A new report from Wilsons Advisory and Canaccord Genuity says momentum is turning positive for ASX resources shares – particularly mining.
Greg Burke, Equity Strategist, said after a three-year downturn, momentum in the mining sector appears to be turning.
He said broad-based strength across major commodities now underpinning what could be the early stage of a significant resources upgrade cycle.
Why have resources shares lagged?
According to the report, a negative view on China's growth has contributed to the multi-year downtrend in resources (with the notable exception of gold).
This has been particularly focussed on the weakness in its property sector, which remains central to demand for iron ore.
While China's economy may slow further, investor sentiment seems to be improving, supported by easier monetary policy and rising credit availability.
We also see potential for large-scale stimulus in China in 2026, as greater clarity emerges around the US tariff situation, which would have positive implications for commodity pricing.
What's changing?
Mr Burke said there are a few catalysts for a rebound for resources shares.
Overall, the macro environment is becoming more supportive for resources thanks to:
- Rate cuts in the US that should help stimulate global commodity demand
- A weaker USD offers a tailwind for dollar-priced commodities
- Trump's 'Big Beautiful Bill' will also take effect early next year and is expected to stimulate US manufacturing
- Further easing of trade frictions between the US and the rest of the world could help improve global growth.
Overall, more supportive supply/demand fundamentals for most metals are now driving upgrades to consensus commodity price forecasts and, importantly, translating into stronger earnings expectations for the ASX Mining sector.
What stocks should investors target?
The Motley Fool's Cameron England reported earlier this week on the ASX copper shares recommended by Wilsons Advisory and Canaccord Genuity.
They also listed other ASX resources shares to target.
Firstly, in the already booming gold sector, the preferred large cap exposures are Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST).
Evolution Mining offers the cleanest gold leverage over the near-term in our view, as it has demonstrated best-in-class operational delivery and offers an attractive FCF yield over the next couple years, while NST offers the greatest medium-term upside in our view, driven by its strong production growth outlook, its relatively attractive valuation, and the rolling off of its hedging profile.
Wilsons Advisory/Canaccord Genuity has price targets of $12.25 on Evolution Mining shares and $34.50 on Northern Star Resources shares.
The report also noted that iron ore demand faces structural headwinds and sees risks as skewed to the downside over the medium term.
With that in mind, the report said its preferred iron ore exposure is to BHP Group (ASX: BHP).
Our preferred iron ore exposure is BHP (BHP), the lowest-cost producer globally with a strong track record of operational delivery and disciplined management. Its commodity mix is relatively attractive compared to the other majors, with ~45% of FY26 EBITDA expected to come from copper (where we have a more favourable view), providing valuable diversification beyond iron ore.
