Mineral Resources, Fortescue, Rio Tinto, Pilbara Minerals surge on renewed Chinese stimulus hopes

The ASX’s cohort of iron ore and lithium miners have been big beneficiaries of China’s latest posturing towards injecting vast sums of money into its economy.

Top Chinese leaders signalled bolder economic support next year using their most direct language on stimulus in years, as Beijing braces for a trade war when Donald Trump takes office.

President Xi Jinping’s decision-making Politburo vowed to embrace a “moderately loose” monetary policy in 2025, according to the official Xinhua News Agency, signaling more rate cuts ahead and shifting from a “prudent” strategy that’s held for nearly 14 years.

The 24-man body also pledged “more proactive” fiscal policy at its monthly huddle, raising expectations for Beijing to widen the fiscal deficit from 3 per cent at the annual parliamentary session in March. That would open the door to more central government borrowing to shore up the faltering economy.

Australian mining giants heavily exposed to Chinese demand collectively gained tens of billions of dollars on Tuesday morning.

Among the biggest winners on the iron ore side were Mineral Resources, Fortescue and Rio Tinto — up 9.4 per cent, 7 per cent and 4.6 per cent respectively.

Lithium miner Pilbara Minerals jumped 9.1 per cent, while Liontown Resources and IGO were both up about 5.7 per cent.

Iron ore is used to make steel and lithium is a key input for electric vehicle batteries. Steel and EV batteries are predominately manufactured in China.

The Chinese Politburo’s December meeting “sent the most aggressive stimulus tone in a decade”, Morgan Stanley economists including Robin Xing wrote in a research note, adding that “while the tone is very positive, implementation remains uncertain”.

The offshore yuan erased losses to trade 0.1 per cent stronger on bets China’s economy will recover due to monetary and fiscal stimulus. Regional currencies also got a boost from the Monday statement, with Australian dollar rising 0.3 per cent and New Zealand’s currency trimming losses.

While Politburo readouts never reveal numerical economic targets, the vaguely worded statements give important clues on future policy.

“The wording in this Politburo meeting statement is unprecedented,” said Zhaopeng Xing, senior strategist at ANZ.

“The policy tone shows strong confidence against Trump’s threats,” he noted, referencing the US president-elect’s vow to impose a 60 per cent tariff on Chinese exports that would decimate bilateral trade.