Transcripts For BLOOMBERG Bloomberg Markets European Open 20200203

catch up. not such a happy new year for chinese stocks. they reopened to huge losses after the extended lunar holiday. containment. the pboc seeks to mitigate the fallout, slashing rates and pledging ample liquidity. and crushed. commodities are also hit in china as bloomberg learns demands for oil falls 20%, iron ore futures dipped by the daily limit. we are just under an hour away from the start of cash equity trading across europe and in the u.k.. let us take a look at futures. you have green arrows here on all the major equity indexes. dax futures up 1/10 of 1%. you can see ftse futures are up as well as cap, about 0.3%. if you look at u.s. futures, they are showing bigger gains. half a percent or more in terms dow, and nasdaq futures. what do you see on the gmm? anna: we will return to the macro picture in a moment. a bit of micro news, imperial -- will join as ceo, stepping down another company and joining the board of imperial brands. we will keep an eye on that. back to the big picture story, this is the thing that matters this morning. china reopening after the lunar new year holiday. 7.9%hinese csi 300 down by this morning, more than 2600 stocks dropping by more than their daily limit. hard, we have seen measures from the pboc, we have seen cuts to reverse repo rate. that combined with the response or the catch up in fx markets, we see the yuan going through seven, something to be aware of. hsbc, the pound is also weaker on another story entirely. it is a canadast deal or something that looks like an australia deal. we will talk a little bit later. the pound is weaker. let us look to the other side and show you how much appetite we are seeing. fixed income this morning, and how little appetite we are seeing for certain asian listed commodity. we saw in the chinese session the iron ore price, the copper price, the palm oil price, all dropping by their daily limits. big moves and big catch-up in play. chinese stocks plunging after investors returned from the lunar new year holiday. that is as the death toll rises from coronavirus. the pboc injected liquidity to cushion the blow. joining us now is stephen engle. juliette saly has the latest on the market impact and mark cudmore is looking at the global impact. let me come to you first. bring us up-to-date with the spread of the virus. what are the numbers we need to know? >> chinese officials are not only trying to contain the virus, but also they are coping with lots of shortages, particularly in hospitals at the epicenter of this in wuhan and in hubei province. 90% of deaths have been from hubei province and the death toll has been climbing. we also got our first death outside of china. this was in the philippines. deaths,xceed one -- 361 an increase from the numbers i gave you on friday. the number of confirmed cases has jumped to 70,205, 75% increase from friday. 65%, are incases, hubei province at the epicenter. coping with the current prices and containing it are the biggest challenges for the chinese right now. matt: juliet, let me get to you. we knew this was going to be horrendous. we have been talking about it every day for the past week. take us through some of the limits we have hit. >> absolutely. on the open we saw all three mainland chinese key indices fall by more than 9%, setting them on track for their worst day in around 30 years. we did have that pboc liquidity coming through and also the rate cuts. you saw some of those losses stemmed somewhat, but still on the close on the csi 300, that is one of the worst days for that index since we saw the equity bubble burst in august, 2006 hundrednd stocks falling by their daily limit by telcos, technology producers, some of the big falls you saw in commodities, the benchmark iron ore contract falling by its daily limit of 8%. the steel reinforcement contract at its downside limit to trade at the lowest since december 2018. copper, crude, palm oil, and the yuan trading for the first time since january 23 as well, and it fell. the dollar, its biggest one-day drop since august. anna: thank you. let us bring in mark cudmore from our markets live team. i want to think about where we are the global picture. clearly we are rightly focused on the way china is reopening, reacting to the events taking place in china. but global stocks, global assets, seem to be happy with the amount of risk they have already over the last week priced in. is that where we stay? this is just the china catch-up story? >> that is a fair way of portraying it. we are always going to be focused on china. athink we are reaching turning point globally. every day last week we said we expect more pain from the coronavirus story. we said monday was the first day we start the turning point. it is interesting to know, even on the virus situation, most cases and certainly most deaths and fatalities are in hubei. situation, agic bad economic situation that will have long-lasting consequences. for a global market story, we might be getting toward the end. the weekend suddenly saw this become a global crisis, you saw traders get worried. ofhink in the next couple days we will probably see markets trade in a slightly more positive narrative, more focused on liquidity again. maybe taking the great earnings we have seen out of the u.s. using that to drive prices higher again. the virus is one thing, but the response is another. when you corentin 15 million quarantine 15 million people, this has to cripple the economy, right? >> i think you are absolutely right in terms of the long-running economic story. we are seeing the impact across asia. flights are canceled, supply chains are broken. most of asia will be impacted. talking about this in the third quarter of this year, the damage to buyers of what happened. it is crippling for china. we do not know the extent of damage. markets outside china and outside asia will move on from this quite soon. even in china and asia, markets themselves may be forward-looking. the amount of stimulus we are getting from the pboc, they cut rates. the chinese government has made it clear they will do whatever it takes to support markets, so i think at some point even chinese markets will start saying, we know it's a terrible economic situation, but we know that will be a read stimulus package. they will be boosting growth once we get beyond the virus. maybe that turnaround point for china and asia is another week away, but not too long away, i suspect. anna: what does that mean from the pboc? we see them taking action around liquidity and reverse repo, but lots of talk about other measures. do they wait? >> the market wants to see they will provide enough immediately. everyone knows pboc will support the market. they areeed to know is willing to follow up with more measures. i think if we see the market, equity markets down another few percent tomorrow, expect the pboc to act again in some way. they will do whatever it takes to turn the sentiment around on the onshore markets. . matt: thanks very much. mark cudmore along with juliette saly and stephen engle, our team in asia giving us the rundown on what we have seen and what to expect. next, a look at stocks to watch at the open this morning, including ryanair as the company posted a profit for its winter season. remember, bloomberg radio is live on your mobile device or on dab digital radio if you are in the london area. tune in. ♪ anna: welcome back to "the european open." under 40 minutes away from the start of the european equity day . many people focused on not europe, on china today. the market after the lunar new year. you see the damage across chinese equity markets. the death toll tragically continues to rise. very much thinking about that, but in terms of the market reaction, this is what we are seeing at the moment. with of these markets closed over in china. european markets have had a week to think about what kind of impact this is going to have on the chinese economy. european equity markets and u.s. futures expected to go higher, showing up as a result of what we have seen the pboc do. some global markets kicking hard from the action we have seen taken by the central bank. interesting to see the chinese foreign ministry commenting as well. let's focus on the stocks we are watching around the newsroom. bloomberg's annmarie hordern is looking at ryanair. we had profit numbers move them. instead is covering -- cm unstead.