little more optimism into the session even as we wait for key crucial earnings. paul: that's right. we had a pretty decent rally on monday and it looks like that is set to continue today. those big earnings announcements from tesla, among the auto makers as well. a lot of u.s. debts will be auctioned this week also. what are we watching right now? annabelle: that's right. certainly going to be testing traders' appetites. this is the open for japan and south korea, as well as australia coming online. again, posting 1% to the upside for the nikkei 225. it was a story of rebounding from last week's slump. we've seen the nikkei two to five very close to entering a technical correction but it moved off those levels. the japanese yen in focus, close

to that 155 mark. the lookout for any government action to support local currency. given the b oj is expected to stay on hold later this week versus a still hawkish fed, likely to stay week for now. that's the state of play for japan coming online. yesterday we did see that kospi rebound. today a little firmer as well. a full week slump. the focus turning to earnings, sk hynek's is one of the key to watch. ppi raising 1.6% on the year. broadly the take away from that is domestic inflationary pressures are calling on south korea. the economics team is saying unless we see a further rise in oil prices, weakening domestic

price would keep cpi inflation numbers. paul: we just open for trade here in australia as well, we have a bit of a staggered open of course. that notwithstanding, we are better about one third of 1% right now. the aussie dollar showing a little more strength. now 64.5 cents u.s. crude is interesting to watch as well. we started off the day with brent exactly at $87. this is despite tensions in the middle east using a little bit. we started trade in u.s. debt as well. let's see how treasury yields are tracking. the two-year backing off a little bit. it was knocking on the door of 5% yesterday. we have a 10 year in the

japanese session right now hovering around 4.6%. we are going to see a lot of debt being sold, the u.s. selling $183 billion in 2, 5 and seven yen notes. it will be fun watching the market. let's bring in dorian carrell, head of multi-asset income at schroders. i want to start with the point about yields. the fed looking higher for longer. you attempted to buy the front hand here with the two-year so close to 5%? >> thank you for having me on the show. we have been waiting for this to happen for some time. we had been expecting yields to back up expectations going forward to be at the rates and the levels in the states are actually not that restrictive peer the short answer is no, we would not buy the front end at the moment, but we are relieved that it has started to adjust to

more rational expectations. the u.s. economy is doing extremely well at the moment. employment is high and projected gdp growth is very strong. we struggle to see the rationale for significant rate cuts in the states. paul: what is your base case for easing now with inflation so sticky and the economy looking strong? are cuts in the u.s. becoming more of a 2025 story now? >> we don't want to be too contentious answering these questions but if you look out this year, you know it moved from six cuts at the beginning of the year to june, july, potentially september, even perhaps a symbolic cut. into next year, we have to reassess because the u.s. economy has been very strong and resilient. the new look at financing conditions which are much more important for the corporate world, the yield covers are quite tight.

it's possible for companies to term out there debt. what we have noticed most is the cost of financing has not really gone up for corporate spirit we think that's a key data point. looking into next year, we have to see what happens in november and the u.s. elections. some of the policies on the fiscal front, in terms of taxes and immigration don't look too great for most from a disinflation area perspective. annabelle: you are watching that really inflationary risk. how does the fed move and potential to stay high for longer constrain central banks here in asia? >> we tend to look at it quite differently. we wrote a piece called the power of gravity referring to the idea that the fed stays higher for longer and that affects all markets. obviously the ecb, christine the guard has been clear she wants to cut in short order.

similarly in asia, monetary policy from the fed affects markets all over the world. if the fed stays higher, there needs to be a reassessment and perhaps a little bit more from a longer-term perspective, our rates really higher at this level? that's a question to answer on the desk. annabelle: what about the market in china? that is a very different environment for rates and a different economic outlook right now. >> china has a very different problem, deflationary problems going through, rate cuts and easing of conditions have been going on for some time in china. from the perspective of looking back a few months from extreme pessimism, some opportunity for

a pick in china. the rates look like they are coming down, but from a rate perspective, it is a different story. we do see a bit of a cyclical or tactical window. it is important from a global growth perspective, the imf has come out with upgraded forecasts for the u.s. and elsewhere. it is looking better than it was before but china is central to that. paul: it will be a big week for earnings. we did see a pullback last week. when you see those dips, do you buy or see that they are looking keenly priced at the moment? >> that's the real topic occupying a lot of us at the moment. we are income investors so that's the first thing to note. i think where we have been a little more radical is incorporating a benchmark for

