>> i am tom mackenzie in london and these are the stories that set your agenda. the u.s. is pressuring allies to

toughen ship restrictions on china as president trump says canada and mexico tariffs due next week are moving forward. and asian stocks slumped the most in three weeks. a split with allies. the u.s. votes against a united nations resolution condemning the war on ukraine. friedrich merz pushes to approve 200 billion euros in defense spending as germany's chancellor and waiting looks to form a coalition government. and happy tuesday. european stocks are searching for direction after softness yesterday. the u.s. story was negative with the nasdaq 100 falling and the

s&p closing lower as well coming from the likes of microsoft. nvidia wednesday could be the catalyst for these markets and that is potentially the earnings story of the week. european stocks futures pointing lower. in the ftse 100 flat. s&p looking to gain back above the 6000 level. currently looking to add .2%. pointing higher by 13 points. and we have seen moves into u.s. treasuries through the session with yields lower, currently yielding .437. , up on the single currency and brent trading higher and watching additional sanctions coming through on iranian crude. and gold having closed again at record levels again with

profit-taking down. and let's cross over to avril hong in singapore for a check on the asian markets. >> it's been quite a while in the asia-pacific. we saw japanese stocks leading declines. back from a long weekend and facing this picture of tech names getting hard-hit no thanks to the wall street handle but also trump pressuring allies to restrict access for china in terms of chips and that is in terms of the collateral damage playing out in the likes of tokyo electron, the big drag on the nikkei today, up on the chipmaker but aside from that we have been keeping watch on the chinese tech stocks that have been whipped sawing today. and we saw them decline as much as 4.5% but managing slight gains again.

and this is all interesting as it managed to pair declines and some have attributed it to mainland investors buying the dip but also worth noting that when it comes to these mild reported restrictions that may be some had been expecting it and they are not as bad as expected so they are racing declines of about 6% earlier. and alibaba considering how it's adr has felt. this is not too shabby. some of this is idiosyncratic. you look at makers like li auto unveiling its first all electric suv and extending 14% but this is the backdrop in chinese tech names. their resilience even in the face of trump policy. >> we will see if that resilience holds in the face of that additional pressure. thank you very much indeed.

staying in asia this is around apple and its business in indonesia. population of about 280 million people in this is news that and anita has approved the sale of the latest iphone 16 after wrangling between the country and apple since october after manufacturing requirements and a commitment to invest in that country. apple will commit to that investment but also train local people there in research and development on the products. so apple and in asia -- and indonesia coming to an agreement. sales have synced in the market. the band has now been lifted. and we continue to watch the impact through the session. in the trump administration is planning to expand efforts to limit china's tech advancements. were details from minmin low,

who has been following this. what is the latest on these discussions. >> the trump administration is sketching out a stronger regulatory regime and trump officials have been meeting with counterparts from japan and the netherlands looking to possibly disallow some engineers from tokyo electron from servicing the gears in china and the holding of such servicing would eventually lead to these losing their functionality and also trump officials looking to tighten the noose on the exports, including restricting ships specifically designed for the chinese market in order to meet the pre-existing conditions put in place by the biden administration and perhaps more sanctions on specific companies, such as one at the forefront of the chinese tech and race -- tech race, and the manufacturer

for huawei. this comes as reuters reported that these companies have been stockpiling chips that are the version of the nvidia chips tailored for the chinese markets and these companies had been buying them up on the back of stronger demand on the back of that deepseek related rally and more activities coming in the ai space. and officials also looking at potentially lowering the threshold for the cap and computing power that could be exported out of the u.s. without additional licensing requirements that's already drawn rebuke from the likes of nvidia hoping the administration would have a lighter regulatory touch when it comes to this entire framework. the market reaction. smic has been holding up, perhaps reflecting sentiment that this would cause chinese companies to pull more resources

and working more on out-of-the-box innovation and you have chinese companies like bytedance and deepseek looking at ways to spread the rules without violating restrictions that have been powered by nvidia chips but even that could eventually be affected as well by the new u.s. restrictions that would apply to most countries when it comes to the cap and computing power the could be exported, so it's a game of cat and mouse. it will likely continue to play out for the rest of this year. >> trying to close off some loopholes, at least from the perspective of the trump administration. and we will be looking for commentary from nvidia executives when those earnings drop tomorrow on restrictions from the trump administration. the u.s. has withdrawn its previous stance condemning russia's invasion of ukraine.