-- sam 88 million euros in the third quarter compared to lost a year ago. all of this is a by last-minute bookings for christmas and new year's. i'm one of those last-minute bookers. one thing they did reiterate is any earnings we are going to see him the max jetline is going to be a year away given the fact that has been grounded. a bigthe airlines are focus for us today. mining companies obviously a huge part of the picture as a in a bigin demand up year for the markets. >> that's right. see correction this morning. there has been a big move in china. mining company investors this morning, we will take a look at that. maybe reposition. european futures are higher. if you look at the move, sentiment in mining is not going to be good today. iron ore, copper hit very hard. it may be as the week goes on we will see this mostly priced in. anna: what's the story? quick steeper cost cuts at the swiss private bank. the next few years they are going to cut $208 million. that's double what it saw last year. they are really just trying to create a leaner bank. at the same time they have scrapped their new money target after having missed it. all this earnings just emphasizes the difficult environment for julius baer. they have increased competition in tighter margins, so it is no wonder earnings look like they did this morning. matt: thanks very much for joining us. you can get all the latest stock stories by going to first go, type first go on your bloomberg terminal. you can also get your first word news on the mobile app. we have european earnings coming up. obviously we are smack in the middle. let's take a look at the highlight. bp is reporting fourth-quarter results. watch out also for earnings from copenhagen-based jeweler pandora and danish beer brewers carlsberg over in italy. .ollow results from ferrari wednesday, earnings are announced by pharmaceutical gskanies novo nordisk and as well as bnp paribas. anna: we have not even got to thursday at. a slew of earnings across different industries. highlights include the banking ,ector results from socgen, ing and unicredit. plus watch out for total and ecuador. -- equinor. friday, maybe we get a rest. let's get a first word news update. >> oil demand has plunged by 20%. executive described the scale of the demand caused by the coronavirus outbreak. it dropped by 3 million barrels a day, the largest amount since the financial crisis. opec and its allies are considering how to respond. eu,u.k. may have left the but the battle over brexit does not look like it's going away anytime soon. boris johnson is using a speech in london to walk away from talks. he does not want to sign up for the single market regulation or the ruling of top courts. he says britain will prosper with or without a deal. president trump's impeachment trial is drawing to a close. senators are preparing to acquit the president. lamar alexander supporting the move to dismiss charges despite saying the president crossed the line by withholding u.s. aid to ukraine. tosays it should be up voters to decide president trump's fate. global news 24 hours a day and on quick take by bloomberg powered by more than 2700 analysts -- and journalists in more than 120 countries. . matt: thanks very much. your first word news out of london. next, take a look at a story you need to know this morning. the slump in chinese demand for oil. there's so much going on surrounding the commodity. annmarie hordern has all the latest for you. this is bloomberg. anna: 7:21 in london. hey quick look at how chinese markets have closed. how has china responded as it reopens after the lunar new year holiday and asked the coronavirus continues to take its humans whole? this is the picture across chinese markets. these markets are now closed. interesting lines from the central bank. the pboc saying the stock plunge today is panic. irrational factors seen in the stock plunge. the pboc having taken some action in terms of liquidity and reverse repo rates. futures look a little different. u.s. futures point higher. global investors price all of this in, that is the big question. bloomberg's scoop that the coronavirus is leading to a 20% slump in chinese demands for oil. manus cranny joins us with a look at the oil sector. how bad is this going to get for oil? you talk about the language the pboc are using, irrational reaction. at the moment, the assessment is that we are looking at an almost catastrophic demand destruction -- disruption. looking at the largest demand shock in the oil market in china since 2008, 2009. it is the most set an and vera drop in demand -- sudden and ent drop in- virul demand. china consumes the equivalent of france, italy, japan, germany, and south korea amalgamated together. demand the scale of china usually has, and that is -- has invoked an immediate response from citigroup. let me run you through. record sub 50 oil is a possibility in the first quarter. chinese demand is inspected to drop by about 20%. the virus drastically shifts global economic outlook, but if you look deeper into what oil demand in china means, 55% of oil demand growth is made up of jet fuel. diesel and gasoline. it is quite an interesting amalgam on the demand side. the question for the market to assess is with this kind of concentrates a producers mind more than the prospect of crude oil prices. hence the reason why we have an ant hill-like frenzy in opec plus. it is a bit like me in an oil pack at opec. matt: you in an oil pack, an anthill, thank you very much for that. the kind ofs about frenzied behavior we are seeing amongst the decision-makers and the concern about demand. joining us now is global head of debt syndicate at ubs. we have seen that kind of frenzied activity in the debt market as well. in terms of buyers, investment-grade debt, i was reading a little bit earlier int we saw 23, 20 $4 billion inflows last month. that makes it one of the biggest months ever. what's going on? yearvery busy start to the . particularly in europe. more than 230 billion of issuance, a number which we never had before. as you rightly say, this is down to the fact we seem very strong on inflows over the course of the past couple weeks, actually months, driven by very strong returns. anna: how much is the coronavirus making a difference? either to issuance or the money available to invest? this is clearly making a lot of people seek some relative safety. armin: it is definitely in the short term a game changer. we have seen slowdown the past week already. impact already in issuance. we saw it in the broader market as well from a performance perspective. hopefully in the medium to long-term we can return to what we have seen in the past couple weeks and months. matt: we are going to keep you with us. of debtter global head syndicate, ubs, our guest cohost for the hour on this monday morning as we see. a huge route in chinese stocks. massive drops that are not looking like they will carry through to european tour u.s. trade. we have green arrows here in terms of futures. key storiesdup of including hong