Stronger level than expected hours after the u. S. Tax beijing and fx manipulator. Stocks shaken. Chinas intervention helps asian equities reduce losses and wall street higher after the worst drop in ae date year. And cutting the session in the u. S. Could the 50 point fed cut come in midseptember . Good morning. Matt where less than half an hour away from the start of european trading. We are less than half an hour away from the start of european trading. Coming down to the the lowest election. E the 2016 the bounce back recovering up to 1. 75 at the moment. Take a look at futures. We saw a earlier bigger gains in futures and then we see then we saw now. U. S. Futures are rising fairly substantially. Dax futures are up. 2 of 1 , byure as ftse futures down. 25 of 1 . What else do you see on the gmm . Yuan suggesting that fixing and working out with a they want to bounce this morning or in europe. We did see losses in the asian equity session being pared back as a result from china fixing its yuan strongerthanexpected. Weaker, thethey are markets in asia but not by as much as they were before we sell the fixing. All of this after we saw President Trump labeling the chinese currency manipulators. We can factor in whether that is the case or ask what does this mean for the trade negotiations, perhaps that is where the market is focused on the broader levels lack ofration for expectation between the u. S. And china as a result of this escalation in the tensions. We are seeing as a result of what we saw in the currency a little bit more appetite for em. We will show you where money has been moving around in terms of yield story. Australian 10 year below 1 . The yield their dropping below the bojs target range. How will the boj explain that . All that keeping the focus on the lower lower yield story even if we are seeing a change in Risk Appetite because of fixing. Lets talk about what is going the markets. Chinas currency policy taking center stage in the ongoing trade. The Trump Administration has named chinaformally a currency manipulator. In response china has taken steps to slow the yuan by fixing the currency to below seven per dollar. The announcement of the daily reference has helped ease of the turmoil in the markets to some degree. Futures pared losses and the again retreated after climbing on haven demand. Asian stocks were still down, deepening this weeks selloff but we see a turnaround in that asian equity trade. Europeans, our chief correspondent. Are we edging closer to a currency war, is that what were talking about or is, have we been there for a long time already . Idea of a the currency war, the two biggest economies are in the middle of a trade this cute. Details are more nuanced. We know there is significant downward pressure to push the currency lower. Pain in to be a further the coming months. China has been trying to keep a floor under the currency not letting it drop too far south. The message in terms of fixing was china is willing to let the currency soften a touch, that would help exporters. They dont want it to go so far as to trigger instability or panic among companies trying to get their money out of the country. No doubt it has found tensions by all accounts, the move mood between washington and aging over trade and currency does not bode well for any trade agreement nearterm. Matt how likely is the capital flight we have seen in the past when the you on weekends . Enda this is the big question, what most people will say is the brake on china letting its currency weaken. They had to burn through around a trillion of their on reserves to defend the currency. Forcing strong roles in moving cash in and out of the country. There is a sense that it can we can to help their own economy. They doubt want to let it go too far that it triggers some kind of panic and everyone is rushing to move their money out. Where theyre red line is, no one is quite sure. Even though it moved past seven, it was a minor move and the greater scheme of things. That is why everyone will be occur,g where it will will they allow it to weaken or will they keep a floor under it likely pledged likely pledged . What thisdo wonder means for trade talks. As we were mentioning, there are increasing numbers of investors who will be asking questions about whether currencies that label each other in this way are going to be in a place to find Common Ground on trade. Goldman sachs says they dont see the possibility of a trade deal before the 2020 election. I saw the notice from goldman and it is reflective of a lot of views this morning. Expectations for any kind of a durable or meaningful agreement have been diminished. The mood coming out of both isot capitols [indiscernible] probably not meeting much for beijing given that they it additional tariffs. That is a bigger focus midterm. Considering one week ago when both sides talked in shanghai and they were said to be constructive, we have this dramatic escalation a week later. It is hard to believe there is much trust left on the table and hard to see any Circuit Breaker in the nearterm. Matt thanks for joining us, our chief asia equity correspondent talking about the u. S. China trade war. Lets get more with wes goodman out of singapore. How do you see chinas yuan fixing affecting markets . Good morning. The message was one of moderation. Dont forget yesterday the pboc governor said china did not toold to use the yuan is a in trade talks and the selloff in the yuan came to a halt. Yesterday, falling yuan sparked this huge flight to quality. There was a bit of a reversal today, that allowed s p 500 futures to rise, it allowed asia andks to trim gains treasuries fell by the end of my day in asia. Ae message of moderation and bit