'Amazing' Trump-Xi meeting cools tensions

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

A handshake between Donald Trump and Xi Jinping, an expected hold on rates from the Bank of Japan and Federal Reserve Chair Jerome Powell's cautious tone are all that investors can think about ahead of another onslaught of European earnings.

First things first, not a lot of details are out from the high-stakes meeting between the U.S. president and his China counterpart, but the optimistic tone struck by both will largely be welcomed by markets.

Trump said he had struck a deal to reduce tariffs on China in exchange for Beijing resuming U.S. soybean purchases, keeping rare earths exports flowing and cracking down on the illicit trade of fentanyl. We are yet to hear from China.

Trump described his meeting with Xi as "amazing", saying that "on a scale of 1 to 10, the meeting with Xi was 12." Markets though didn't know what to believe, keeping stocks choppy so far.

With a lot of excitement already priced in on Thursday, markets are awaiting more details of the agreement between the world's top two economies. Signs of easing trade tensions sent stocks across the globe towards record highs while Chinese stocks held near a decade high.

That sets us up for a busy European calendar, with earnings from carmaker Volkswagen, apparel maker Puma and a slew of French banks and inflation and economic data from the region due later in the day.

The Bank of Japan held rates steady but repeated its pledge to continue increasing borrowing costs if the economy moves in line with its projections, shifting investor focus to the prospect of a hike as soon as December.

The Fed cut rates as expected on Wednesday but the spotlight was on Powell, who said a policy divide within the U.S. central bank and a lack of federal government data may put another interest rate cut out of reach this year.

Key developments that could influence markets on Thursday:

Economic events: Germany inflation data for October; Q3 GDP data for euro zone, Germany and France

(By Ankur Banerjee; Editing by Jacqueline Wong)