kong's fourth-quarter gdp rating. alphabet and european bank earnings as well. ♪ matt: welcome back to bloomberg markets. this is "the european open. " matt: i'm matt miller in berlin alongside anna edwards in london. you are seeing green arrows across the european equity index futures. it looks like we could have a positive start to this week, even with the huge route we have seen in china. investors quite pleased with the extent they have already priced in damage to the chinese economy. let us check out the other stories we need to be watching out for today. reporters have their eyes on california. majoruropean capitals, banks start reporting their earnings. in hong kong, fourth-quarter gdp numbers coming in the next hour while the coronavirus outbreak rages on. lookingg intelligence to add alphabet. can the company -- the success. europeaner is watching banks, which will show the impact of the negative rates and -- on revenue and profitability. stephen engle is focused on hong kong. kong foroking at hong the moment through the lens of gdp. this is going to be a backward looking number. from protestcome activity into the coronavirus. things are not going to look good. >> over the last year we have had the lingering effects of the trade war between china and the united states. that was hammering hong kong. on top of that, violent protests .n the streets on top of that, now we have the coronavirus, which will not necessarily be baked into the fourth quarter numbers. it is the harbinger for more pain to come. growth fell 2.9%. the fourth quarter contracted 3.9%. for the full year, down 1.4%. hong kong is trying to hang tough. whammy punches are going to be hard to overcome. what are we watching out for in terms of european bank earnings. is really a trading revenue story. though we did see deutsche bank and ubs outperform, they were dwarfed by the likes of morgan , which doubles their outcome. markets are expecting perfection. the negative rates environment is going to be problematic. they have been for some time. investors are expecting better than will actually come from bnp given the negative rate hit. there are early of issues. nordic banks this week. generally, the issue with the european economy is in low gear. rising loan risk could gain more attention this earnings season. anna: let's focus on the technology sector. what are we expecting from alphabet? >> analysts are expecting $47 billion of sales for the fourth. alphabet makes most of its money from advertising. the focus is really going to be on what they can do in the cloud services area. they make a small amount of money there, dwarfed by the area of -- but it is an estimates -- analysts think can grow. they are expected to make a bigger push. they want to overtake at least one of their big rivals in terms of sales volumes in cloud by 2023. focus on any incremental exposure around revenue and profit they currently make from google cloud and what their plans are for the next 12 months. the other area that continues to be in focus is regulation. that is a huge amount of focus on google as a dominant player in the u.s. and europe. competition for markets authority has a big review of the advertising market. there are threats to the current structure. the new ceo has quite a bit on his plate and expectations to deal with. >> thanks very much for that. stephen engle out of asia. armin peter, global head of debt syndicate at ubs still with us. inflowstalked about the in investment-grade and how popular that asset class was. in terms of a sector breakdown, looking at bank earnings, tech earnings, what kind of trends are you seeing? >> but we have seen since the start of the year is we were led by the financial spectrum in terms of issuance, which led to record volumes you mentioned. corporate's probably in that regard. so far they have been slightly behind volumes we would have expected. as you rightly say, we are coming out of the reporting season in the next couple of weeks. the corporate space is catching up. there are no favorites, probably in light of the coronavirus. it may have infected some sectors. with other words, generally speaking, everybody gets good reception by the market. terms of example we have seen so far this year. anna: maybe you see corporate's catching up. what about the appetite for the year market in general? you see non-european issuers. what is the attraction? fact that european investors continue to seem diversification. the hunt for yield has not stopped. it started with more non-european issuers going to the year market. anna: you have negative interest rates making it cheaper corporate's to raise money and a lot of investors looking for places to park their cash. do you see that changing? armin: i do not see in the short term. i cannot see the yield environment changing. it is due at some stage. maybe then the trend will change. matt: what do you see in terms of default concerns amidst this coronavirus? plea from junks debt over the last week. are they right to do so? this is the area where you clearly see the virus impacting broader markets. you see the first reaction, you do see decompression. when the market has been embraced for taking risks, this market was outperforming. in thehat do we see seasonal pattern? january started well. how will february shape up? been february has seasonally the most busy month. we have issuance bringing that forward. we should see a slowdown. matt: armin peter talking to us ion.e kick off a volatile we saw huge drops in asia and now wewe saw massive inflows for investment-grade debt last month and investors fleeing from junk debt as well. a lot going on. next, ryanair reports a winter profit, but what will the coronavirus do to the company's bottom line? our interview with the ceo next. remember, bloomberg radio is live on your mobile device or on dab digital in the london area. this is bloomberg. ♪ anna: welcome back to "the european open." it seems european equity markets looking to move higher at the start of trade, focusing on the measures taken by the pboc to add liquidity to markets rather than focusing on chinese investors returning from the new year holiday. let's get a bloomberg business flash. at u.s. regulators say the 737 max may not need its wiring fixed according to the wall street journal. if the latest flareup between u.s. and european regulators over the jet and it complicates the plane's return. european officials had wanted the wires removed to reduce the risk of short-circuit. we work has named its new chief executive, bringing on board the real estate veteran in a bid to turn around the struggling startup. the company has been run by co-ceos since the founder stepped down in september, following a failed attempt to take the company public. pg&e says it will overhaul its board of rectors in a bid to exit bankruptcy. it will also bring in safety experts and create regional operating units. the company filed for chapter 11 protection after facing billions of dollars in liability after wildfires were blamed on its equipment. australian lender westpac says it will defend itself against class-action lawsuits in the u.s.. it's already facing class action in australia related to allegations of 23 million breaches of money laundering, failing to detect payments linked to child abuse. westpac is warning more suits are impossible. thanks very much. you ryanair telling posted a profit for its winter low season, but the airline said an earnings boost from the grounded 737 max will not kick in for another year. the cfo spoke to bloomberg about the impact of the coronavirus. >> we don't know how long this will last. if it is relatively well contained at this point in time. if it were to continue, you would see a similar trend with