Have just voted in in centerright government. Annabelle i am Annabelle Droulers in hong kong, we are counting down to asias major market opens, in australia have just come online. Shery i am shery ahn in new york. The top stories. Asian stocks set for losses, as the prospect of a ground offensive in gaza is large of a market. The u. S. Warns iran against escalating the war between israel and hamas. Washington and its allies stepping up efforts to prevent a wider conflict. And the baited administration is set to tighten measures to curb chinas access to advanced chip tech, adding design firms to a restriction missed. Adding design firms to a restriction missed. Annabelle asx 200 had just come online. We will see how it starts to trade. Really the focus as you said in the headlines is all around the flight to safety. It started to kick off in the session on friday. The question is whether it is extending into the start of another trading week given the prospect of another ground offensive in gaza. Its a big uncertainty. It could really weigh across a lot of markets. So far in the session today, you arent seeing too much of a bid for these assets. These sensitive ones, trading is actually higher in the session. The aussie dollar is a good barometer of Risk Appetite and it is a little bit higher. Bond yields are fairly steady. The asx 200 is just flat. Lets change and look at the other risk haven assets. Again, it is the story, the japanese yen fairly steady. Gold had a bid in the prior session, but it is weaker as trading gets underway. Bitcoin, something that is sensitive to the israelhamas war, perhaps somehow must militants using bitcoin as a way to evade sanctions. Essentially bitcoin is a bit weaker in the session. New zealand stocks likewise are trading to the downside. It is broadly risk of unbalanced, but still a lot of uncertainties and unknowns as we start another trading week. Shery yeah, we bracing for volatility. Features are still slightly in positive territory early in the agent session after stocks lost ground on the friday session. We were bracing for the continuing conflict in the middle east, and a potential ground incursion in gaza. We had the bigtech selloff as well. We also had treasuries rising across the curve, haven demand being seen in the 10year yield which fell to the 4. 6 level. We are also watching oil continue to rally. The largest weekly gain in a month. But you can see in the agent session, a bit of downside, 0. 2 . Perhaps one positive for the Broader Market was the earnings season being kicked off by big wall street banks. Jp morgan, citi, wells fargo. We had a couple of them really gaining ground on the friday session on solid earnings. We have Goldman Sachs, Morgan Stanley and bank of america this week. It was already a big week for politics where it came to us truly and new zealand. Australia seeing a comprehensive defeat of the voice referendum, and questions about what that means for Prime Minister albanese who made it a key campaign pledge. We know that he really announced this referendum at the height of his popularity. And then we saw at the end of the campaign how he had taken a hit on his support levels across the country. We will see what his government does in order to refocus on pressing concerns of voters, which include elevated prices, high Interest Rates. Perhaps some of those concerns that new zealanders will also ask from their new leader to manage. Haidi yeah. Inflation. Higher Interest Rates. The costofliving crisis. Shery, this was almost as single issue going into the campaign. We saw the vote shift from the labour party which had been in power since the start of Jacinda Arderns error. Its a far cry going into this weekends elections, we saw the ships to the centerright national party. Looks like they will be able to form a government with one or two allies, there still a bit of horsetrading in play. What is fascinating to me is that, the labour partys handling of covid was well thought of. Is this a reflection of this tickler political situation or is this going to be a broader trend that we see with the u. S. And canadian elections that are still to come, where the incumbent governments that herded these economies and these populations through covid, are going to see that backlash as reducing the economic struggles the struggles with inflation and with costofliving . Is this going to become part of the broader Global Political trend as we get into the next few months . Shery and how these administrations deal with geopolitical challenges as well i know of course, the top story right now is, 600,000 people have left gaza city as israels troops gear up for a ground war against hamas. Israels allies are also raising to prevent a conflict from engulfing the middle east. Bloombergs Michael Heath. Joins us with the latest we have been bracing for conflict for some time. What is the latest on the Israeli Offensive . Michael a lot of events have been going on that signal the preparation for the ground attack. Obviously it was reported that israel has called up more than 300,000 reserves. About 600,000 people have moved from gaza city into the south of gaza strip. The northern part is exited to be the ground incursion, that is the built up area where a lot of hamas people and armories are understood to be. So these are all the preparatory steps before israel actually moves into the strip. We have also seen the u. S. And egypt talk about being able to ship in aid supplies through the border with the gaza strip and egypt to assist the civilians who have moved down to the south of the strip. There is obviously a lot of people there. That movement is a prayer lewd to israel then going in. That movement of civilians to the south is a prelude to israel then going in. Haidi President Biden talking about the fact that at this point he doesnt think u. S. Troops are necessary in the israel war. This kind of opens up the question as to