mention the loss -- the horrible gut wrenching loss of civilian life. i am gratified the foreign ministry issued a new statement that did condemn the loss of civilian life. >> chuck schumer obviously was particularly tough on the chinese foreign minister for showing "no sympathy or support for israel during these tough troubled times. again, the state media did put always new statement yesterday as chuck schumer just responded, obviously alluding to the fact that there were losses of life and also what again bruce was talking about, that is the potential connection to tehran

and iran's role if any in this. chuck schumer did encourage beijing and xi jinping to use their influence in tehran to prevent this conflagration from spreading further. >> bruce einhorn there. stephen engle as well. more to come here on "daybreak asia." this is bloomberg. ♪

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and the other goals along the way. wealth plan can help get you there. ♪ j.p. morgan wealth management. >> a significant statement from what was formerly the biggest properly -- property developer in china, country garden, saying they have not made payment and they are not expected to meet all offshore payments. they are saying that their cash

position is under significant pressure and they are really talking about market conditions and making it quite difficult when it comes to that regard. they have not made a payment to the principal amount of $470 million under certain of its indebtedness. we continue to watch that, also saying that the big fall in september contract sales down over 80% in 2022. bloomberg has learned one of china's copper trading houses has lost contact with its founder. sources say metals executives believe he has been detained by police for questioning. let's bring in bloomberg's commodities editor, jason rogers. what is going on here? is this a reflection of the individual, the company? we tend to be concerned for what this means for the broader sector when things like this happen. jason: this is probably entail rooted in the pandemic and -- a tale rooted in the pandemic in

many ways. he did run afoul of a lot of the covid restrictions that hurt his business and also the famed who we believe has been detained by the police. he made a lot of real estate investments using his copper profits and obviously, the real estate industry took a dive during a pandemic and has not really recovered so while details are scant, it is likely the financial troubles that have drawn the scrutiny of law enforcement stem from these issues. >> we will continue to watch this story very closely. jason rogers there. we are seeing potentially a little bit more optimism when it comes to the asian trading session. must take a look at our futures in europe and how they are opening up at the moment. we have seen that particular focus. that was one of the sector leaders in the european session.

oil and defense really blocking the broader european equities slide there. we are seeing a bit more of a bounceback in the session today. euro stoxx 50 futures up by .9%. dax futures looking pretty resilient. we are watching some of the fx paris as well given the levels we see in the u.s. dollar. also that recovery we have seen and treasuries in the early part of the session as well. the weakness across the broader european equity market looking like it could see a bit of a reversal. as we continue to look at the implications for hamas's surprise attack on israel, really looking to inflame tensions further across the middle east. plenty more to come here on "daybreak asia." this is bloomber

>> we are getting australian

business confluence readings coming from -- the conditions are resilient amid the broader consumer gloom. the business confidence index unchanged. business conditions falling to 11. we have seen a little bit more resilience from australian business conditions to elevated price pressures, consumer confidence remaining in deeply pessimistic territory so quite a bit of a contrast to the tighter monetary policy settings even though we have had a hold from the rba for four consecutive meetings. looking at sales, employment profitability, three points to 11 but still holding above that average level since the beginning of the year. we have also in the last hour seen australian business conditions showing ongoing resilience and we have seen really a little bit more sort of

resilience when it comes to households as well according to sentiment numbers that have come out today. that separate survey from westpac showing consumer sentiment gained almost 3% in october but that pessimists outnumber optimists in a pretty heavy way. let's get you to annabelle for a look at what we are seeing in markets. part of this is really the haven demand we are seeing for treasuries. a bit of respite. annabelle: that's right. this is the first chance that they have to react to events with the israel-hamas war. we are seeing a pullback in yields. cash treasuries trading out of the session in tokyo but that is the state of play half an hour into the session. you are seeing that big move lower across the curve here. has we said, there is geopolitical risk playing into