these mega cap names. the only comment we would really make is yes, multiples are high but we do think projected growth rates are realistic and that you can see them critically coming through. a lot of people have looked at mega cap tech as growth and defensive and it is that transparency on the earnings. if you look at ai and technology, the kind of budgets they have to spend in this areas put them in a strong position going forward. we don't trade day to day. we don't have a strong opinion about who will hit or miss this week. we do think it comes to justify significant premiums in the market. annabelle: the expectations are pretty skyhigh in terms of earnings growth we can expect. if we don't meet that or even if we come in line with that, where do you think the market goes

next? >> i think you have to split the market up a little bit here. if you look at semiconductors, the expectations are stellar and you have to split the ai driver and the more mundane part of semiconductors which is doing less well and you seen that in some results that have come through. mega cap tech, they are different companies and it is strange they are bracketed together. we think selective names can do quite well but generally growth rates are not too optimistic relative to their prospects. what does it mean for the markets? if there's a big dip, combined with the fact that rates are higher than many people expected. a big miss would not be good but we think we are an environment of rolling out here. we've been in japan for some

time. we have looked at global energy. if there is a miss, it could be the opportunity broadening out which we think would be healthy and we think the pullback recently has been a healthy pullback in reassessment for the market. annabelle: that was dorian carrell, head of multi-asset income at schroder investment. taking a look at the drop we've got coming through for gold miners in particular, we did see boolean taking a bit of a tumble overnight because investors sort of back away from the haven aspects like gold given that the risks in the middle east or the were in the region seems the state of play for now. gold very much in focus trading below that 2350 level per ounce. the other stocks we are tracking is woodside.

that's also a watch for us given some moves at the top of the business but actually woodside not trading as yet. we do see woodside online and it is a little weaker so far. but the macquarie group as well coming up. paul: that's right. woodside does catch us out. it does seem to start trading toward the end of the morning. macquarie group will be sharing their outlook with us on the fx markets and why they are seeing further vulnerability for asian currencies. first, digging in for a legal battle over moves to force a tiktok sale. more on the implications for chinese and american businesses next. this is bloomberg. ♪

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paul: tiktok's chinese parent company bytedance has made it clear it has no intention of selling the video app. this as the u.s. government moves ahead with the plan to shut down the platform if it's not divested. for more, peter ahlstrom joins

us. bytedance looks ready to play the long game here in terms of the legal battle. how does this play out, and is waiting around and stalling for time maybe more favorable administration after november? >> that's exactly right, things are moving pretty quickly in washington p the house has gone ahead with legislation to give bytedance this ultimatum to either sell operations in the united states or it would be banned or the senate is expected to pick up that legislation this week and joe biden said he would sign it into law. that will give bytedance this ultimatum that either they need to sell the operation to another buyer, a non-chinese buyer, or face a shut down in the united states. four years ago there was a similar ultimatum and negotiated a preliminary deal to sell u.s.

operations, a complicated deal involving microsoft and oracle. this case is the opposite. they are not working anything out or contemplating the option seriously. there are a few reasons. they see elections in the united states or in november and they no changes in the administration can change their fate in the political outlook. the business in the united states is much bigger than it was four years ago. there's about hundred 70 million users -- 170 million users in the u.s. and they are generating a lot of revenue and they feel like they could take this to the courts, they can sue to stop legislation, they can get a temporary stay and play the long game to see whether they can be this out. annabelle: and the long game perhaps could involve exiting the u.s. market for a time, but can tiktok survive given the u.s. is such a key market now?

>> and -- that's a very good question. i think they look at it this way. if they sell u.s. operations to somebody else, they lose that forever. whereas if they shudder operations to fight in court, they have an opportunity to regain their position in the u.s. market >> they can continue to run their other operations. it is very popular, it is the biggest market. users may figure out how to use vpns or other devices to use that option. it is very unclear whether that would be a viable strategy and you're talking about influencers

who create content and advertisers. if the two sides of that business shift to other platforms, that would create long-term problems, so they are taking risks. annabelle: that was peter elstrom. let's keep on the china story. jean-luc is still in hong kong. beijing is big here. we know they want to see homegrown tech giants succeed, so how likely are they to block tiktok given it means the approval of regulators? john: beijing blocking tiktok from selling its business is high and there's a lot of politics in the u.s. and in china, slightly different.

