BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and Fortescue Ltd (ASX: FMG) shares are enjoying a strong end to the week.
Rekindled investor interest is seeing all three of the S&P/ASX 200 Index (ASX: XJO) mining stocks outpace the benchmark in morning trade on Friday.
At the time of writing, the ASX 200 is up 0.8%.
Here's how the big three Aussie iron ore miners are faring:
- BHP shares are up 1.3% at $39.31
- Rio Tinto shares are up 1.2% at $111.69
- Fortescue shares are up 1.6% at $16.93
Here's what's driving today's outperformance.
BHP, Rio Tinto, and Fortescue shares regain some lustre
As you're likely aware, the ASX 200 mining giants have been under significant selling pressure this year amid a big fall in the iron ore price.
Iron ore is the biggest revenue earner for all three of the miners.
In early January, the industrial metal was trading for US$144 per tonne. Then the bottom fell out, with iron ore declining through most of the year and sliding to just below US$90 per tonne last week.
Despite today's welcome bounce, Fortescue shares are down 42% year to date, Rio Tinto shares are down 18%, and the BHP share price is down 22% in 2024.
For some context, the ASX 200 is up 7% over this same period.
Iron ore has come under pressure not so much from the supply side – though there is plenty of supply – but more due to slumping demand. That's mainly due to weakness from China, the world's top importer of the steel making metal and the world's number two economy.
China has been struggling to regain its growth traction all year. Of particular concern for the big Aussie miners is the ongoing weakness in China's steel-hungry real estate markets.
Which brings us back to why Rio Tinto, BHP and Fortescue shares are ending the week on a high note.
Overnight the iron ore price ticked up 2.5% to trade for US$95.05 per tonne, now up some 6% since last week's lows.
That looks to be partly driven by growing optimism that the US Federal Reserve will deliver its first long-awaited interest rate cut next week.
It also looks like investors in the ASX 200 mining stocks may have Chinese President Xi Jinping to thank for today's mini rally.
Yesterday, Xi pressured China's local and central governments to roll out the policies needed for the nation to achieve its 5% growth target this year. Meaning we may yet be looking at some outsized stimulus measures in the fourth quarter.
Commenting on potential Chinese economic stimulus that would likely offer tailwinds for BHP, Rio Tinto and Fortescue shares, Jia Kang, a former head of research at the Ministry of Finance, said (quoted by Bloomberg):
Fiscal policy must strengthen to stabilise the economy. Either a budget deficit raise or extra special sovereign bond sales should be considered this year.
Stay tuned!