it, that flight to safety but also you got what you are hearing from fed officials. if you take a look at this, you can see the chances here that are building that we will not be seeing a fed hike at the november meeting so that is certainly feeding into it. i don't know if we got that full-screen. i heard from a number of fed officials essentially indicating that they do need to proceed carefully with where they go in rates, mindful of the rise in yields, also reflected by others over the past day or so. let's change on because in the equities picture, that move lower for yields and the dollar is a supportive factor for asian equities and if you look at the function, every single sector is in the green as we get trading underway so the broader index rising around .9%. the question of course is how long this holds four. of course, there is that risk really developing or continuing to develop in china's real estate sector. shery: especially when we are hearing more from country garden

as well. they are not expecting to be able to meet all of their offshore payments that just came out on their exchange filing and this of course at a time when we have seen chinese property developers really bring the broader economy down in china as the property slump continues. even during the golden week holidays, we did not necessarily see that much of an uptick when it came to house sales so we will continue to watch what this means in terms of the broader risk in the sector. we are now seeing that country garden has confirmed they are hiring financial advisors. they are seeking what he calls a holistic solution to their liquidity problems. let's bring in our reporter, the chen. what does this mean for the firm in its efforts to move forward and also for bondholders? >> good morning.

we are seeing two of the country's biggest developers come a country garden, and also evergrande. for country garden, bloomberg has reported a few weeks ago that the firm is in fact exploring a holistic debt restructuring and in the latest filing, it disclosed that it actually had failed to make a $47 million payment on certain indebtedness so does that indicate a potential default situation? country garden has flagged that it possibly would not make payment on any offshore obligations so we know that there are a few coupons currently in countdown in the 30 day grace period so those would not be expected to be paid so that seems like a difficult situation is really on the horizon for this developer right now and country garden on the one hand is seeking that restructuring with advisors and bloomberg news also reported yesterday that it's bondholders

are also trying to, you know, in discussions to talk about forming an ad hoc committee to be in that negotiation with the company. it did seem like this company is heading towards that long process of restructuring that we are seeing that evergrande has embarked on since two years ago. >> what options remain here? loretta: i think for country garden, really, it's going to be a long process of a negotiation and we are expecting to see, you know, the debt restructuring plan to come out perhaps in the months to come. you know, following all these previous cases that we see with country gardens peers and for evergrande, you know, the option seems very scarce with that complaint letter yesterday from its creditors. it seems like the offshore creditors are very confused with

the inability for the company to go with its restructuring plan and that just brings the october liquidation hearing for evergrande one step closer to a possible destructive scenario. >> it has been two years for evergrande. country garden may be headed the same way. evergrande is not necessarily making any great progress in its restructuring so what does this spell for the rest of the property sector across china? they are not the only ones who are in hot water right now. loretta: the impact would be very broad because he would have, you know, the bulk of countries developers who once contributed to over two thirds of the economy now falling into distress so that doesn't just mean the companies themselves, you know, the people that are employed, and also the housing market has of reverberating consequences on the country's

banking system. all these local governments that's been able to profit from the land acquisition of these developers and also these banks that have been lending to these developers, they also have to, you know, keep injecting liquidity to finish those unfinished projects as we speak. evergrande and country garden and many of their peers, they still need to finish those projects in order to keep the social stability of the country which is what the beijing government really cares about as well. >> loretta chen with the latest on country garden, saying -- amid the worsening debt crisis, looking for a holistic solution to its debt. you can get around up -- a roundup of the stories you need to know to get your day going in today's edition of "daybreak." bloomberg subscribers can go to dayb on their terminals, and it's also available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on

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>> that is not a large jump in the world we live in here you would expect a jump between 5% and 10% and it has been a less than 5% jump and even if we look back a couple of weeks, prices

have gone down a lot more than they have recently gone up so it has been a blip. >> the market has been pricing in an escalation which involves iran. that has yet to come. >> if we see an escalation and israel implicates iran as having knowledge of this attack prior to it happening, that escalation will cause an immediate move higher in crude i would say to a tune of another 5% to 7% from here. >> just what our guests have been saying in light of the conflict. let's bring our next guest who says iran's oil exports face imminent downside risks should western countries linked -- link that to the hamas attack. always great to have you without and let me start off by throwing up the magnitude of the move we have seen in crude and we continue to see really, you know, two standard deviation

