Iron ore price spike boosts ASX mining stocks
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The news: BHP, Fortescue and Rio Tinto all gained in morning trading on the ASX after iron ore spiked almost 11%, boosted by China's new stimulus package announced last week.
The numbers: BHP (1.9%), Fortescue (3.2%) and Rio (1.7%) were all trading higher by midday AEST, as the materials sector added 1.7%.
Iron ore surged as much as 10.6% in Singapore on Monday morning, before paring some gains, Bloomberg said. That followed an 11% rally last week.
The context: The spike came as three of China's biggest cities eased curbs on home-buying, boosting the demand outlook in the world’s biggest consumer of iron ore. Shanghai, Guangzhou and Shenzhen loosened rules, after the Chinese government unveiled a slate of stimulus measures last week, in part to prop up its embattled property sector.
Guangzhou became the first tier-one city to remove all restrictions on homebuyers. Shanghai and Shenzhen announced they were lowering minimum downpayment ratios for first and second homes to 15% and 20% respectively. China’s central bank also announced on Sunday that it would allow refinancing of mortgages.
The slowdown in China's property market has seen iron ore prices tumble this year, as the country's steel-intensive property sector battles a prolonged crisis, with construction activity remaining lacklustre.
The source: Bloomberg
