After falling short of arriving at a consensus last weekend, the UK and the European Union finally ironed out a deal that includes a financial settlement, protection of rights of EU citizens residing in Britain, and assurances that no hard border would be erected between Northern Ireland and the Irish Republic. With EU demands met, talks will now move on to drawing up a future trade framework. On the economic data front, US Nonfarm Payrolls grew by a better-than-expected 228,000 in November, while the jobless rate remained unchanged at 4.10%. Average hourly earnings edged 0.20% higher last month after contracting by a revised 0.10% in October.
The solid jobs growth cemented expectations that the Federal Reserve will hike interest rates for the third time this year when it meets next Wednesday. On the political front, Germany’s centre-left Social Democratic Party re-elected Martin Schulz as its chairman on Thursday and sanctioned him to open talks with Angela Merkel’s conservatives on the formation of a new coalition government almost three months after the general election. In Asia, the International Monetary Fund warned China this week that it debt-fuelled economic model had reached its limits. The IMF stress-tested 33 major Chinese banks and found substantial weaknesses outside of the big four, potentially adding to financial risks and weighing on economic growth.