bandwidth, right . How much bandwidth is the u. S. Have now potentially of involvement in the second war . Lets not forget what is going on in ukraine. We see secretary of state Anthony Blinken trying to manage the regionalization of this conflict. Michael exactly right. The u. S. Is the superpower at the end of the day. Biden maintains that they can do both, they can support ukraine and support israel. We saw the movement of a second Aircraft Carrier and naval group near israel. This is to reinforce the message the u. S. Is trying to send, particularly to iran, one of the supporters of hamas, and also hezbollah in lebanon which has exchanged fire with israel in the north of israel. But yes, it is it obviously widens that issue in terms of trying to supply weapons to ukraine and to israel. But the u. S. Is a big country, it is a big economy. Biden seems fairly confident that they will be able to do that. Haidi bloombergs Michael Heath there with the latest. We are hearing more details from this interview, comments from President Biden saying he doesnt think it is necessary to have u. S. Troops in combat in this israelhamas war, israel has one of the best fighting forces and he will guarantee that they are provided with everything they need in terms of support. We have the market reaction. A lot of investors to be contending with at the start of a brandnew week. Haven assets. Oil in focus with traders watching development in the release very closely. The prospect of any ground offensive in gaza. But with mliv contributor garfield reynolds. Garf, pull together the pieces of this for us. How are you viewing the Current Situation . Garfield markets are basically saying they have stood the, as that were, their worries about an immediate, broader escalation that would send oil prices skyrocketing, damage, assets, and push investors to take refuge. Havens such as the u. S. Dollar, the swiss franc, gold and treasuries. All those assets have sort of fullback. As you were mentioning. Equities so far, not doing a lot one way or the other. Crude fell initially a little bit, but it has stabilized. It is kind of an as you were on friday. But there is still plenty of nervousness out there about what the rest of today and with the rest of this week might bring. But for now it is fairly calm across markets. Shery we are watching earnings season moving into full gear. We already had three large banks on friday reporting jp morgan, citi, wells fargo combined, best Third Quarter in history. But still lots of warnings about the outlook from here on out. Garfield that is exactly right. That is kind of the concern in general with earnings. Everybody is expecting pretty good results for the Third Quarter. If you look at the way stocks most performed up until the end of that quarter, and you look at the Economic Data that came across pretty strongly, you can see why that would be the case. The concern is, how are things going to be Going Forward . There have been some signs of a little bit of a slowdown in the jobs market. There has been still mostly resilient Economic Data, but concerns about how long that resilience can last. So what is going to come this quarter and the following quarter, that will be on investors minds. If you are going to see equities move sustainably higher from here, then you need to see that as one of the pillars, along with a relatively calm resolution to what is going on in the middle east, and also the sort of goldilocks kind of balance when it comes to the Monetary Policy outlook. The fed may be stepping back from the last rate hike or being patient about when they might put in some more tightening, but not switching rapidly towards considering rate cuts because the economic picture is deteriorating. So that is what you are looking for. And as i said, earnings are a key part of that picture and they are the main ones we would get clarity on in the next few days. Shery our chief rates correspondent for asia and mliv contributor garfield reynolds. Still ahead, air canada is back at precovid strength when it comes to travel to and from japan. We will be speaking with its head of aipac, at the end of this hour. Before that we will preview Economic Data with our guest as she walks us through their predictions, next. This is bloomberg. Welcome to ameriprise. Im sam morrison. My brother max recommended you. So my best friend sophie says youve been a huge help. At ameriprise financial, more than 9 out of 10 of our clients are likely to recommend us. Our neighbors, the garcias, love working with you. Because the advice we give is personalized, hey, john reese, jr. Hows your father doing . To help reach your goals with confidence. My sister has told me so much about you. Thats why its more than advice worth listening to. Its advice worth talking about. Ameriprise financial. The front is concentrated now on very carefully monitoring what could be the Economic Impact of the new eruption of tensions in the middle east so far, what we see is relatively contained. Oil prices are going up and down, but there hasnt been a huge spike. Some nervousness in markets, understandably. Imf managing director kristalina georgieva. There are elevated risks from the war between israel and hamas already adding to the fragility in the Global Economic recovery. Joining us now is Alicia Garcia herrero, chief asiapacific economist at natixis. There are different prisms to look through this. For markets, the key concern will be oil, not to mention the broader humanitarian crisis that is unfolding before us. What are you watching very closely at the moment . Alicia the key issue here first is how much this conflict escalates. And i think the first point to watch is iran. We have had over the this sunday, actually, hezbollah attacks on israel. That is already a sign of escalation. This is the thing that oil is reacting to of this. It does sound like even if we were to avoid a humanitarian drama, we still