ASX 200 mining shares charging higher amid China's $210 billion cash injection

The big three ASX 200 miners are charging higher on Friday even as the benchmark sinks.

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S&P/ASX 200 Index (ASX: XJO) mining shares are racing ahead of the benchmark today.

In early afternoon trade on Friday, the ASX 200 is down 0.66%.

Here's how the big three ASX 200 mining shares are tracking at this same time:

  • Fortescue Metals Group Ltd (ASX: FMG) shares are up 1.8% at $27.10
  • BHP Group Ltd (ASX: BHP) shares are up 0.99% at $44.98
  • Rio Tinto Ltd (ASX: RIO) shares are up 0.93% at $131.60

Here's what's happening.

ASX 200 mining shares lift on China stimulus plans

ASX 200 mining shares BHP, Rio Tinto and Fortescue are all catching some heady tailwinds today amid a 2.6% increase in the iron ore price. The critical steel-making metal is trading for just under US$117 per tonne.

Now, that's well down from the US$144 that same tonne was fetching on 3 January. But iron ore has now surged more than 16% since 4 April, when it was trading for just under US$100 per tonne.

This once again defies numerous bearish analyst forecasts, which predicted iron ore would be trading at or below US$100 per tonne by now.

The strength of the industrial metal also lifted BHP and Rio Tinto in US markets, where the ASX 200 mining shares are also listed. BHP shares closed up 1.3% on the New York Stock Exchange (NYSE) overnight, while Rio Tinto shares gained 2.3%.

Investor enthusiasm for the big miners looks to be fuelled by China.

New economic data shows that while parts of China's economy, like its manufacturing sector, are rebounding, other sectors continue to struggle. Particularly the nation's sluggish property market.

In hopes of getting the economy back onto its growth track, the Chinese government said it would commence selling 1 trillion yuan (AU$210 billion) in its ultra-long special sovereign bonds today.

Much of this cash is expected to flow into the steel-hungry infrastructure sector. Analysts are also forecasting the potential of more monetary easing from the People's Bank of China to make it, well, easier for banks to buy the bonds.

Commenting on the Chinese stimulus that looks to be lifting the ASX 200 mining shares today, ANZ Group Holdings Ltd (ASX: ANZ) stated (quoted by The Australian Financial Review):

Iron ore rose amid renewed optimism over Beijing's efforts to tackle property crisis. This follows reports that China will start selling 1 trillion yuan of special bonds this week centred on boosting infrastructure spending.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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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