people holidaying in europe. >> airlines in europe, asia, and the middle east have stopped service to mainland china. the u.s. has become -- begun limiting entrance of travelers. of dealprepared to kind with a bigger number of passengers? how will that impact you? carry 156 million people next year. we are limited in the number of aircraft we can take on board. we are well prepared, operationally prepared to handle those kinds of numbers. -- matt: you talk about delays from delivery on the max. you're going to reduce the summer schedule. can you put some numbers around this? what kind of capacity? bere are the risks going to most at risk as you assess the situation right now? won'tlooks like we receive our first match september, october. we hoped to have 10 of them in the summer schedule. our colleagues in operations at this point in time are reviewing the schedule to see where we take some numbers out. we still grow by 2% this year. it is likely that will be a limited base closure. we reduce frequency in our larger basis. that is underway. it will be a couple weeks before we final that, but our objective is to minimize whatever comes out. downof our growth will be to our airbus fleets. in thatoing into vienna motion. we will push that hard. we have good confidence at this point in time. that was ryanair's cfo earlier this morning speaking about their numbers and coronavirus. coronavirus having an impact on chinese markets today. chinese stocks have been hit really hard today. the commodity exchanges have taken an unprecedented hit. the benchmark iron ore contract has fallen, largely reflecting a broad selloff in january across all commodities which will be in focus this week. us now to discuss further the impact on commodity markets, our energy reporter in singapore. what we are seeing in energy markets in china and other parts of asia opening up for the first time, but mostly in china since the lunar new year, is this any new information for investors globally? wti and brent are fairly flat at this point. >> overall, the market expected there would be some kind of reaction when they chinese markets opened. if you look at oil, for example, the market was expecting some sort of drop in demand because people are not flying on airplanes anymore because of the impact of the virus. sources, to bloomberg the amount of demand has dropped 3 million barrels a day, about 20% of china's total consumption . that is a big number, but like you said, wti and brent did not react tremendously. the market has really priced that in. everyone is just waiting to see china respond. they are waiting to see them bring the demand backup and how they are going to get this fire is under control. that is what everyone is waiting for. matt: you clearly don't make up plane trips you missed, or not all of them. you don't make up driving time you did not do. but you are going to get factories going into overtime, right? if they had any slowdown in their energy output. do you expect any kind of pop after the lolly? -- after the lull? >> some type of overcompensation. you cannot go back and retroactively get airplanes running again. maybe you could see other commodities with different steel-related products trying to pump out more product. you can see refiners boost their operations and try to cut through the amount of stockpiles they have soaked up as demand fell. you are not going to be getting that back ultimately. could see other reactions. you can see opec and russia coming to the rescue and trying to balance the market that way. that's one potential. another thing you could see his overall market sentiment increasing at they are able to get demand backup. what commodities are taking the biggest hit in the energy sector? what are the big standouts you see? >> you have steel, iron ore, different kinds of refined oil products, and you also, interestingly enough, cole itself actually pops, the price theoal, because a lot of mines in china were closed because of the new year. everything is not doom and gloom. there is at least one commodity energy product that saw a bit of an increase in china amid all of this red. you for joining us. our energy reporter joining us out of singapore, giving us the market andhe oil really the broader commodities fallout we have seen. minutes away from the open. 10 to be exact. china unveils a raft of measures. eight companies hit by the coronavirus outbreak, but have they done enough to shore up the financial markets? certainly did not look like that as we saw the numbers this morning. we will bring you more next. ♪ anna: welcome back to "european open." eight minutes to go until the start of the equity trading day. investors in europe are going to turn a blind eye or at least expect they have priced in china. bloomberg first word news brought to you now. thehinese markets blunting opening after extended holiday as the coronavirus continues to spread. china has vowed liquidity to come. the first death outside of china has been reported in the philippines. the number of cases has jumped to over 70,000. bernie sanders is leading in a key pole. -- poll. a number of factors complicate the results. voters whose favorite candidate does not get 50% can take a fallback choice and one third of caucus-goers say they could still change allegiance. the kansas city chiefs have defeated the san francisco 49ers to win the 54th super bowl. it was kansas city's first big three in 50 years. mahomes was named most valuable player. according to one advertising executive, the wind may help him million aother $7 year in endorsements. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. thanks very much. i will just tell you quickly that the kansas city chiefs also where red jerseys that look surprisingly similar to 49ers jerseys. it's easy to considers -- confuse those. kansas city happens to be in missouri for those of you who happen to not be in the u.s. or to be the president of the u.s.. companies hit by the coronavirus outbreak, but have they done enough here? with your details is dani burger. >> according to socgen, they have done enough to stabilize the yen. we saw chinese stocks off and the yuan get hit. a lot of this is just got punch risk off panic selling. it should stabilize around 108.30. the pace of the spread of the virus is somewhat contained despite the fact that is outside of china. long-term, the end will depend on chinese stocks. right now that's a precarious prospect. anna: dani burger with your socgen morning call. goingneral directions are to be up, it would seem. line.n eye on world bid for whatking a would create the fourth-largest payment company globally. beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. wheneveryone is different.a, which is why xfinity mobile created a different kind of wireless network. one that saves you money by letting you design your own data - giving you more choice and control compared to other top wireless carriers. now you can choose unlimited, shared data, or mix lines of each and switch any line, anytime. no one else lets you do that. design your own data with xfinity mobile. it's wireless reimagined. simple. easy. awesome. anna: a minute to go until the start of cash equity trading for this weight. here are your headlines. catch-up is not a happy new year for headlines -- for the chinese after the lunar holiday. the bp as he seeks to mitigate the fallout, pledging ample liquidity. the crust commodities are hitting china as bloomberg learns its demand for oil falls 20%, the nation's eye and or futures, this by the daily limit -- iron ore futures, this diet -- by the daily limit. matt: futures pointing higher across the board. ftse futures, 3/10 of 1%. content of features not quite as much as you do see in london, but