the government is keen to defend chinese companies that algorithm has to seek approval from the chinese government. the likelihood they would decide to do that is high. paul: i want to talk about another policy in china to do with stimulating demand, encouraging consumers to upgrade equipment including electric vehicles, what will it cost? john: government will offer incentives to buyers to compel people if they have an older

car, to trade that in. government will do that for home appliances, equipment use in factories. this is part and parcel of an effort to get consumption of and running, the big question for this economy. where is the demand going to come from and china will help to alleviate. it will come down to how much the government is willing to spend, i detail that we do not

have. it for electric cars it will be 50 billion u.s. dollars. something of that scale could do a lot in terms of alleviating demands. paul: senior editor jean-luc. thank you, plenty more to come on daybreak asia, this is bloomberg. ♪

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♪ paul: let's check in on shares in woodside, good morning, up by 4/10 of 1%. stock has been off by seven .4%. we've seen a modest uptick in

oil prices today of course, but this is on signs that there might be investor discontent around woodside energy, so australia's largest pension fund voted against the climate plan and reelection of the chair. for more, amy bainbridge joins us from melbourne. what is going on? woodside agm is happening on wednesday. amy: funds do not like to talk about how they are going to vote. in this case there has been quite a bit of noise leading up to the general meeting. which has 170 billion australian dollars and management yesterday. they told bloomberg they voted against the reelection against the company's climate transition plan. they said there have not been

sufficient progress made on climate change in the company for it to support both of those going forward. those votes were put through electronically. if there is a deadline passed. australian super, the largest pension fund with more than 330 billion australian dollars under management said they budgeted against the climate plan and supported richard coleaders reelection and they've been making comments including a hester, a large fund, which confirmed it has been putting too woodside alternative board member proposals to see whether the company can do more through leadership to transition and reduce in missions. annabelle: amy, how much power

to pension funds have here? amy: good question because it is not always obvious when you look through the data. a lot of these funds have holdings through index providers . they hold about 3% of woodside. they said in parliament that it was largely inherited through the merger with bhp, so they are trying to advocate for better climate transition. super holds over 1% of the company, but there has been a counsel which represents investors of around $2 trillion worth and they had put forward a proposal to members recommending that they vote against woodside's climate transition plan. they stopped short of saying mr. goiter should not be reelected.

worth mentioning that the pension funds are under pressure to back up their climate statements that they are making. many have been more forward in commentary and the lead up to the meeting. annabelle: that was pension funds correspondent amy bainbridge. latest corporate stories and the u.s. federal trade commission is seeking to stop a merger between two fashion giants. the agency alleged that the deal between tapestry and michael kors owner would harm the luxury goods market. this is the first time in the sector. industries disappointed revenue

topped expectations. coming up, here why mcquarrie group is anticipating vulnerability for asian currencies. it's macro and fx strategist joins us next. this is bloomberg. ♪

annabelle: this is daybreak asia , this is the japan manufacturing figures. an improvement coming in at 49 point nine, close to the 50

threshold that is seen as expansionary. improvement, 52.6, 51 point seven in services. a little change from the month prior. 54.1 in the march reading. these are preliminary figures, but it tells us the story that sentiment is improving in japan. what you are seeing in terms of dollar yen fairly steady. japanese yen holding close to the yield differential between the boj and the fed given they are expected to hold. let's take a look at asian fx. in the session we are seeing little movement, dollar gauge flat. the story of this year for the

dollar is it is a force we did not that on. strong dollar is back and set to stay. our next guest says vulnerability and something we did not expect was the greenback being so strong. guest: they do for having me. for this year the strains of u.s. economy beats expectations. at the start of the year we are down to more than one half cuts a week. our view is we would only have one cut in december. u.s. yields are higher for longer and for dollar asia we continues to be a challenging

environment. annabelle: is that a trend that will worsen? what is your outlook? >> for right now in second quarter, it is very vulnerable. the reason i said that is because second quarter typically see very negative effects flow. quite a little bit of asian countries including indonesia and thailand. and when you throw in the backdrop of the hawkish fed, geopolitical risk and the dollar fixing, that really means that you have not seen the worst. paul: let's talk about the fixing. how far might the pboc be willing to let the yuan to appreciate? what could be that knock on effects? >> it has been a key question.