and it is a stark policy reversal and another blow to ties with the european union as prince president emmanuel macron visited trump in washington an effort to get europe back to the table in talks with russia. >> we are working on deals now and transactions now in the big one is to get the war stopped, whether it's a cease-fire or direct to an agreement. >> as it is now written and negotiated and as this meeting is done is an important step forward for disagreement. >> joining us now is bloomberg's guy on this and also greg. this is a marked change from the united states in terms of its relationship with russia and the way it phrases and frames the

invasion of ukraine. what is his strategy here and has he moved over to his side and is that how we should be interpreting this? >> we know trump has said clearly he wants to end the war. and european allies think that could be more favorable to russia. leading rusher retained some territories that it has captured. and with this united nations resolution vote, the stark symbolism of that, voting with russia and north korea and belarus against the european allies reinforces these worries. there's a sense trump would rather talk to prudent than europe and that's a worrying development for european allies. >> where do we stand in terms of the chances of a cease-fire actually transpiring now between

russia and ukraine and are we moving forward on that front? >> it is clear trump is intent on trying to reach that. we heard from the french president in washington saying it was feasible to get some sort of truce but a lot of major obstacles remain. the first is how long would such a cease-fire hold? trump said whether that's a short term truce or long-term cease-fire but they have ruled that out before any long-term negotiation is reached. they are making gains and see that strengthening their negotiating position and do not want to stop fighting until there's long-term settlement. another question is security guarantees. it is not clear what would satisfy all parties on that front. >> what did trump and macron discuss and whether any achievements? did he manage to move the dial in europe's favor? >> emmanuel macron thinks he was in charge of european diplomacy

here. we were in the middle of the german elections. he gathered these two meetings in paris last week to discuss ukraine so he wanted to show that he has what he calls a special relationship with donald trump. trump already came to paris in december where he had a meeting with ukrainian president zelenskyy and said during the press conference that he had stopped talking with putin after the war crimes in bucha but now perhaps was a new time -- a good time and reason to reengage with the administration because macron said he believed donald trump look strong -- looked strong in front of vladimir putin. his goal was to keep them at the table of negotiations and have some form of u.s. support in light of perhaps a future cease-fire or peace deal but

donald trump seemed mainly interested in this agreement on critical minerals and rare earth , where he said to recoup the money we have sent to ukraine. >> did he achieve what he set out to achieve with this visit? >> that is hard to tell, whether he was satisfied or not, but emmanuel macron said several times during the press conference that this was a turning point and even gave one interview to fox news so clearly trying not to confront donald trump publicly. remember, fox is this media were donald trump said zelenskyy was not welcome at the table of negotiations. the gesture on occasions during the press conference was a little strange. trump congratulated him rebuilding notre dame but on several occasions he was focused

on his domestic agenda and so their work domestic questions, sometimes totally ignoring macron for a good part of this press conference. now emmanuel macron has to take everything back home and talk to his counterparts in europe. the u.k. prime minister is also traveling to washington thursday to meet with donald trump. macron and starmer had a phone call sunday to be on the same page when it comes to peacekeepers on the ground and air defense in case of another attack. we will see if there's any achievement before this crucial european union summit on march 6 and one word on the domestic agenda. you know he has been very weak at home since last year, since the snap election, so for him shining internationally and

looking like he is key in these negotiations for the peace in ukraine could boost his popularity back home. >> important contacts. caroline and greg, thank you very much. and we will be speaking to hermitage capital management cofounder and ceo bill browder, who has been one of the leading voices for sanctions on russia and president putin. who comes with a unique perspective as well, so tune in for that. bloomberg has learned germany's chancellor and waiting has started talks with the spd to force through 200 billion euros in defense spending. this is bloomberg. ♪

this is why the german government in particular is keen to get things going and make sure the defense spending is in place. >> so what about the european union?

