Why are ASX 200 iron ore shares jumping higher today?

The China property sector is going to get a boost.

A female employee in a hard hat and overalls with high visibility stripes sits at the wheel of a large mining vehicle with mining equipment in the background.

Image source: Getty Images

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Key points

  • Many iron ore miners are rising today, which is boosting the ASX 200
  • China has announced more support for its real estate sector
  • The ASX 200 is also rising after a strong day on Friday on the global share market thanks to slower-than-expected wage growth

High-profile S&P/ASX 200 Index (ASX: XJO) iron ore shares are receiving a boost today after some positive news out of China.

In early trading, this is the current state of play:

The BHP Group Ltd (ASX: BHP) share price is up by 1.5%.

Rio Tinto Limited (ASX: RIO) shares have climbed by 0.5%.

The Mineral Resources Ltd (ASX: MIN) share price is up 1.75%.

The Fortescue Metals Group Limited (ASX: FMG) share price is bucking the trend, down by 1%. This could be explained by the fact the miner's chief financial officer (CFO) is leaving the business.

What's happening in China?

A lot of 2022 saw the Asian superpower trying to control the spread of COVID-19 with restrictions and lockdowns. But, life is now mostly returning to normal.

At the end of last week, it was reported by various media including Bloomberg and Reuters that China would be providing increased support to the Chinese real estate sector.

Reuters reported on research from CRIC that showed Chinese property companies raised a total of $14.9 billion in December, which was a year over year increase of 33% thanks to more government support for the sector.

Reuters also reported that the Chinese central bank, the People's Bank of China, said that "for cities where the selling prices of new homes fall month-on-month and year-on-year for three consecutive months, the floor on mortgage rates can be lowered or abolished for first-time home buyers in phases."

A stronger Chinese real estate sector could mean more steel usage, which could flow into better earnings for ASX 200 iron ore shares.

Reuters reported that, according to analysts, 38 cities are eligible for adjustable mortgage rate floors, such as cities like Wuhan and Zhengzhou.

However, some experts are not convinced this is going to help that much. For example, Reuters reported that JPMorgan analysts commented:

Lowering mortgage rates has not been able to drive sales. We think homebuyer confidence is a more important factor than affordability.

What else is happening?

The ASX 200 is also rising after a positive trading day on the US share market last week on Friday – the S&P 500 Index (INDEXSP: .INX) climbed 2.3%. The ASX often follows on from large movements in the global share market.

It came after US payroll information was revealed.

According to CNBC, US non-farm jobs increased by 223,000 for the month, more than the Dow Jones estimate of 200,000. The unemployment rate decreased to 3.5%, which was also stronger than expected.

However, in what optimists view as a positive sign for inflation, wage growth was below expectations – average hourly earnings only increased by 4.6%, less than the 5% that was expected.

If interest rates don't need to go as high to control inflation, then that could be good news for the global economy and asset valuations, including ASX 200 iron ore shares.

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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