the key to how bad asia sentiment will get, if we had the pboc holding steady around current level, that would help asia central banks. unfortunately, a move higher is more likely and the reason is if you look at the china basket, it has gone up 3.4% year to date, so that provides a policy route to raise dollar see ny without compromising stability in the sense that they can measure broader basket. my view is we get the dollar fixed to about 714 in second quarter and the dollar could touch 730. so that is the level that i think wants it filter to the rest of asia it could be and fx selloff. paul: so much focus is on the

yuan and the dollar, but we have a chart on the terminal that illustrates this, yuan versus the peers, it is the highest it has been in 17 months. as all of asia weakens, going forward, how do you see it performing against regional peers? guest: yes, so i think there would be some downside. when the pboc start to race more meaningfully in the direction, however we will not see aggressive downside because it is a strong dollar environment, it tends to inch in the same direction as well. having said that, the fact that china economy recovery is slow, relying on exports, so they would prefer a weaker currency against the basket.

annabelle: oil has been a story of resurgence on the back of risks that appear contained, but there is a chance it moves higher so how that affected dynamic? guest: in the p.m. in asia we have net energy exporter like for example malaysia frigate. when you see oil like what we are seeing recently, across emerging markets asia, dollar asia, this is higher. it reflects concerns about inflation, but also reflection of the fact that the dollar is important currency. the market feels the fed can get more hawkish and u.s. yields rise filter through and move dollar asia higher regardless of whether you are importers or

exporters. paul: i want to talk about indonesia. bank of indonesia decision coming up on wednesday. intervention has not halted the slide. do you think indonesia will put a floor under the currency? guest: they will try. at the start, when i said it is hard to say with confidence that the worst is over for dollar asia, i would say when it comes to the rupiah, the pace of the selloff will slow because of indonesian resistance. this is light and they will decide whether to hike, they will go further to discuss whether 25 basis point would be enough. my best case is that they settle

to the policy rate, however, they are likely to drag up yields. the fecteau tightening quiddity. the combination of intervention, interest rate hikes will slow the rupiah, but the deciding factor for us is the direction of the dollar and commodity prices and we still need to be in wait and see mode. paul: for our macro and fx strategist, thank you for joining us. let's take a look at how markets are tracking in the asian pacific. another reasonable day for equities in australia, 6/10 of 1%. if we take a look at how the market is performing, a second day, broad-based. it is utilities and industrials that are suffering. elsewhere, the nikkei having a

good day, kospi following on from yesterday's gains. modest rise from a decent day for u.s. stocks. let's take a look at how we are doing in commodities. even though we've seen tensions easing, we have brent crude starting off at $87 and now we are at 87 .41 with new york crude rising. focus on gold, rally hanging on by its fingernails. that is our question of the day, whether gold is in a correction. or whether or not there is a way to go. some of our guests think it can get below $2300 an ounce level. annabelle: it perhaps comes down

to the dynamic as well. the is really -- is really official step down after the assault. he stayed in his role as israel launched a war in gaza. european union has imposed new sanctions over iran's attack. if the deal will expand restrictions with drones. they target weapons transfers in the middle east including hezbollah. president biden told below to

mere zelenskyy the u.s. aims to shift battlefield and air defense equipment. the u.k. is sending missiles to ukraine including long-range weapons in a package worth $620 million. and remember, bloomberg users can interact with a chart using gtv . browse charts on bloomberg to catch up on key analysis and save charts. this is bloomberg. ♪

>> bloomberg has learned traders left banks amid that that stimulus will create a boom. let's bring in asia investigating reporter lisa. this is a knock on effect a policy normalization in japan, it could reshape the market. lisa: certainly, if you are a rates trader you will be busy

with head critters -- had recruiters that want to hire you away. more than one dozen traders have shifted from morgan stanley and citigroup as well as megabanks and moved to hedge funds that are trying to get a piece of the action in japan. think of japan had a yield curve control policy for years as part of it stimulus that put a lid on government bond yields. now it created volatility that funds can make money off of. some are active in hiring like millennium. paul: so it anecdotally, what are we hearing from people hiring traders? what is it meeting for salaries? lisa: competitive landscape was

very competitive because the talent pool is limited because of the yield curve control. this has been a sleepy corner in japan and it was basically the talent pipeline is limited. headhunters and recruiters estimate less than 100 traders that can be hired and a portion would have risk appetite to shift from a stable job to work at hedge fund. because this is the financial industry, they are not shy about incentives. many are boosting bonuses for traders even though it has not been a great year for them while at the same time hedge funds guarantee a bigger payout of profits so basically this will be an active hiring space to watch.