>> at the moment, you have germany with a changeover in government. we had macron in the u.s. yesterday and generally the european union is very much scrambling to come up with a plan to continue the support for ukraine potentially without the strong involvement of the u.s. we have seen and the u.s. has been the biggest supporter in terms of military equipment and that's a role europe will need to fill. >> thank you for the latest on that story and germany moving forward, potentially with additional funding. we will be at the bank of america investors summit with a conversation with a former governor of the reserve bank of india. that is next. this is bloomberg. ♪

>> india's economy has seen its weakest growth since the pandemic as geopolitical risks and tariffs threatened economic recovery. while the government is focused on fiscal consolidation the reserve bank of india has started cutting rates to revive growth. let's go to dubai and the bank of america investors summit. guy johnson can speak with expertise on the story. >> good morning. he was the 23rd governor of the rpi. talking about the fact that we have gdp numbers coming out friday. and they are expected to go higher and it feels like we are below potential. where is potential and how do we get to it? >> it depends on what you mean by potential.

because that is what we have done for the last 25 years. extremely creditable but also compared to what we need in terms of the people coming to the labor force. and i would say that if you look at our ability to employ people, it should be more like 8.5% and we are below that so we will go up and i think some of the blip downwards was because infrastructure was postponed while the elections were taking place. i think that will come back up but to go to india's true potential they need another 10% of growth. >> is it a service economy now? >> increasingly so. last quarter you saw exports overtake manufacturing. and they were only 69% in 2019.

and part of this is technological. you can work at a distance and that means you can work as much in seattle to produce for chicago. and you can now work in bangalore and produce for chicago. more funds are having operations of a sizable nature. >> india is good at software. will it be good at ai? because all we are hearing out of china is that is the focus. >> india does not have huge firms focused on ai but a lot of small to medium-size firms all trying to do that and more in the way of applications, so in medicine and a lot of stuff. >> is that something that -- does india need to be the face in terms of producing models and being at the cutting edge or is the money going to be made ultimately further down the food chain? >> i think the applications also

offer a lot of opportunity. indian engineers are cheap and getting them -- many of them are learning what it takes in machine learning and getting them to work on applications of how you take these models and apply them to the nature of work and i have seen a number of indian firms already using ai at the cutting edge in the sense that customer service reps are now thinking of replacing them because they do a better job and speaks seven languages rather than one. >> to circle back to the growth story, 23rd governor of the r b.i., do they have a money problem at the moment? >> i don't think that is a central problem. what is holding back growth is a mismatch in talents between what the labor force has and what firms need, what the urban population needs in terms of

skills, so what india has to do is ramp up that skill base so all the people coming into the labor force can do jobs the economy is creating and i think the cost of money will come down somewhat. i think the r b.i. did cut interest rates and may in the future but the real issue is more improving the supply potential and that implies working on human capital and skills. >> do you think the modi government would be ok with a mar-a-lago cord? >> i think there are contradictory elements of the trump administration's objectives. on the one hand, they want to bring down the trade deficit. on the other, they do not want to lose preeminence in attracting financial firms from across the world because that helps support the debt and keeps interest rates from going

through the roof. how you square all that to my mind is a big uncertainty. as far as these reciprocal tariffs that have been threatened, i think india will be happy to enter into a dialogue with the administration. i think they will up some purchases and may reduce tariffs in a number of areas that are not politically sensitive agriculture >> -- sensitive. agriculture is politically sensitive but others they can do. i think more competition in india will help industry and growth. >> thanks for joining us. back to you. >> stay with us. >> stay with us. one scorching heatwave will leave me powerless

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>> i am tom mackenzie in london.

