european markets moved higher on thursdayled by retailers travel and auto companiesas a raft of strong earnings boosted shares while investors await the bank of englands interestrate decision french bank credit agricole surprised positively with a strongerthanexpected second quarter as net profit and revenue beat expectations while commodities giant glencores firsthalf profits more than doubled boosted by huge market volatility stirred up by macroeconomic and geopolitical eventsa theme it expects to continue for markets through the rest of 2022 buoyed by the bumper earnings switzerlandbased glencore said it would pay 45 billion of what it called topup shareholder returns consisting of a special distribution of cash to investors and share buybacks elsewhere in the market deutsche lufthansa rose after the german airline swung to a profit and forecast high ticket demand while rollsroyce fell after the enginemaker posted a loss in the first half the boe is expected to raise its key interest rate to 175 from 125 at 11 am gmt the central bank is also set to outline plans to sell government bonds acquired during its stimulus programs which would make it the first major central bank to reverse the process by selling bonds rather than by letting them mature and not reinvesting the proceeds the eurozone economy is heading for a major recession owing largely to exorbitant prices for natural gas and the risk of shortages berenberg said whether the recession will be followed by a solid rebound from spring 2023 onward or by a delayed and shallow upturn will depend partly on the choices of policy makers in the next few months the german bank said targeted fiscal support for those in need and streamlined procedures for new investments rather than price caps for gas or an adherence to germanstyle debtbrake rules should be key priorities according to berenberg the uk economys heightened sensitivity to higher interest rates versus other economies would argue for a 25 basispoint interestrate rise by the boe but still a 50 basispoint rise is very likely invesco said it is very likely that they hike by 50bps as a behavioural response to other central banks hiking to stave off inflation and the risk of being seen to being behind the curve it said markets have overwhelmingly priced in a 50bp boe rate rise for thursday while a small minority expects only a 25bp increase from an investment perspective a 50 basispoint interest rate rise by the boe wouldnt necessarily mean the central bank is about to embark on an accelerated hiking cycle rather it is more of a catchup with the frontloading of policy tightening by peers close brothers asset management said it could be joining both the federal reserve and the european central bank in frontloading tightening it said given the uncertainty around uk fiscal policy and lessthanexpected slack in the labor market the boes monetary policy committee may be ready to take a more hawkish tone the asset manager said but adds that forecasts will remain uncertain until the tory leadership race is won and fiscal policies are confirmed us stock futures wavered between gains and losses as investors attention remained focused on the health of the economy and how it could affect the federal reserves monetary policy pathway after notching gains on wednesday in a session that snapped two days of losses stocks were more muted thursday as investors readied for the us jobs report on friday which has loomed as one of the most important events of the week one thing we can say for sure is that august hasnt been dull so far and weve only had three days said jim reid a strategist at deutsche bank stock futures in the us are pausing for breath the economy remains in sharp focus amid expectations that the fed will continue its pathway of aggressively tightening monetary policy in a bid to tame redhot inflation which is at its highest in four decades the fed has already raised interest rates four times this year including two megasize 75 basispoint rate increases in june and july  the biggest since 1994  and is expected to keep raising rates this year before cooling off in 2023 the risk is that denting economic demand while it should bring inflation under control could cause a recession signs that the economy is weakening such as a deterioration of the labor market that would be revealed in us payrolls data could stem the pace of the feds tightening before fridays jobs data the day ahead includes more economic indicators including jobless claims for last week and the trade deficit for june the narratives at the moment are struggling to be consistent though as equities have recently rallied on weaker growth that has been seen as helping to limit how far the fed can hike mr reid said however yesterday equities rallied on stronger economic data regardless of the potential fed impact earnings season remains in sharp focus with companies including alibaba conocophillips amc entertainment block lyft and warner bros discovery reporting results the dxy dollar index edged down following gains in the previous session given fed policy makers recently quashed speculation that it will ease policy next year the dollar could stay stronger for longer ing said this is understandable in that the fed is battling its toughest inflation challenge in 40 years and it will not help to keep inflation expectations contained if it starts outlining that this years rate increases will be reversed next year ing said that could be the feds position until yearend when the fed funds rate could reach 325350 it said the pound edged up ahead of the boes rate decision but commerzbank said the policy decision isnt likely to provide much support to sterling more important will be the central banks new economic projections along with any signals on future rate rises it said if the boe gives the market the impression that its expectations are too high gbpusd might ease towards 120 again the german bank said sterlings losses against the euro are likely to be limited amid uncertainty over how much the ecb will lift rates given the looming energy crisis commerzbank said the boe is unlikely to dampen the markets interestrate rise expectations while sterlings recent strength may be wellreceived due to high inflation ing said given high gas prices and a strong dollarplus boe remarks that sterling plays a role in monetary conditionsthe boe may be reluctant to push back against tightening expectations today and will probably welcome the 3 bounce in tradeweighted sterling over the last month ing said if the boe reiterates that its prepared to act forcefully to combat rising inflation after an expected 50 basis points rate rise thursday at 1100 gmt eurgbp could fall to the 0827508300 area from 08374 currently also read pound seen driven by risk appetite rather than rate rise bets details to be provided by the boe about quantitative tightening may help determine whether the reflattening of the 1030year segment of the gilt curve can persist into growing supply and fiscal risks from the autumn citi said the boe is set to reveal the qt strategy at thursdays policy meeting ahead of active sales potentially from september it said despite uncertainty about qt there has been a revival in the long end of the gilt curve citi added european investment grade and local currency emergingmarket bonds could experience a floor soon mfs investment management said the former already prices in a considerable chance of recession in europe and trade at generous premiums to the us market mfs im said local currency emerging market bonds benefit from attractive real yields relative to developed markets and cheap currency valuations mfs ims approach to the asset class is however very countryspecific and based on indepth research it said finding that brazil and south africa appear attractive bond returns could remain challenged in the near term but the majority of the declines are over mfs investment management said aggressive and frontloaded tightening by global central banks led by the federal reserve is increasing recessionary risk making it more difficult for longer maturity yields in usd bloc countries such as the us and australia to rise much further it said furthermore higher running yields for bond portfolios and the buffer provided by markets already pricing in further rate hikes provide additional protection for bond investors mfs im said negative flows could reverse as investors revaluate the role of bonds in a balanced portfolio it said oil edged up as the market continues to show a limited reaction to opecs pledge to increase supply in september by a modest 100000 barrels a day opecs supply increase satisfies usled calls to raise output but the amount is significantly smaller than early supply increases in reality a lack of spare capacity means the hike will amount to an increase of roughly 42000 barrels a day split between saudi arabia and the uae sp global commodity insights said the modest quota hike underscores the minimal level of spare capacity left in the world gold prices moved higher supported by some safehaven buying amid rising geopolitical tensions the nearterm focus will likely be on uschina relations following us house speaker nancy pelosis visit to taiwan investors struggled to make sense of the challenging macro backdrop anz said a hawkish fed and a stronger us dollar could weigh on investors appetite it said