A look at the day ahead in European and global markets from

Gregor Stuart Hunter

The surge in energy prices as war engulfs the Middle East is

top of mind for central bankers. Deciding what to do about it is

proving more complicated.

On Tuesday, the Reserve Bank of Australia became the first

major central bank to hike since the start of the Iran conflict,

lifting benchmark interest rates by 25 basis points to 4.1% and

warning that sharply higher fuel prices will add to inflation if

they are sustained. But an unexpectedly close vote that saw four

dissents sent the Aussie dollar skidding afterwards.

The debate is a foretaste of what may be ahead for

rate-setting committees this week at the Federal Reserve,

European Central Bank, Bank of England and Bank of Japan, which

will assess the global economic impact of the energy shock,

though all are expected to remain on hold. The Bank for

International Settlements has urged policymakers not to rush

reactions to the energy price spike, calling it a textbook case

of when to "look through" a supply shock.

Elsewhere, Bank of Japan Governor Kazuo Ueda said on Tuesday

that underlying inflation is accelerating toward the bank's 2%

target. The yen weakened 0.1% to 159.25 per dollar,

shrugging off verbal warnings from Japanese authorities.

Analysts expect the bar for an intervention to be higher because

of rising oil prices.

The Iran war continued to rumble on with no sign of abating,

with Israel and Iran trading airstrikes. U.S. President Donald

Trump accused some Western allies of ingratitude after several

countries rebuffed his demand to send warships to escort oil

tankers through the Strait of Hormuz, as Iran continued to

target oil facilities in the Gulf. Brent crude was up

2.9% at $103.11 a barrel.

And it's not just energy markets facing supply disruptions:

South Korea's SK Group Chairman Chey Tae-won said on Monday the

global chip wafer shortage is likely to persist until 2030, as

demand driven by artificial intelligence continues to outpace

supply. Meanwhile, the biggest workers' union at South Korea's

Samsung Electronics ( SSNLF ) has threatened to disrupt chip

production as members vote on a plan to strike in May, its

leader told Reuters.

Whether that disrupts the $1 trillion revenue opportunity for AI

chips through 2027 forecast by Nvidia ( NVDA ) CEO Jensen Huang

remains to be seen.

In the meantime, stock markets are struggling to find new

direction, with volatility remaining elevated. MSCI's broadest

index of Asia-Pacific shares outside Japan was

up 1.6%, while Japan's Nikkei 225 rose 0.5%. S&P 500

e-mini futures were down 0.2%.

In early European trades, pan-region futures and

German DAX futures were flat, and FTSE futures

were up 0.1%.

Key developments that could influence markets on Tuesday:

Earnings:

Tencent Music Entertainment ( TME ), Lululemon Athletica ( LULU )

, DocuSign ( DOCU ) and Oklo ( OKLO )

Economic events:

Euro zone: ZEW survey expectations, economic sentiment and

current conditions for March

Debt auctions:

UK: 5-year government debt