Marketmind: RBA a diversion from crisis Europe

(Reuters) - A look at the day ahead in Asian markets from Jamie McGeever

An expected interest rate hike in Australia is the main macro and market event in Asia on Tuesday, but any investor not paying full heed to the energy and economic crisis unfolding in Europe by now is, frankly, guilty of gross negligence.

With U.S. markets closed on Monday for Labor Day, events in Europe took center stage. The euro fell below $0.99 for the first time in 20 years, stocks slumped, bond yields rose, and gas prices surged after Russia said its main gas supply pipeline to Europe would stay shut.

Britain's next prime minister, Liz Truss, meanwhile, has a job on her hands - the energy crisis is snowballing, recession is close at hand, inflation could top 20% next year according to Goldman Sachs, and sterling is half a cent away from a fresh 37-year low against the dollar.

Deutsche Bank on Monday warned that the risk of a UK balance of payment crisis "should not be underestimated".

It's difficult to imagine Asian or U.S. markets escaping a looming winter of severe discontent across Europe unscathed. How much of that risk is priced into global markets right now remains to be seen.

Any relief from the 25% fall in global oil prices since June will have been punctured by OPEC+ members' decision on Monday to cut production by 100,000 barrels per day to bolster prices. Brent rose about 2.5% back above $95/bbl.

Asia's local focus on Monday will be Australia's rate decision. Economists expect the RBA to raise the cash rate another 50 basis points to 2.35%. The RBA was a late entrant into the global tightening race, and has raised rates by 175 bps since May.

GRAPHIC: RBA cash rate & inflation ( https://fingfx.thomsonreuters.com/gfx/mkt/zdvxomrndpx/RBA.jpg)

Key developments that should provide more direction to markets on Tuesday:

Reserve Bank of Australia rate decision

Australia current account (Q2)

Japan household spending (July)

UK, Germany, France, euro zone PMIs (August)

(Reporting by Jamie McGeever in Orlando, Florida; Editing by Alistair Bell)