Morning Bid: Fed bets cool, BOJ wagers heat up

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

For all the anticipation, Wednesday's U.S. CPI data was largely in line with expectations, perhaps even a little anticlimactic.

Coupled with softer-than-expected July nonfarm payrolls, it has dampened money-market bets on a September Federal Reserve rate hike.

In contrast, Thursday's Japanese wholesale inflation data reinforced expectations for a September rate hike by the Bank of Japan.

The 7.2% year-on-year rise in July suggested that price pressures remain alive and resilient, driven in part by strong demand induced by the AI boom and higher raw-material costs from the Middle East war.

Asian stocks were mostly firm in the morning session, with South Korean shares hitting their highest levels in three weeks on chip stocks.

MSCI's broadest index of Asia-Pacific shares outside Japan was up nearly 1%, while Japan's Nikkei rose 1.61% as of the midday recess.

In early European trades, the pan-region Euro Stoxx 50 futures rose 0.35%, German DAX futures were up 0.26% and FTSE futures edged 0.27% higher.

Oil prices fell after forecasters scaled back this year's global demand outlook, citing the broader fallout from the Middle East war.

United States and Iran remained deadlocked over efforts to end the conflict, with conflicting claims about control over the vital Strait of Hormuz.

U.S. crude shed 1.3% to $82.19 a barrel and Brent eased to $87.95 per barrel, down 1.16%.

In Sydney, Reserve Bank of Australia Assistant Governor Christopher Kent warned of the risk of further policy tightening at a Reuters NEXT Newsmaker event, saying inflation threats remain on the upside and "a lot of things" would need to go right to avert another rate hike.

Key developments that could influence markets on Thursday:

- UK April-June quarter, June GDP - Euro zone, UK June industrial production- U.S. weekly jobless claims

(Reporting by Satoshi Sugiyama; Editing by Jamie Freed)