move of a surge of over 4%. we continue to see the hold of the biggest gain in crude prices in six months with these ongoing concerns and as you say, you know, iran is the central factor here on where this market goes next. >> yes, i think absolutely. we have seen palestine and israel conflicts in the past. the price premium we have seen, the oil prices, it's been quite temporary and that's often because there is no real supply instruction. in this case, there is actually i think a real scenario where there is disruptions that actually take place and it is all linked to how much of this -- how much the blowback is against iran because right now, i think the u.s. is really critical. they have explicitly said there is no direct evidence yet that they found linking iran to planning the attacks but we have

heard from reports that senior officials from hezbollah and hamas have linked iran to it. it is a fluid situation but if we do see direct evidence appear, it would force the u.s. to enforce those sanctions and that is really where we could see brent futures in particular start pricing higher and we are talking more in the 90 barrel to 100 barrel. if it does go to that isolationist iran scenario, $100 becomes a real tangible reality. >> does the scale of this latest attack really take away from the fundamentals of demand of supply that we watched? we had opec raising their expectations of global demand through to the middle of the century and on top of that, we are getting the monthly reports from opec, from the iea, and inventory numbers from the u.s. as well. do they still move the needle?

vivek: i think that was the backdrop before this. in late september, we saw brent peek at $97 per barrel and that was fully pricing and probably that opec scenario where we would see a 3.2 million barrel deficit this quarter so we are talking roughly 3.5% of global supply. i think the market last week really started looking at demand concerns and that is where we saw the correction and now, we see the price increase on the back of tensions in israel and palestine so we are not even close to those peaks that we saw but if we do see another underscoring of the deficit and if it is actually worse than what was predicted in the last month's report, i think we have the case for oil to move higher so i think fundamentals play a role but only if it makes the situation worse than what it was. shery: how much spare capacity does opec have to bring to the table if we do in fact see an

escalation and a major disruption? vivek: in terms of the major spare capacity, we are talking saudi and uae. there's about 4% of global supply but if i had to really say where you would have the supply reaction, it's probably going to be russia and i think the u.s. is very clear that that is probably going to be the outcome. it will be hard for air to change or boosts production with gaza being bombarded and them having to almost give some level of alliance to what is happening with the citizens of gaza. i think it will fall on russia to be the supply valve. immediately, 300,000 barrels per day so i think that is really where you will have some supply relief but i think saudi and uae will have their hands tied because they cannot be seen cozying up to the u.s. and

israel given everything that is happening. haidi: we talked about demand concerns given the economic slump in china. are you seeing concerns in the u.s.? we are getting measures of gasoline consumption here in america that may be plunging. vivek: in terms of that data point that really triggered everything off, it was that four-week moving average measure of gasoline demand. in terms of the demand instruction, it's early to look at just one week's data to make that conclusion. in terms of where the market was, we saw yields rise. we saw the u.s. dollar surge. both those factors set the scene for any indicator that showed some demand problem. it would really start building the market attention toward selloff, selloff, and oil would fall and that is really what happened last week. i think the reaction was very much overdone and i think part of the recovery we have seen in oil prices this week is the fact that that was overdone.

really the question now is front and that a right now is in the low 90's but the risk right now is for disruptions to push it to the high 90's and potentially 100 plus. >> always great catching up with you. director as cba with what to expect in the energy markets as we of course continue to watch the supply and demand picture especially as we are getting that geopolitical risk coming from the conflict between israel and hamas. the founder and president of eurasia group saying that is not yet clear whether iran was behind the hamas assault on israel. ian bremmer telling us the failure of israeli intelligence to stop the attacks will be prime minister benjamin netanyahu's legacy. >> the united states government has said there is no evidence as of now that the iranians were