of a turnaround in the markets. If i could point to one thing that has not turned around, it is bets on the fed cutting Interest Rates. Has led is investors to increase bets for the fed to cut Interest Rates. They are forecasting four rate cuts over the course of the next year. That would be on top of the one we got in july. Probably some longlasting effects being seen there. Anna this is reshaping people thinking peoples thinking around the fed. The developments at the start of this. Chinas happening in starting to sell its Treasury Holding . Another tool that maybe the chinese have. We talked about this many times and many guests have pointed out the reasons china would want to do that. Wes right. Since the trade war has flared up, the idea has come that china may trim its holdings of treasuries. It is the biggest overseas holder with more than 1 trillion of treasuries. One of the reasons it would not would be that its got so many, it will have trouble moving the money around. Here is one thing to think about. Heres the way i have been looking at it. A bit counterintuitive. ,f they were to sell that much increased concerns over safety and uncertainty may want to make people cut risk and get into treasuries. That may end up boosting the treasury market. And a similar thing happened in 2011 when Standard Poors cut the u. S. Credit rating. You would think that would make people sell treasuries. The opposite happened. It sparked this overall flight to quality and ended up helping the treasury market. Thanks very much, wes goodman, mliv strategist joining us with the latest on the market. Follow the latest on the markets live blog, mliv is the function to use on your bloomberg. Lets get a first news update. Making chiefs are [indiscernible] janet yellen, ben bernanke, alan greenspan, and paul volcker commented on trumps attack on the central bank. They said the chair must be able to act independently and free from the threat of removal or demotion area and demotion. Opposition Labor Party LeaderJeremy Corbyn is signaling he will call a vote of no confidence when parliament returns next month. Says a growing number of conservatives are turning against a hard china has reiterated its support for carrie lam as the Financial Hub cleaned up from a general strike before a day of traffic chaos and more violence. China will not tolerate violent protests, the china daily said. Their priority is to punish criminals and restore order. The luckiest 500 people on earth, u. S. Stocks plunged amid escalating trade tensions. 21 members of the bloomberg billionaires index each lost 1 billion or more. Jeff bezos dropped the most shedding two . 4 billion. He is still worth 110 billion. Global news 24 hours a day on air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna and matt. Much, innks very london with your first word news. Delivering the goods. Deutsche post list the lower end of its profit forecast despite slowing growth. We will talk to the cfo next. Bloomberg radio is live on your mobile device or on dab Digital Radio if you are in the london area. To an end. This is bloomberg. Anna welcome back to the european open. 7 45 a. M. In london. Leave pictures coming in from beijing. Were looking at these live pictures of the hong kong Macau Affairs office. Some of the most recent headlines saying the Central Government support for carrie lam is firm and steadfast. China says there will be no tolerance for violations of the law. Interesting to see the president taking place once again. With this office that had been until recently pretty tightlipped with the media area china also saying dont underestimate the immense strength of Central Government. Central Government Support is steadfast as they say and reiterates support for that government there. China warns criminals that they should not miss judge the situation. The situation. Lets get a Bloomberg Business flash. Unitedting positions in technologies and agp adp. We have learned the investor decided to sell his stake rather than fight its takeover of raytheon. Here he had vowed to oppose the deal in june. Saying it lacked strategic cents. The private equity firm has agreed to provide 1. 8 billion of Debt Financing to support new media investments. The deal would bring usa today and over 200 other publications under the same roof. We have learned the loan is one of the biggest ever arranged outside of wall street. That is your Bloomberg Business flash. Much, in london with your business flash. Deutsche post is lifting the lower end of its profit forecast seeing earnings before interest and taxes between 4. 3 billion euros and four billion euros despite slowing growth in tariffs between the u. S. And china. Joining us is the cfo, melanie christ. Theme ask you how much trade war is affecting your business. Certainly did not stop you from tightening your expected profit range to the upside. Melanie good morning. Obviously, we are not immune to what is happening around us. The good thing is we have a very broad and diversified portfolio. The they feel the impact more strongly than others. We have seen a volume decline in the Second Quarter. Chainve the supply business and that is relatively resilient. I think overall, the we are not immune to what is happening on the macro and trade war side. But we feel comfortable given the resilience of our portfolio and given that we are focused on we callll our ourselves health agenda. Measures andolled i think those are the key drivers for the encouraging developments on the second ebiter, 6. 