still striking after the huge drops, biggest in five years, out of chinese markets. you see bigger gains in u.s. futures. it looks like european and u.s. markets want to kick off this week on the risk on foot. the markets are just getting out of the gates right now. what do you see? anna: markets looking to start site,ek on the risk on around liquidity, around whether further action might come from them to support the chinese economy, the death toll rising from the coronavirus from china itself. this is the picture. european equity investors choosing to focus on what they wasted, not the big loss session . your stocks up for tense of our present, the dutch market up strongly. a little movement to the upside in the dollar, weakness in the your, a sense of weakness in the pound. brexit was done friday. we will continue to do so as the negotiations ramp up, some talks from boris johnson over the weekend. it's not no deal versus canada. it is can that -- australia versus canada. that's what we're seeing and markets this morning. that can explain the difference. from a sector perspective, what do we see? most sectors going higher in europe. some of those stocks did well in the recent weeks, giving up some of those recent gains. materials is a little bit mixed. we might see reaction in part of the mining sector to what we're seeing in china. there are other listings globally, and some of those reacted to the coronavirus and made there is substance on what the -- made their assumptions on what this does. what do you see? matt: we see more winners than losers, about 400 winners, 140 losers. you were talking about ingenico a little earlier after the whirlwind offered. we see that up about 9% right now. ingenico one of the big winners, an absolute movement. in terms of adding points to the index, s&p, asml up there at the top, followed by novartis and nestle. you do have tech names adding points to the stoxx 600. on the downside, give got oil and commodities producers. tinto, down rio this morning, glencore is a loser, anglo american as a loser, total as a loser, so really heavily skewed towards the commodity losers. although you do see some, novo gsk,sk, and some other other smaller losers in this. chinese stocks it did plunge big-time after investors returned from the extended lunar new year holiday, that's as the death toll rises from the growing coronavirus outbreak. the pboc did cut rates and injected liquidity to try to cushion the blow. joining us right now is bloomberg's stephen engle. stephen, you're in hong kong right now. we're seeing more quarantines. -- seeing a push, in other countries and in asia, -- indonesia, the u.s., to stop travel. what's going on there? stephen: the challenge internet is not only containment, but coping with the crisis of the epicenter, as far as the bulk of the death, 97% of the deaths in the hubei promise, where wuhan is. 17,000,e more than confirmed cases 69% of those also in hubei promise test province. -- province. issue.ment is one big philippines had the first noted death that did not originate or come from china. yes, containment is one thing, shortageg, there's a or overwork -- no shortage of overworked hospitals, people, doctors and nurses. there's all kinds of problems there. the biggest problems on the markets, we kind of expected 9%, but one point down economic numbers were getting from hong kong in a half-hour, also going to hear from carrie lam, is going to give a press conference in an hour's time. anna: stephen engle keeping us updated from hong kong. joining us, simon harvey. good morning to you. great to have you on the program with us. many investors are trying the trays is to economy we are going to see in the first quarter, recouped in the second. until we see infections plateauing, it seems difficult to how long it is going to last for markets. simon: that is the million-dollar question. this is why we don't see aggressive pricing and effects. crusius depend on macroeconomic conditions, not industries like equities or commodities. the fx pricing is all over the place, japanese yen suffered losses even though chinese you want. is getting erect. australian dollar is rallying. people are all over the place. they had no idea what sentiment was like. they had no data to run with and they still have no data to run with. pmi aren't representative. we're going to see a trickle through affect, a bit more longevity as opposed to equities. but that's the million-dollar question. anna: the yen is at levels it started january at. that is the extent of the mood . risk off territory to reflect slowdown in china, surprising the yen has engaged more? 1.08: yeah, and we've got at the end of the quarter, looking quite comfortable now. at the moment, we're pressing it in treasuries and bond markets, not pressing anything too much and fx markets. this is the problem. we don't know what the effects are going to be on chinese economy and the global economy. you know, with china's economy especially, it's going to take time. it's going to have to take time. matt: are there smaller currencies -- i notice the chilean peso definitely taking a hit, seeing big moves made? simon: the chilean peso is taking a double whammy, idiosyncratic risks of domestic political risks, going on and then you've got the additional risk factor of commodities taking a plunge. copper has been done, historical run for copper prices. it doesn't look great. chilean peso is one of those commodity linked currencies that are showing a more true move of what's going on in fx markets because of this contagion. further'll get to market stories and how they respond, simon let's get bloomberg business flash with leigh-ann gerrans in london. >> right air posted a profit for a winter low season, the biggest budget airline was boosted by last-minute bookings over christmas and new year holidays. ryanair says an earnings boost from the 737 max jet won't kick in for another year. it doesn't expect to get its first max until september or october. payroll brands named stefan bomhard as its next ceo. he currently leads the car company. they will revise sales of cigarette alternatives. they struggle to keep up with bigger rivals like british american tobacco. regulators say the 737 max may not need is wiring fixed. but according to the wall street journal. it's the latest flareup between banks and regulators over the jet and complicates the return to service. u.k. officials wanted the reuters removed to reduce -- wires removed to reduce the risk of short-circuit. and that your bloomberg business flash. matt: leigh-ann gerrans in london with your business flash. your stocks on the move, including ryanair. she up after maintaining guidance. there's a lot more going on. we'll bring it all to you next. this is bloomberg. ♪ anna: welcome back. 12 minutes into the trading session, unlike china, attorneys session rocked by coming back to market, opening up the first time since the new year holiday, pressing and what we've seen from the coronavirus last week. europe looks different, open last week. european investors focus on the liquidity measures instead. --'s get to individual stock stock movers with annmarie hordern. alix: a lot of earners --annmarie: a lot of earners, right air up 3.5%. a profit of eight -- 88 million euros. it was a loss, had a lot to do with last-minute bookings for christmas and new year's. on top of that, they are getting a boost today. ingenico and whirlwind getting a boost today, one of the best gainers, while whirlwind one of linebiggest losers -- world one of the biggest losers. we are seeing the consolidation in payments industry, both companies in france, a big one for the french industry. annmarienks very much, hordern taking you through the biggest movers