these are the stories that site your agenda. bloomberg learns the u.s. is pressuring allies to toughen ship restrictions as president trump says canada and mexico tariffs are moving forward. and asian stocks slumped the most in three weeks. the u.s. sides with russia against a united nations resolution contending the war in ukraine as they try to get europe back to the table for talks with moscow. and friedrich merz pushes to approve defense spending as germany's chancellor and waiting looks to form a coalition government. let's check in and on the markets after some softness. with european futures currently down. s&p futures pointing stateside

to a gain of a 10th of a percent. and the nasdaq looking to add after falling yesterday. we will look to nvidia earnings. let's see how the treasury story is shaping up. >> back below 4.40. and you will have fed speakers coming out with their analysis later today so watch for that and the sensitivity to the treasury curve. euro-dollar at 1.04. brent trading at $75 a barrel, gaining .4% so far in the session. the trump administration putting additional curbs on iranian crude. and that is supporting oil so far in the session. and we will get more analysis on that in the next part of the show. so stay for that and gold having

reached record highs yesterday, profit-taking currently but it has see that haven bid of 2934. and finance ministers are meeting in cape town for the g20 summit. , the first since donald trump to the white house. in the top of the agenda will be the impact of the proposed tariffs on the global economy. let's cross over to jennifer zabasajja standing by with a guest. >> thanks so much. i am here with a south african central bank governor. appreciate your time. because one of your mandates is price stability and undoubtedly one of that has gotten harder considering the uncertainty but a lot of concerns about inflation moving out. where are your concerns place?

>> brought inflation to target. and other major emerging markets , we responded to inflation before the great inflation of 2022 set in. in advanced economies did adjust aggressively to bring inflation to target or towards target and global uncertainty abounds and at the moment it has generated this uncertainty and there is a question about whether inflation could be corrected and whether central banks are complacent about that and added to that are the geopolitical risks adding to

the uncertainty. tariffs that are not quite trade related. and from the textbook, when tariffs rose, that you have to at inflation. >> do you think there is a resurgence? >> we inspect -- expect inflation to to be creeping up. our expectation is a will rise but are baseline is still that it will rise to our target, which is 4.5%, which is the middle of our target range. but that is the baseline scenario. to the extent that there are tariffs imposed and to the

extent that other countries might move to the tariffs imposed on them, you are going to have a rise in global prices and secondly you are going to have a slowdown inc. global trade -- in global trade and that could have an impact on outlook. >> does that input that impact your outlook -- does that impact your outlook on inflation? >> it adds to the uncertainty. in the previous meeting we had we took a scenario approach and had a scenario where if tariffs are imposed, this is how we think the global economy could evolve and we think inflation might pick up and central banks that have embarked on reducing restrictiveness in the china policy to pause or even that cause of that.

>> are you seeing that? and is that part of the calculus that you are thinking potentially the fed will have to stay higher for longer? collects the decisions of the fed are positions of a major economy. as one economy, those will affect the global economy and how they feed into our own decision-making process is through two channels. in the first is the trade channel, which in normal circumstances would be a slowdown in economic growth in the u.s. leads to a deadline in our own exports by contrast when the economy is doing well. that would also do well.

and once tariffs enter that space, to the extent that the u.s. process would slow down or reverse, it might force policymakers to than reassess their position, which is another matter. the point is that we would then be affected by a rise in global inflation and the extent to that that recalibration of policy leads to tightening of global financial conditions, capital flows and a repricing. >> do you think that will affect foreign direct investment into south africa if we see that play out? >> that does not so much respond to monetary policy actions, but the trade policy actions would actually -- could actually affect foreign direct investment. how?