6 organic increased. Anna the guidance you are giving today more positive as matt said. Is that positivity restricted to letterman market, higher prices, increased volumes of parcels in germany . That is where you are seeing the positive story in this. Melanie that was an area where at the beginning of the year when we gave our guidance, we had a lot of uncertainty. We did not know what to expect with regard to the letter prices and that is why we gave a broad Guidance Range between 1. 0 and 1. 3. Now that we have a final decision on later pricing and those prices have come into effect july 1, we were able to uplift the lower end of our for postand parcel germany and upheld our guidance for the divisions between 3. 4 and 2. 5 billion for 2019. Matt it looks like germans are the european champions in terms of returning unwanted goods that they ordered online. Germans are sending back more Deutsche Post than any other nationality. Is that helpful to your business because of the increased traffic or is it difficult because there is so much volume . I think at the moment, in terms of volumes, we are benefiting from this trend because we do carry lots of the return shipment. That is something we as an industry have to Work Together on finding more solutions and and involves our customers optimizing the returns process. See in youro you large express business in asia . You talked about the diverse nature of europe was as your business cushioning you from global trade but some fear because of your exposure you could be hurt. Was encouraging in terms of volume growth in the Second Quarter. A very slow start into the year particularly in january and february. Expressleration in volume grows toward the end of march. That has continued in the Second Quarter. We had a 6. 6 increase in shipments per day and our express division. What we see here are the benefits of the structural ecommerce growth trend. We have relatively subdued volume grows, there is still growth but at a relatively low rate. What is driving the growth in the express division at the moment is the structural growth segment. B to c matt thank you for joining us, ceo of the Deutsche Post after the Company Raised the lower end of its earnings forecast. We are minutes away from the trading forecast. We take a look at stocks to watch including vivendi. The company is in early talks with tencent about selling a 10 stake in its Universal Music Group. This is bloomberg. Anna five and a half minutes to go until the start of the European Equity trading day. We are going around the newsroom. Focusing on vivendi and the latest on rollsroyce. You have seen some suggestions that prevent it could go higher. What is the story . As high as 10 , some calls are saying. They are in preliminary talks to sell 10 stake in europe herself in Universal Music Group. That values the worlds biggest music business at 30 billion euros. They wanted to sell half. Potentially, we could see more of these kind of deals coming up after they secure this 10 to 10 this 10 to tencent. Brandbmw owns rollsroyce but the engines have been in the news, what is the story with that company . The focus has been their trent 1000 engines, some technical faults forced forced them to make some repairs. We have the costs associated with that. Rollsroyce sees 100 Million Pounds stacking up over three years for that engine. They were able to confirm their fullyear guidance saying that restructuring is on track so shares called higher. Anna thanks for joining us. For more go to first go on your bloomberg and the mobile at. We will be set for a fairly flat start, mixed start to trade. This is bloomberg. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Anna one minute to go until the open of cash equities trading. Good morning, everyone. Welcome to Bloomberg Markets european open. The asian equity session was under pressure, down by 0. 9 in the msci asia pacific. We saw an uptick during the session because of the chinese currency. The chinese yuan a little bit stronger than expected. A little bit of a move in a pro risk direction. That has turned equities around of the, forced some money to around, the yen forced some money to come out of the end. The effects of the big selloffs out of the yen. The effects of the big selloffs and the u. S. Administration labeling china a currency manipulator. This is the picture for the equity markets. We are expecting to see a fairly mixed picture at the start of trade. We could see underperformance on the london market. We see some movement in the pound. Lets get to the open of the markets. The gmm function showing us where we are seeing movement coming through. The ftse 100 is open and down, but not by much, down by about 0. 1 . Around a quarter of a percent weaker on the ftse 100. We see a little bit of strength 1 ore pound, just up 0. So. That is enough to make the ftse stand aside from the other markets in asia, where we were expecting to see something a little more resilient. The dutch market down, spanish ibex fairly flat. The futures willsted the cac and dax open a little more positive. Jgbs money going into and yields going down on jgbs. We will see how the boj response to that. That is the big move as we saw as a result of the yuan fixing, being more sort pro risk then we were expecting. Lets have a look from the sector perspective. All of the sectors were negative. Today much more nuanced, much more mixed. Staples very much an area of red. Energy stocks look red. Telecoms are on intermixed back. Not much evidence coming to the fore on the sector picture. Matt we see a pretty even split. There are more losers than winners. 350 stocks are down, 200 and 24 stocks 224 stocks are up. In terms of the Companies Helping to boost the stoxx 600 or helping to pull it back from further losses, you have adidas lockheed all air adding points, as well as sap. On the losing side of the ledger you have a novartis, royal dutch shell, bp.