(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

March 17 -

What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

After a slightly peculiar burst of positivity in world markets

on Monday, without any one clear trigger, investors have turned

sour yet again today, as the Iran conflict remains as tense as

ever and oil prices move back up.

Away from the Middle East, the week's big central bank parade

kicked off today with a widely anticipated interest rate hike in

Australia.

I'll get into that and more below.

But first, check out my latest column on how central banks may

yet avoid rate hikes as they navigate potential oil-driven

inflation.

And listen to today's episode of the Morning Bid podcast, where

I break down Australia's hike versus global rate paths - plus a

look at yesterday's burst of AI-chip optimism.

Subscribe to hear Reuters journalists discuss the biggest

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A RUMBLE DOWN UNDER

The S&P 500 ended up 1% on Monday, though futures have since

given back some of that. Asian shares were mixed again on

Tuesday, with South Korea's KOSPI rising by 2.3% and Japan's

Nikkei closing flat. The dollar has firmed after easing slightly

yesterday.

Part of Monday's rally on Wall Street was due to a sizeable

retreat in crude, as a kernel of optimism emerged about getting

some ships heading to India, China and Pakistan through the

Strait of Hormuz. Brent crude fell nearly 3% to settle at around

$100 per barrel.

But that was short-lived. With few signs of any major

breakthrough in the war and President Donald Trump struggling to

draw NATO allies into a planned coalition to shepherd tankers

through the strait, oil pushed higher once again on the

simmering conflict, with Brent jumping to over $104 per barrel

before easing slightly.

U.S.-China trade talks in Paris may also have helped improve

sentiment at the margins, with the two sides holding

constructive talks focused on agricultural goods and rare

earths.

Another apparent cause of the lift on Monday came from the

return of the AI theme to the forefront, as chipmaking giant

Nvidia's annual GTC developer conference got underway in San

Jose.

The world's most valuable company said that its AI chip revenue

could potentially total $1 trillion through 2027, as it

announced plans to compete more aggressively in inference

computing. So far, Nvidia chips have dominated AI model

training.

Meantime, South Korea's SK Hynix warned that strong AI demand

could cause the global chip wafer shortage to last until 2030.

Turning to central banks, the Reserve Bank of Australia's

unexpectedly narrow 5-4 vote to hike rates left the prospect of

further tightening an open question. In response, the Australian

dollar was a bit choppy on Tuesday.

Focus will now shift to policy decisions from other big central

banks this week, including from the Federal Reserve tomorrow.

Trump on Monday called on the Fed to hold an emergency meeting

to cut rates, but the Fed's biggest task will be showing how it

can negotiate the likely inflationary spur from a prolonged oil

shock.

Chart of the day

Australia's central bank raised rates for a second straight

month in a tight call on Tuesday, warning of a "material" risk

to inflation as policymakers stepped into a volatile global

backdrop amid an intensifying Middle East war. The world's other

major central banks meet later in the week, though they are

expected to hold fire for now.

Today's events to watch

* U.S. Federal Reserve's Federal Open Markets Committee

begins two-day policy meeting

* U.S. 12-month and 20-year bond auctions

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Opinions expressed are those of the author. They do not reflect

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