European Shares Seen Higher As US, China Agree Framework Of Trade Deal

European stocks are likely to open higher on Monday after the U.S. and China hailed progress in trade talks in Malaysia.

Ahead of the first meeting between U.S. President Donald Trump and Xi Jinping since 2019 on the sidelines of the APEC summit in Gyeongju, South Korea, on Thursday, U.S. and Chinese officials on Sunday said they have negotiated a framework for a trade deal.

According to U.S. Treasury Secretary Scott Bessent, the outlines of the agreement include China easing rare earth export restrictions and buying “significant” amounts of U.S. soybeans in exchange for Trump removing his threat of adding 100 percent tariffs on Chinese goods.

Meanwhile, Trump hiked tariffs on Canada by 10 percent and said he expects a Brazil trade deal “pretty quickly” after meeting with Brazilian President Luiz Inacio Lula da Silva in Malaysia.

The Fed’s monetary policy announcement will also remain in the spotlight this week, with the U.S. central bank widely expected to lower interest rates by another quarter point, bringing the benchmark rate to 3.75-4.00 percent.

The Fed meeting kicks off on Tuesday, October 28, and concludes on Wednesday, October 29, with the central bank’s latest policy decision.

Fed chief Jerome Powell may leave the door open for another rate cut in December and could end quantitative tightening, the shrinking of the Fed’s massive balance sheet.

On the earnings front, tech companies Meta, Microsoft and Google parent Alphabet report on Wednesday, while Apple and Amazon report on Thursday.

Asian markets were broadly higher, and the dollar hit a two-week high against the yen, while gold fell more than 1 percent below $4,100 an ounce on dollar strength and amid signs of easing U.S.-China trade tensions.

Oil traded higher after rallying almost 8 percent last week on supply jitters.

U.S. stocks hit record highs on Friday as cooler-than-expected CPI data reinforced views that the Fed will cut the fed fund rate by another 50 bps by year-end.

Data showed the consumer price index rose 0.3 percent month-on-month in September, bringing the annual inflation rate to 3 percent, just below the 0.4 percent and 3.1 percent that economists had expected. Core CPI came in at 0.2 percent and 3 percent on a 12-month basis.

Investor sentiment was also boosted by upbeat earnings news from big-name companies like Ford, Procter & Gamble and Intel.

The Dow rallied 1 percent, the tech-heavy Nasdaq Composite surged 1.2 percent and the S&P 500 added 0.8 percent to notch their second winning week in a row.

European stocks reversed course to close higher on Friday as investors reacted to the delayed U.S. inflation print and a flurry of corporate earnings reports.

The pan European Stoxx 600 gained 0.2 percent. The German DAX inched up by 0.1 percent and the U.K.’s FTSE 100 climbed 0.7 percent while France’s CAC 40 finished marginally lower.

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