there. the u.k. has left the e.u., as you may have heard, but the brexit battle is far from annmae hordern taking you through the biggest over. prime minister boris johnson is going to threaten to walk away from e.u. talks instead of accepting demands of from brussels to sign up for the single market regulations and the rulings of its court. meanwhile, in brussels, michel barnier will set out the e.u. position for the talks ahead. joining us to discuss is our reporter on the ground, maria tadeo. what are we expecting to hear from both sides today? isia: right, so matt, this about setting the tone for trade negotiations. the prime minister will say we want a comprehensive trade deal with the european union. u.k. is aiming to get something similar to that of canada, but will also say the fact we're leaving the european union means we should not be a role taker from e.u. standards and regulations. we're expected to hear from michel barnier something slightly opposite of that. the more you move away from the e.u. status, the more difficult it is to get that trade deal done. he'll also say these are things the e.u. agreed to in the declaration. you remember that document added to the withdrawal agreement, which both sides said they would agree to a fair relationship after brexit. isre's two issues here, one how closely aligned to you want to stay to the you? what does that mean in terms of the time i going forward? we know this is a tight deadline, talking about 11 months. but is less than that. the europeans only get serious about the negotiation and march, and the and principal engine, both sides would need to agree they want more time to negotiate this deal. much, maria very tadeo in brussels. us.n harvey is still with i'm interested to see the way the narrative has changed a little over the weekend from number 10, a lot of talk talking about how they would walk away from a deal. interesting they tried to get rid of the cliff edge by this year, sang is not the choice between no deal and canada. as a choice between us really and canada, so recasting what it means to not have a conference of deal with europe, what are your thoughts this morning? simon: i'm in the same camp as the pound. b going to get? is not going to be canada. it might be surely. who knows -- might be australia. who knows? the bank of england's not going to cut and they didn't. going forward, i was in the dovish camp. if you don't know what deal you're going to get, how do you know where to invest? where am i going to sell my goods? that might be an increase in business sentiment, initially, but is this going to have legs? we'll have to wait and find out. we're going to get this deal, aim for that deal. we still have 11 months or so. but i from a business owner, i don't know what my outlook for the year is. --ase pmi's our initial jump are in initial jump. egg onght leave him with his face. i know were i stand. anna: matt? matt: simon, i want to ask you inside baseball here. it's a six telling -- $6 trillion market. does that remain the same after brexit, or are you concerned business leaves the city? simon: london's always been an fx hub. there's multiple reasons for it, institutions, they're very well-known, very credible. you've got the timing. london, is one of the best in the world. i leave my office rarely. yes, there's been an argument we're going to go to frankfurt, paris, dublin. it depends on passporting rights we get. people are taking cautionary measures to open smaller offices in europe, but arguably what you've seen from investment banks, they're going to keep their operation in london. anna: let me ask you about the economy. got a chart talking about decline in recent years. this is something that big of england talked about. you pulled it out in your notes is one of the factors to watch. are we focused brexit headlines still on the pound, or are we focused on the underlying economics? when do we get folks on underlying economics? simon: we got a taste on pmi's. we are screaming to get away from political headlines and go back to something more for castable, easier to engage with the macroeconomy. arguably, it's going to have more of a mix because we have the timeline with politics. it's going to impact this sentiment, investor appetite, and so forth. but productivity remains low. we're dealing with the financial crisis. we're looking at the state of the u.k. economy, especially with the bank of england weighing in on whether to have a cut, bank of england versus markets. markets have nudged expectations further down the line. we're going to have more of a blend than previously before the election, where political headlines we're looking at. matt: simon, we're going to keep you with us a little longer. coming up, as the new coronavirus squeezes chinese oil demand, city cuts its first price forecasts. up next, it's the chart that matters. this is bloomberg. ♪ anna: welcome back, 22 minutes into the equity session, which looks to be broadly positive. but actually, coming off eyes. stoxx 600 over flatland light,ry, a bit of a after the dax. u.s. futures point higher, but of earlier highs. if that earlier exuberance is a little overdone. as theas dropped 20% coronavirus squeezes the country's economy. here's annmarie hordern. annmarie: tori percent or 3 million barrels a dale -- tweeps or 3 million -- 20% or 3 million barrels a day. you can see the collapse. it's a brilliant bloomberg scoop by our friends at bloomberg news. talking to people with inside knowledge of the chinese energy industry, since the outbreak, we've seen brent drop 10% and city says it can fall further. they cut first quarter price targets to $54 a barrel from $69, more than a $10 price differential. you look at brent spreads, they are selling to flatten, they concern for opec and friends like russia. they are going to have a technical meeting this week. representatives will report back to the ministers. it remains to be seen whether they think this situation is dire enough to meet, meeting some resistance from russia to bring in a meeting up from march to february. anna, matt? matt: great to get that from annmarie hordern in london. simon is still with us. i know you have recently changed your canadian dollar forecast based on the oil situation. details.he simon: yes, previously we had teller breaking $1.30, now we're having to reassess. headwindsng external reemerge, purely because of the coronavirus. we're also seeing the u.s. teller elevate. when you factor in the fact oil markets are not on spot level re seeing the spread annmarie is alluding to. it looks like it's going to be a longer oil price. anna: talk about commodities, makes me think of the australian economy. we've seen a lot of commodity prices making big adjustments last week and this week in terms of the chinese coronavirus. i'm joined with an interesting stat. the chinese bought 82% of australian iron or shipments in 2019 back in 2003, only 30%. it shows how much links have changed since it. what do the australian dollar and how it looks at this point? simon: it's definitely vulnerable. we saw it last week, though. looking at the commodities is easier than fx because you're looking at it from a microlevel, opposed to level, as this macrolevel risk. then you look at the australian dollar. it's an open economy, high exposure to commodity prices. we saw all of this kind of impact take on -- hit the aussie dollar. then you look at what's happening today. the aussie dollar is up. that's because liquidity measures are improved. anna: same reason european stocks are up? simon: exactly. if it's the australian dollar. matt: pleasure having you with us this morning. thank you for coming in, simon harvey. war,xt, first came a trade then protests on the