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Do ASX mining companies carry the Australian share market?

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The All Ordinaries Index (ASX: XAO) has been having a pretty flat week. Upon today’s opening, the ASX commented that, “Over the last five days, the index has gained 1.59%, but is virtually unchanged over the last 52 weeks.” 

While the All Ords plods along, one sector that seems to be on the rise is the Materials sector having gained around 2.5% over the past month.

On Tuesday, the Australian Financial Review noted that while the market closed slightly lower, Silver Lake Resources Limited (ASX: SLR), Newcrest Mining Ltd (ASX: NCM), Lynas Rare Earths Ltd (ASX: LYC), Westgold Resources Ltd (ASX: WGX) and Ramelius Resources Limited (ASX: RMS) had all posted nice gains for the day.

During times likes this when most other sectors don’t seem to be keeping up, it poses the question: Does the Australian share market always rely on the mines to carry it along?

The largest industry sector

According to the ASX, “The Metals & Mining sector is the largest industry sector by number of companies with over 700 companies involved in mineral exploration, development and production across 100 countries.”

There are currently 2,008 companies listed on the ASX in total. Out of these 2,008 companies, 200 rise to the top rated by market capitalisation. These are the guys featured on the S&P/ASX 200 Index (ASX: XJO). That said, the Materials sector (which incorporates Metals and Mining) comes in second place according to the index’s sector breakdown, after Financials. 

So which shares post the biggest gains?

Best performing ASX shares of 2020

Taking a closer look at the best performing ASX 200 shares of 2020, two out of the top five fall into the Materials sector. This includes Fortescue Metals Group Limited (ASX: FMG) and Minerals Resources Limited (ASX: MIN). The other three sectors that made the cut were Information Technology, Consumer Discretionary and Financials.

If we look at the top performers of the 2020 financial year, Perseus Mining Limited (ASX: PRU) and Mesoblast Limited (ASX: MSB) both snatched up a spot. Fisher & Paykel Healthcare Corporation Ltd (ASX: FPH) took fourth place while Afterpay Ltd (ASX: APT) grabbed the number one position posting a monstrous 150% gain for the period.

Foolish takeaway

Considering the top ASX 200 listed sectors and recent best performers, there’s no doubt that the Metals and Mining industry certainly boasts a stronghold in the Australian sharemarket. However, let’s not forget that the index encompasses 11 sectors in total.

While mining giants like BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) are some of the biggest listed ASX companies, that doesn’t mean they’ll always be the best performer or deliver the most value — particularly given the market’s day-to-day volatility and the number of companies working hard to also gain top spots in FY21.

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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Gretchen Kennedy