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

Wayne Cole.

Asian trading has again been all about the Strait of Hormuz and

President Trump's odds of strong-arming U.S. allies, and others,

into helping escort shipping through the vital waterway.

Early reports said the White House would soon announce

multiple countries had agreed to provide naval protection, but

were still talking about whether operations would begin before

or after the end of hostilities.

That morphed into Trump just talking to seven countries about

escorts, with no agreement reached. Mentioned were France,

Japan, South Korea, Britain and China, with the latter sure to

raise diplomatic eyebrows.

Beijing actually has more suitable naval vessels for such

operations than the U.S., which is hamstrung by a lack of

frigates and minesweepers. Imagine the optics of the Chinese

navy doing what the U.S. navy could not by opening the Strait.

It could be used as a bargaining chip in U.S.-China trade talks

underway in Paris.

European ministers meet today to discuss the Strait, though

Trump may not have won many friends by seeming to threaten the

future of NATO should allies turn him down.

Net, the Strait remains effectively throttled and trouble is

building in the supply chain and not just with crude. Various

nations, including China, are clamping down on the export of

refined products to preserve domestic supplies, and that is

rippling through the Asian region. Australia, in particular,

faces shortages of the diesel that is vital for mining and

farming.

Even with a coalition agreement there are real doubts naval

ships alone could guarantee safe passage through such a narrow

waterway, with Iran looming in the north. Seizing the northern

shore would involve ground troops, risking heavy casualties.

Which is one reason Brent is up more than 1% in Asia,

with trading again very choppy.

It's a headache the host of central banks meeting this week

really didn't need, and has put paid to hopes for any policy

easing. Indeed, investors think the next moves for the European

Central Bank, Bank of England, Bank of Canada and Riksbank are

up, while the Reserve Bank of Australia is probably set to hike

for a second straight meeting.

There is just one rate cut now priced for the Federal

Reserve, though it's possible the median dot plot for rates will

remove that easing too.

Key developments that could influence markets on Monday:

- U.S. Treasury Secretary Scott Bessent holds trade talks

with ​Chinese Vice Premier ​He Lifeng in Paris

- Empire State PMI, U.S. Feb industrial output, NAHB housing

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