street. now hong kong faces a deadly virus. ♪ anna: welcome back, 30 minutes into trading day. i'm anna edwards in london, alongside matt miller in berlin. matt, the session is evolving in the first 30 minutes, isn't it? matt: yeah, absolutely. take a look at the stoxx 600 index. although we have gains at the top of the hour, we're now coming down a little bit, and it's really the commodities producers that are taking the hardest hits and weighing on the indexes. if you look in at the stoxx 600 grr on your bloomberg, you can see the breakdown and really that it's the oil and gas quote -- companies that are weighing on the index, as well as basic resources there right at the bottom of the list. take a look at the sectors that are winning, travel and leisure, technology, and utilities are the companies that are helping to boost the index gains at first, but they have no giving up the ghost, as it were, and are being pulled back down. anna? anna: i've got hong kong gdp that's just waking, down 1.2% year on year. yes mitt was a drop of 1.4%. bet number looks to bree -- better than what was expected. the estimate drop of -1.5%, so however you cut it, with a looking at your on your lobar -- year on your number or quarter on quarter, the numbers do look better than the dissipated, but expectations were really low. expectations were for substantial contractions. with that, the back being the protest activity, the trade war, and coronavirus, all of that set to take its toll. expect.es in q1, we let's get bloomberg first word news with leigh-ann gerrans in london. >> the u.k. may have left the you -- of the eu but the battle for brexit doesn't look to end anytime soon. boris johnson is threatening to walk away from talks. he will say britain will prosper with or without a deal. president trump's impeachment trial is drawing to a close. republican senators are preparing to acquit the president. senator lamar alexander proposing the move to dismiss the charges. that's one of the few republicans saying that president cost a life by withholding u.s. aid to ukraine. but he said it should be up to voters to decide president trump's fate. " wasorld war i drama "1917 the big winner. other winners included "joker," " and "oncean, upon a time in hollywood," but they were criticized for a lack of diversity. miller.for matt it was the first victory in 50 years, quarterback patrick mahomes named the most valuable player. according to one advertising make him, the win may rake in another $7 million a year in endorsements. global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. anna, matt? matt: if only i could have stayed up late enough to watch the super bowl. i guess i will have to do with the highlights. joining us from hong kong is stephen engle. we're getting breaking numbers out of the hong kong economy, fourth-quarter gdp dropped 0.4%, a lot better than the estimate, stephen, the number for the full year, 1.2%, the, drop for the full year better than the estimate of 1.4%. yeah, i think the estimates were pretty dire. we had all these headwinds, a proxy to the mainland, but them ahead seven plus months of violent unrest on the streets, of hong kong which hammer demand in the tourist industry. mainland visitors try to. now they completely have gone away because of the coronavirus. these numbers do not reflect the coronavirus outbreak. you can probably extrapolate a little bit further that there is more pain to be had here in the hong kong economy. the numbers were better. we were expecting a fall of three-pointer percent. it came in at 2.0 percent. but quarter over a quarter -- we were expecting a fall of 3.9%. it came in at 2.9%. but quarter over quarter, they came into recession, 2.25%., we're waiting to get a press conference from carrie lam, another scandal going on here, thousands of hospital professionals called a strike today. they are threatening to strike for five consecutive days if carrie lam and the government doesn't close the border with china. she has refused to do that because of the coronavirus. she cites evidence that it would not contain it. however, medical professionals are worried the spread could get worse and their lives are at risk, so they have started a strike today. i'm assuming she will be addressing these concerns and wide she did not meet with hospital professionals to hammer out a last-second deal with them. anna: we'll look out for news lines, stephen engle in hong kong for us. next, china grapples with the outbreak. we speak with the head of the rapid support team. that's coming up next. this is bloomberg. ♪ anna: welcome back, 39 minutes into the trading day that's been eventful. european equity markets bounced, buoyed by the measures taken by offpboc in china, not put by the selling internet after the lunar new year isla day. since the early -- your holiday. -- lunar new year holiday. let's talk about m&a, we do have m&a things to discuss. the combined company will be europe's biggest payment services provider. the deal sent world line slumping. good to speak to you. 12% or so higher this morning. this is an old french affair, crating a big payments company in europe, in fact a big company on the global stage, as well. >> yes. this deal is supposed to create the fourth-largest payment processing company. this isn't some great big m&a news to kick off this week. just as you mentioned, ingenico shareholders are being offered a 7% premium to the closing the, not so much for disclosing deal, not so much for -- not so much for the closing deal. matt: what did you see in terms of a buildup to this deal? and do you see any other bidders coming in? >> well, so this is a friendly deal, right? this is taken by ingenico investors. regulatory approval is likely to go through. but ingenico's past was not easy. if you remember, in 2018, the ceo was removed after 11 years at the company because the investors felt the company wasn't keeping up with the times, focusing on terminal business, close to following the new models like going after e-commerce. the company has gone through turmoil. over the past year, the stock has doubled, up more than my hundred 40%. -- 140%. this was expected by investors. we just didn't know which payment processing company would acquire it. anna: now we know, world line coming into do it, twice the size of ingenico, setting themselves up to be a consolidator in this space talking about more deals ahead. >> absolutely. we could see more consolidation in the sector. it's such a hot industry. there will be more consolidation. now that they are creating this juggernaut, it can go after more smaller payment processing companies. we should keep watching that sector. matt: thanks so much for joining us. a joining news' kseni us on m&a news. turnout grappling with the coronavirus after the lunar new year holiday. 360 --y's past fatalities passed 360. joining us now is jimmy whitworth. uk'smic lead for the public health rapid support team. as newspeople, we continue to call this the deadly virus. in didi -- indy, we have a death toll -- indeed, we have a death toll over 360. how much worse is this than the common flu? jimmmy: hello. matt: hi. how muchell us, jimmy, worse this coronavirus is than the common flu? i'm going to guess that jimmy can't hear us. but we're going to come back to him. and not a sound tech, apparently. up next, we're going to bring you some of the stock movers. julius baer is one of them. there are a lot of movers in this movement unrelated to the coronavirus, but overall, the main headline is big drops in chinese stocks not being met by huge drops in european stocks and european futures are gaining. this is bloomberg. ♪ anna: welcome back, 46 minutes into the trading day, a little unsettled, a little merck -- a little nervous. off earlier session highs. let's get individual movers now. annmarie hordern has the breakdown. annmarie: while your screen is green, i'm looking at those in the red, minders down 3/10 of a percent, pulling back a bit. this has everything to do we saw in china overnight. commodity prices, iron ore and i -- iron ore and copper collapsing. we're seeing that drag. siemens health and ears down 4% this morning. they came out with profits that missed estimates, group earnings falling 11%, dealing with promise -- problems at installations. 