have the issue with iran. Frankly speaking, we are no longer in the scenario of a terrible but still sharp shock to the global economy. We might be moving to something more structured and, unfortunately, more painful for the global economy. Haidi lets see it from where i am here in wellington. We have seen a new zealand vote for change, shifting from the government that took the country throughout of covid and the postpandemic. Do you think this is a reaction to the with that economies have been managed through covid, and in the postcovid era . Because it feels almost like there are limited fiscal louvers to pull to be able to accelerate recovery in a lot of these economies. Alicia indeed. I would say, and to our dismay in a way, there is monetary space, we have set record highs. But the point is inflation would not allow us to use that space, especially if oil prices shift up more structurally because of the conflict. That is one of the problems that we have, that we need to hold the reins on inflation. On the fiscal side, i couldnt agree more, we had before this conflict, a potentially unfolding debt crisis in some countries in the world and in others, thanks to the reserve role of the dollar may be avoiding it, but even the fiscal numbers in the u. S. Or perhaps creeping into a much more difficult situation given the debt service. But this is nothing compared to other parts of the world where they dont have a reserve currency. In that regard, i think that space is limited because we have used it up, either for inflation, or basically to combat the impact of covid for fiscal policy. Shery how restricted are chinese policymakers . We continue to see this slump in the chinese economy. I wonder how broadbased it is when it comes to the slowdown, and whether Monetary Policy can actually do more. We do have rate decisions, and commercial banks also setting their rates this week as well. Alicia well, i think frankly, the space is limited everywhere, including in china. Of course, they have a little bit more monetary space because they havent got all the way to quantitative easing or negative rates, as japan. One could argue that they could do that. But the reality is that their strength, for many years, in terms of basically intermediate between policies, are the banks. The banks need that room. They need a decent interest margin to basically do what the Government Asks them to do, and if you cut rates, that disappears. On the fiscal front, space is very limited. Chinas public debt already is 100 of gdp. That it would do one trillion rnb, one hundred 60 billion or so in infrastructure stimulus. They worry about growth next year. This year is done, they hit their target, but their target was low. Next year is a big issue. On the fiscal space, they might do it, but reluctantly, because they know that it could actually have consequences in terms of potential defaults of local governments, or the local government financial vehicles, et cetera. That is why the room is no longer there, even in china. Haidi always great to chat with you, Alicia Garcia herrero, chief asiapacific economist at natixis there with us. We have much more to come here on daybreak asia. This is bloomberg. Haidi bloomberg has learned that the Biden Administration will tightened measures announced last year to restrict chinas access to advanced semiconductors and chipmaking gear. Furthermore, lets bring in our chief north asia correspondent Stephen Engle. Is this a reaction to what we saw with the price progress that huawei made . Stephen its an interesting development, not to be an expected, though, to tighten some of the loopholes that chinese firms have been able to navigate to get supplies of these advanced chips which are on the restricted list, as well as chipmaking equipment. So this is, according to sources , saying that this new tightening of restrictions could be announced by the u. S. As early as this week. Essentially, and we can bring up some of the bullet points on what we are learning for these sources. Here adding trainees chip design firms to the restricted list which was first announced last year. Overseas manufacturers will need to obtain a u. S. Licenses to fill orders from those chinese companies, and there will also be stronger controls on the sale of advanced chipmaking equipment and graphics chips, according to these sources. It will close loopholes that might have allowed cheney to buyers to use either third countries, or adding supplies to china through overseas subsidiaries or units. Also, more checks will be made on shipments and licenses will be needed to export tech to those intermediary countries. As i said, this is not a big surprise. But we are getting more details that the u. S. , as it continues to widen and broaden these export controls, to keep the most advanced proprietary chips as well as chipmaking equipment but actually out of the hands of the Chinese Military. Haidi there are also interesting developments when it comes to Anthony Blinken. We are seeing more pressure on beijing when it comes to what they can do in the broader context of this conflict . Stephen thats right. There has been a lot of diplomatic efforts. Anthony blinken had about an hour long conversation with chinas top diplomat, foreign minister wang yi, before he headed off to riyadh where he is supposedly trying to garner arab support for israel at this time of war with hamas and the humanitarian crisis that is going on in gaza. Josep borrell, europes top diplomat, he was in china and met personally with wang yi as well. Borrell has been a bit critical as well of china for its lack of statements condemning hamas for that attack in gaza, but also reaffirming that they would like to see more from china. The war in ukraine, essentially criticizing china for not condemning that ongoing war. This is what he had to say. Russia represents a huge threat for our security. And that we are committed to support yo