at the moment, as a small open economy, we attract foreign direct investment that produces goods we send to other countries so we have american companies that have established in south africa that are producing to export into the african continent and some of them back into the u.s. and if that is to affect them than it would affect that. >> it sounds like you are saying tariffs are the number one risk you are facing as a central bank governor in setting policy. is that fair to say? >> tariffs are a rift to the global economy and the global disinflation process and what i am saying is that a year ago it was not something that we were worried about but now that it is here we have to take that into account. and to the extent that it is

clear these are the tariffs and we know that is what we live with them we can calibrate policy to that extent. the problem is there is an announcement of some tariffs, a suspension, a restart, a threat to increase them again and that adds to the uncertainty. >> that is creating a difficult task. >> i would say it is a difficult institution. >> we will have to leave it there. that is south african reserve bank governor -- that is a south african reserve bank governor at the g20. >> jennifer zabasajja in cape town at the g20 meeting of central bank and finance ministers. donald trump said tariffs do to canada and mexico next month will go ahead even as u.s. --

one u.s. official cautioned the schedule could be less certain. >> the tariffs are going forward on time and on schedule. this is an abuse that took place for many years and i am not even blaming the other countries that did this. i blame our leadership for allowing it to happen. who can blame them that they made these great deals and took advantage of the u.s.? >> for more on the market impact, valerie tytel. and how the markets been adjusting? >> the fx markets are still have a complicated time pricing in this risk. we saw an effect on the canadian dollar weekend on these headlines and it goes to show just how much canada has toulouse. we had the bank of canada governor last friday say in a speech that if these go ahead it could didn't long-term growth of canada by 2.5% of gdp.

a lot of brinksmanship ahead and trump mentioned the schedule is running on time. and let's remind ourselves what it is looking like because we have three cases in the next five weeks starting with march 4. that is the deadline he gave for the canada and mexico negotiations. on march 12 we get those global steel and aluminum tariffs on imports in april 2 is another big one, what he has threatened could be reciprocal tariffs as soon as april 2 but that mark ford eight could be the next catalyst for a market reaction given the economic ties between the u.s. and canada and the u.s. and mexico. mexico is the second-biggest when it comes to the u.s. trade deficit between the countries and canada is not far behind. this is a key reason why trump has his eyes on negotiating usmca because of the trade

deficit between those countries combined. >> good breakdown of what to expect. thank you very much indeed. some other stories making the news. elon musk's spacex is seeking to deploy satellite internet terminals to help upgrade the u.s. federal aviation administration's national airspace system. a source says musk approved a shipment of starlink terminals last week. an faa spokesperson confirmed they are testing terminals at critical sites. the effort raising questions about the future of a verizon contract and potential conflicts of interest for musk's business empire. tesla's european sales plunged 45% last month while rival carmakers thought a surge in demand for electric vehicles. and the company registered fewer than 2000 cars in january, down for more than 18,000 year ago.

and total electric vehicle deliveries jumped in markets, including germany, the u.k. and italy. and we will discuss the state of the european car industry at 8:00 -- at 8:45 a.m. u.k. time. bloomberg has learned anthropic is close to a deal to raise billions at a valuation of over $61 billion at a source tells us the funding round is larger than the ai startup land. we reported menlo ventures, general catalyst and nzx are in talks to back the company. high energy costs are one of the most critical issues for businesses and households in germany and as friedrich merz looks to form a coalition we will discuss the outlook for power prices in germany, europe and the outlook for oil on those new iran sanctions. stay with us. this is bloomberg. ♪

>> welcome back to bloomberg daybreak: europe. oil gaining in the session as the u.s. issues sanctions on iranian crude and donald trump signaled tariffs are on the cards. and european gas markets have been pricing in a return of russian gas. i am joined by the director of a capital firm that has expertise on the energy markets. good have you. let's start with the pulse of the markets. oil higher in the session tying into what's happening with iran but what are the markets generally telling you? >> the markets expect they will continue to control the market.

and they are probably not really focusing on tariffs and what that could mean for the demand side of the oil market so when we look at that the knee-jerk reaction was negative on renewables, positive for markets but tariffs were a big deal and that is where it was negative towards commodities and the tariffs picture is much more muted than what could be the case but he is a dealmaker so we have to take it step-by-step. >> if tariffs come through as he has proposed, and you point out there is context around that, you could see a crimp to demand at the same time as trump is pushing for more output from the u.s. market, so that could arguably set us up for prices that are lower. >> what he wants is saudi arabia to produce more.