3%.us baer down more than they dropped a target for new money after missing last year. on top of that, they announced cost cuts. some of that is flashing -- slashing 300 jobs to create a leaner bank. matt: thanks very much, annmarie hordern looking at your movers this morning. it's been a volatile session. keep your eye on that. china is grappling with the coronavirus outbreak after the lunar new year holiday was past 360 astalities out of china. joining is now is professor jimmy what worth. -- whitworth. put into, could you perspective for us just how deadly this virus is between the common flu and sars? where does this fit in? jimmy: well, thank you for that question. er of people that it kills or makes seriously sick, it's very much worse than the common cold. it's more like a severe flu, but it's not as severe as sars, that was killing 10%, 11% of those infected, whereas this new virus seems to be more like 2%. but having said that, it does seem to be very highly transmissible, so the number of cases has risen much faster than it did for sars. anna: good morning to you, professor. is it still the case that most of the fatalities here and the death rate still seems to be climbing, up 69% or so since friday? is it still the case that many of the people died had pre-existing conditions? is that still the situation? jimmy: good morning. yes, that does seem to be the case that people who have pre-existing conditions are more at risk from that. having said that, there have certainly been severe cases and deaths among those who were otherwise apparently well. matt: what are the concerns here, as far as the spread, professor? how high do you expect this number to go before we can get it under control, globally? eah, that's a really good question and quite hard to answer at the moment. the numbers of cases is rising very fast. w'ere in expansion phase for this, but robust public health measures have been put in place by the chinese. there's a blank period before you see the effect of those on the number of cases. towards the week, we'll know whether the lockdown of people in who weighing provost and someone and the increased public health measures have enabled the spread of this to actually be controlled. i think it's actually still too early to tell. anna: i want to understand a little bit about the death rate and whether it would very in different parts of the world, jimmy. is aly, the death rate function of the virus itself and the disease it causes, but is it also the extent of which the providers of hospital facilities are being overwhelmed in china, like a pair redness -- lack of preparedness? is it also those factors that we see at this point? jimmy: it could do. there is a number of factors that might affect this. to how quickly you are able identify cases is important. if you're able to identify cases like, that person may be very sick. the quality of the health care that people receive. and then the underlying health of the population are all going to be factors that might affect this. so, in that regard, i would worry particularly about sub-saharan africa, where the facilities to be able to diagnose and treat this are going to be suboptimal in many cases. and also, there is many people who are suffering from hiv, and so they'll be suppressed, and they will be particularly vulnerable to this infection. matt: what do we know about how this all started, professor? i mean, do you believe, for example, that this started at a wild animal market in china? or is it possible that there are better theories? jimmy: i think that's the most likely cause of this. i think investigations are still going on. that was the case for sars. it came from close human contact with infected animals. that seems the most plausible reason for this happening at the moment. the case is -- the initial cases wuhan ise seeing in having to do with the seafood market where wild animals were on sale., matt: professor jimmy what worth, really appreciate your time. lead foro the academic the u.k.'s public health support team, talking to us about the new coronavirus. now let's move from that science to the art of markets with richard jones, our mliv fx and rate strategist here in berlin. what do you think about how this has played out in terms of the massive drops that we saw across asset classes in china? we haven't seen that panic hitting european markets this morning. of course, we were open while they were closed last week. richard: i think that's what it is. we were open while they had reasonable selloffs. they had yields in anticipation of what was going to happen in china. i think what we've seen, when we look at trading markets, u.s. equity features, i look at the cash features here in europe. we sell the price action, were prepared for what happened in china, and a little bit of relief permeated into the markets. but we were open last week. it was big news before it opened up today. anna: we had gloomy data out of the u.s. last week. today, we get other bits of europe, manufacturing pmi's coming. i think the u.s., ism a little bit later, what is the global picture starting to look like? richard: i think it still doesn't look great. if you're going to pinpoint the weakest part of the economy and it stretches apart the globe, it is the manufacturing sector. we had chicago pmi number out last week, which was really, really bad. we get final readings today in europe and the u.k. this isn't going to invest cash advance the story that much, but if you point to the weakest part of the economy, it is that advancing a -- that economic sector. matt: it looks like the german manufacturing numbers coming out right now, the pmi is a reading of 35.3%. 45.2%,liminary reading, to looking a little bit better, but still in a contraction. have do you reckon the german economy is faring? richard: until manufacturing is back above 50%, i think it's too soon. manufacturing is the driving force in the country. services has been bearing a lot of the load, but we need manufacturing to turn around. and a reading on the 45 handle is a what you want to see in germany. anna: richard, we've got the pound weaker, down, familiar levels, but a decent sides -- decent sized move. i thought we were going to talk about underlying economic realities. still seems to be about brexit. richard: i think we are talking about an underlying economic reality. it does point to the fact that yes, we've had a bit of a bounce in sentiment as a result of a more definitive election result. but now the hard yards start to negotiate what happens after the transition period with the e.u.. that presents a significant challenge, and that's what's feeding the pound today. matt: thanks for joining us, richard jones here. you can check out his work by tapping -- typing mliv on the bloomberg terminal. surveillance is up next. this is bloomberg. ♪ francine: china's stocks tumble. on coronavirus worries. as the coronavirus death toll, markets get crushed, china falls some 20% the race for the white house gets underway as isla considers who they want to take on president donald trump later this year. ng, good afternoon, e -- good evening grade -- good

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