annabelle: how much more can you get from a hedge fund in terms of profit sharing? lisa: the numbers vary, but the headline is to reference traders at banks taking on profits that they make. compared to a hedge fund, you are taking 20% or more, so the difference is substantial. paul: asia investing reporter lisa in tokyo. here are the latest corporate stories. chinese wealth manager noah holdings is planning to beef up the managers in hong kong and singapore. the chief financial officer wants 150 or two hundred managers by the end-of-the-year. that is up from the current 100. the bank is expanding overseas as china looks to diversify wealth.

the trade commission says google limited yahoo japan's ability to compete in targeted search ads. the regulator says they blocked yahoo japan from accessing technology to receive targeted ad revenue from searches on mobile devices between 2015 and 2022. ftc says google change conduct and has promised to give yahoo japan access to the tech. saudi aramco bought a 10% stake in petrochemicals. the company signed an agreement to explore a transaction. no details or timeline were provided. they are seeking more deals to expand business and secure longform buyers for their crude. singapore exchange is proposing a rule change to make it easier for some shareholders. companies must take steps to

hold a meeting. if shareholders invest 10% of stock. this is the latest move to improve corporate governance in response to activism. still to come, a model t maker is china's biggest offering. they preview up next, this is bloomberg. ♪ ♪

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for hong kong, a thin ipo market, not a great timeline for outlook, but the bubble tea maker has declined in gray market trading. let's bring in capital markets reporter philippe they. just talk us through the background for the ipo and what we are going to expect at the open because gray market trading is not looking too pretty. philippe a: it should be an interesting start today. this is the biggest ipo, 330 million u.s. dollars, a thin ipo market. this was quite the q year and was flagged for a while. the company decided to come to market with a deal that was smaller, but it went through and they managed to go through

closing the books. there was not a price range. fixed price 17.50 is the level of the stock is starting in. the market yesterday was a great indication of what we should see an performance was not good, shares were down over 13% so it would not be surprising to see pressure when the stock starts trading. paul: seems to be a lack of enthusiasm, is it possible we will see more companies coming to the market? full ebay: well, it is fair to say a lot of companies will be looking at this ipo not because of the size. it is quite meaningful considering the context in hong kong. that would not be the case two years ago, but nowadays, 350, 300 u.s. dollars is a significant amount and you have

competitors, other bubble t companies looking at the hong kong market that have started the process to actually sell shares. we are talking about a group that has been talking to banks for a while. a company called sexy t which is expecting to list their shares in hong kong. so we do have competitors and we have broader potential chinese companies that are expecting to list in hong kong checking their performance. it is hard to say whether we have a positive day. annabelle: i'm curious about selling shares at 17.50. is that something we see when we do not get a market range and what would be the lesson for companies looking to list? full ebay -- philipe: sometimes when the market is not good,

when the price at the bottom or below, it is a negative indication of sentiment. when you come with a fixed-price it is easier for you to create the valuation and bankers should be confident that they would get to that point, probably after having chats with investors and with the company willing to come at that market value. if you sell at the top and you have a pop, that is a good indication there is demand. the opposite, when you come at a confident price level and have a sharp decline, it is an indication of pessimism for sure. annabelle: that was equity capital markets reporter ahead of what will be a key test for hong kong's ipo market this

morning. time to check on stocks to watch. markets are open in hong kong in china, keeping our eyes on asian tesla supplies and the ev will or its first quarter results after cutting the prices of its cars in a key markets including china. we have seen tesla down more than 40%. asian miners move as gold takes a tumble. haven demand is using with tensions in the middle east appearing to be contained for now. what we are seeing in the broader market, one hour into the session, looking fairly mixed at this point, not seeing outsized moves. it does point to the number of key bond options coming up, set to test appetite and keep earnings on the docket. tesla, and number of magnificent seven names are due to report.

more on that, different themes in the next hour. the chief china strategist tells us how the upcoming u.s. election is shaping up mainland equities. that is it from daybreak asia. markets coverage continues as we look ahead to the start of trade in hong kong, shanghai and the china show is next. this is bloomberg. ♪ to me, harlem is home. but home is also your body. i asked myself, why doesn't pilates exist in harlem? so i started my own studio. getting a brick and mortar in new york is not easy. chase ink has supported us from

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>> we are a half-hour from the opening bell. you are watching "the china show." >> asian stocks gaining as investors post strong earnings led by big u.s. tech. ubs upgrading china stocks to overweight.