it is no surprise to us that he had the meeting with putin, as in the u.s. meeting with the russians and saudi, because they want that part of the deal, and that makes sense. give more supply and then think about these additional steps. >> but you don't think opec-plus buckles to trump's pressure and they push back the additional output. >> this comes to the question because he sanctioned iran last time really hard and was granted six months of waivers for people to keep buying while russia, the u.s. and saudi arabia increase production. they don't want to make the mistake again so maybe there is a middle ground on that side but what i think is important is that the market is not focusing on that because we have seen equity markets overly price in what may happen and the physical markets are trying to look at what is happening and that is why the oil side now has good

demand and low inventory. oil continues to be supported. >> what is the inventory story around gas in europe? we are around 40% storage levels, which is ok, but we could drop lower. the problem is to prepare for next winter. we still have this 90% by first -- by november 1. there is flexibility by country. the germans have the strictest rules on enforcement. there are financial penalties or they could disallow withdrawals. the question is, if they relax that storage target, that could make cheaper gas prices this summer, because if there is a heat wave we don't have to take everything we get. we think there's 350 to 400 more cargoes they have to arrive this year versus last so that can make lower prices in the summer

or result in much higher prices next winter or heading into next when we have the demand and if we are short. that is why these targets exist. >> should the markets be pricing and more russian gas? >> the quickest ways to get more is through ukraine. however, if there is a forced peace deal on the ukrainians, are they really going to promote pushing russian gas and even if they officially do and it is $800 million for them versus billions for the russians, then we could have people taking that gas, siphoning off gas. we have had this in previous years and administrations where this has happened and given the human toll that's happened in ukraine, there could be individuals that don't want this to happen and i think the market has dismissed this. >> there will be focus on the national people's congress.

what is the impulse from china? >> on the natural gas side it continues to be strong. we see that commodity markets are showing activity in china has probably bottomed out and activity is higher. on the oil side when we think about tariffs and all of that, china is only taking 200,000 barrels per day. they are taking only 6% of their lng from the u.s.. so it is more flexible because they can just replace that lng with other purchases and because the u.s. does not sell its lng with a final destination clause it is easy for that to be resold to europe. it does not mean demand is lower in china and the market misunderstood that and saw china was rerouting lng to europe in recent weeks and saw that as collapsing demand in china but that is not the case. so they would rather take more

gas or lng from qatar and other countries rather than from the u.s. >> we will see if energy is part of any deal that comes to pass if we do indeed get some kind of trade deal as trump has suggested. thank you for the analysis and expertise. nettie -- nadia. they should not be pricing it in at this stage. more coming up. stay with us. this is bloomberg. ♪

>> europe is loaning the money to ukraine and they get their money back. it was loans guaranteed.

>> emmanuel macron with donald trump doing a bit of a correct in terms of europe's support for ukraine that ties into the defense story and we have news in berlin that the incoming chancellor of germany is looking alongside his colleagues to push through an emergency funding package around 200 billion their -- euros in the current parliament before they take their seats. so we look at the support and the defense stocks that have already rallied. we watch that into what extent that further supports the rally in europe. more than 30% year-to-date gains for those names. that company in germany one of the key beneficiaries. so watch those defense stocks at the open. let's have a different story

that ties into the trump administration, tesla. let's see if that is part of the story because tesla sales in europe have plummeted even as electric vehicle sales have grown. tesla sales falling 45% in europe in january as electric vehicle sales overrule. byd in the u.k. is selling more cars than tesla for the first time ever. nvidia is the big one when it comes to earnings and arguably overall market sentiment. those numbers dropping. hedge funds reducing their exposure to the mag seven stocks. what does that tell us about sentiment? that is the story of to -- up tomorrow and arguably of the week. we will be speaking to bill browder but the opening trade is up next. this is bloomberg. ♪

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>> good morning from london i'm anna edwards alongside kriti gupta lizzy burden, one hour away from the open