behind the attack. let's be clear, they are not nice people as a government. the iranian supreme leader and the president for throated he supported the hamas terrorist attacks and they have provided not just diplomatic cover but also weapons and financial support to hamas directly over the years. i would be very surprised if they were unaware of the attack but there is a very big gap between unaware and orchestrated. and you know, i will tell you that life has been going reasonably well for the iranians of late. you will remember that the chinese facilitated a diplomatic engagement -- a breakthrough between iran and saudi arabia in the past months. you also know that the biden administration came to an agreement both to get five american citizens held hostage by iran back to the united states and also was planning to

provide 6 billion dollars of iranian assets on frozen back to the iranian regime. the iranians have also allowed in international inspectors as they have reduced their amounts of heavily enriched uranium stockpiles. none of these are actions by an iranian government that is about to declare war. against israel that would lead to clear reprisals, immense reprisals by israel it was -- if it was found out with evidence that they actually ordered this from hamas so i will tell you i don't have a lot of confidence in the sense that i hardly talk to the iranian leadership. but i would be quite surprised if we found out that the iranians were directly ordering it. >> isn't it a surprise that the cia seemed to not have known about this attack?

in 1973, they dismissed intelligence from -- and apparently did not listen to a bug they had in the office but you would imagine they have learned from that. how could they not have known about this attack? >> israel does represent the gold standard not just on human intelligence and on signals intelligence, but also on border security. this is not like build the wall in the united states. their borders are relatively compact and they know how to defend them. they know the consequences if they don't. but the issue is that the israelis took their eye off the ball. you know, you will know, israel has been in the headlines over the last year quite a bit. not about the palestinians, not at all. the focus was unprecedented demonstrations in israel, fearing a constitutional crisis with the judicial reform that

netanyahu and his far right government have been pushing. not only that, but there has been an expansion of israeli settlements in the west bank and that has led to palestinian reprisals. and a whole bunch of the defense forces were sent to the west bank and to the bordering region in israel around the west bank to deal with -- to respond to those reprisals. both in terms of domestic instability, intelligence focus, unwillingness of some defense forces to serve if the judicial reforms went through and these expanded settlements, israel was not acting like they had the gold standard on defense capabilities, border capabilities, and intelligence capabilities. this is all netanyahu. this is a matter for another day. they have to defend their borders, get the hostages back, fight hamas leadership, but this will be his legacy. >> ian speaking with marc

miller. more to come here on "daybreak asia." this is bloomberg. ♪

>> take a look at what we will be watching when markets open in china. news that the u.s. has allowed samsung and sk hynix to acquire

equipment needed for their chinese operations. country garden in focus along with the broader property sector with the company happening -- tapping c&c as possible advisors. we continue to track hong kong and developers as well. risks mounting even after a $56 billion selloff. next bring in asia equities reporter charlotte yang. is this a risk off when it comes to hong kong developers, inevitable given what is happening in the mania and -- mainland? >> investors are really not ready to go bargain hunting yet for the hong kong developers talks even though a lot of them are trading in key evaluations after this big selloff. probably that is due to the longer interest rate environment and also as you have mentioned, some of the troubles -- a lot of them have exposure to the

mainland so they are not muted from economic woes on the mainland and the reason why our investors -- is often more due to the outlook. it's here to stay and that means that we will discourage homebuyer sentiment in hong kong, putting demand -- next year. even after, you know, the home prices in hong kong fell from a historical high and now at a six-year low level so that and together with some of the developers are cutting dividends and hurting investor sentiment in the sector right now. >> very quickly, what is the next catalyst? >> the policy investment coming out later this month which will ease some of the key curves he has on the sector which could mean easing some of the property tax he levied for homebuyers for the second apartment as well as easing the stress tests to help

stabilize demands in the housing market. >> charlotte yang there. and this is a picture as we get into the next hour where we will have chinese equities joining the fray. we are seeing a little bit of more risk-on sentiment across the board really, upside of just over 2.25%. asia stocks gaining alongside treasuries, rate optimism story which is dominant and debit comments on rates from federal reserve officials. we are seeing gains across the board in australia, japan, and south korean markets. futures in hong kong also pointing to gains. in the next hour, our guest on the outlook for china's recovery. ♪

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