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ASX this week: Markets watch for possible start of Brexit proceedings

ASX this week: Markets watch for possible start of Brexit proceedings

The UK may trigger the start of Brexit proceedings as early as this week which could create risks, leading to a lack of confidence in financial markets in the coming weeks and months.

Australian shares, as measured by the S&P/ASX 200 index, chalked up gains in four out of five trading days last week, while trading volumes were up 21% from the prior week.

An overall 4.3% increase in the ASX 200 materials sector helped lift the benchmark stock gauge by 0.4% over five days to 5,799.6. 

On Friday: 

  • Brent oil added less than 0.1% to US$51.76 a barrel; up 0.8% for the week.
  • WTI crude rose less than 0.1% to US$48.78 a barrel; up 0.6% for the week.
  • Iron ore with 62% content delivered to Qingdao, China, dropped 0.3% to US$92.34 a dry metric tonne; up 6.5% for the week.
  • Spot gold climbed 0.2% to US$1,229.26 an ounce; up 2% for the week.
  • Australian dollar traded at 77.04 US cents, strengthening 2.1% over the week; the currency edged up to 77.08 US cents at 11:10am Sydney time today.

What to watch this week

UK Prime Minister Theresa May could activate Article 50 of the Treaty of Lisbon, an agreement guiding the European Union (EU), as early as this week.

If that happened, May could officially start the lengthy process of withdrawing Britain from the EU, nine months after just over half of Britons voted in a referendum to leave the 28-country bloc.

"The imminent triggering of Article 50 leaves GBP [British pound] subject to extreme headline risk over the coming weeks and months," Peter Kinsella, senior currency and rates strategist at CommBank, wrote in a research note today.

"The negotiations are going to be difficult," he said. "Both sides will approach the negotiations with a strident tone, and this will unnerve markets, with malign consequences for GBP exchange rates."

Meanwhile, iron ore rebounded last Wednesday, 15 March, to trade above US$90 a dry metric tonne. It continued to hold above the US$90 price level for three consecutive days.

China's transition to larger, less-polluting steel mills will boost demand for higher-quality iron ore, Bloomberg reported last night, quoting Rio Tinto group chief executive Jean-Sebastien Jacques. 

It's a relatively quiet week in terms of economic data, with no major economic indicators due for release in Australia and key overseas markets such as China and the US.

The Reserve Bank of Australia will publish minutes from its March board meeting tomorrow. CommSec said investors might scrutinise the minutes for clues on the central bank's policy bias.

Stock movers

Below are the five best and worst-performing ASX 200 stocks for the week ended Friday, 17 March.

Company/Index

ASX code

Weekly price change

Evolution Mining

EVN

+17.8%

Galaxy Resources

GXY

+17.8%

Resolute Mining

RSG

+14.3%

Northern Star Resources

NST

+11.5%

Saracen Mineral

SAR

+11.3%

S&P/ASX 200

XJO

+0.4%

Spotless Group

SPO

-4.6%

Eclipx Group

ECX

-5.4%

iSentia Group

ISD

-5.7%

Ardent Leisure

AAD

-5.8%

Sky Network Television

SKT

-6.1%

Past performance is not a reliable indicator of future performance. Source: Bloomberg

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. The inclusion of companies in this article does not constitute a recommendation and it’s vital to remember that the value of shares in any company can fall as well as rise, which means you could lose money by investing in them. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia.