The Pilbara Minerals Ltd (ASX: PLS) share price is having a day to remember on Tuesday.
At the time of writing, the lithium miner's shares are up 10% to $2.36.
This compares favourably to a 0.2% decline by the ASX 200 index.
Why is the Pilbara Minerals share price shooting higher?
Investors have been scrambling to buy Pilbara Minerals and other ASX lithium stocks this morning following a very strong night of trade for their peers on Wall Street.
For example, overnight Albemarle Corporation (NYSE: ALB) shares were up 4.5% and Sociedad Química y Minera de Chile (NYSE: SQM) shares jumped by 6%.
But why are lithium stocks rising?
The catalyst for the rampant buying of lithium stocks has been the announcement of new stimulus measures out of China.
According to Reuters, China's leaders have pledged "more proactive" fiscal measures and "appropriately loose" monetary policy next year to boost domestic consumption.
This is according to an official readout of a key policy meeting that has outlined the country's upcoming economic priorities. It states:
A more proactive fiscal policy and an appropriately loose monetary policy should be implemented, enhancing and refining the policy toolkit, strengthening extraordinary counter-cyclical adjustments.
The media outlet notes that ANZ's senior China strategist, Xing Zhaopeng, believes this means that a big rate cut is coming in 2025. He said:
We think it points to strong fiscal stimulus, big rate cut and asset buying in 2025. The policy tone shows strong confidence against Trump threats of tariffs.
This appears to have sparked hopes that domestic consumption could get a major boost, which could lift electric vehicle sales. This would be good news for lithium demand and could potentially take battery materials prices out of the doldrums.
Should you invest?
One leading broker that is likely to see now as a good time to buy is Morgans.
While its analysts have not yet responded to this development, they were previously the only major broker with the equivalent of a buy rating on the Pilbara Minerals share price.
Morgans has an add rating and $3.25 price target on its shares, which implies potential upside of approximately 38% for investors over the next 12 months even after today's strong gain.
To put that into context, a $5,000 investment would turn into approximately $6,900 next year if Morgans is on the money with its recommendation.
Though, time will tell if this proposed stimulus will have any impact on the lithium market.
