Iron ore stocks soar on new China growth measures
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The news: Mining stocks surged on the ASX after China's central bank lowered interest rates and injected liquidity into its banking system, after Chinese leaders pledged “necessary fiscal spending” to meet the country’s 5% growth target.
The numbers: The Australian sharemarket's largest iron ore companies BHP (3.1%), Fortescue (5%), Rio Tinto (3.3%), Mineral Resources (12.7%) and Champion Iron (8.2%) were all trading higher by 3:15pm AEST.
Materials, up 2.78%, was the best performing sector on the ASX as the wider market rose 0.18%.
Singapore iron ore futures were up 4.14% to USD102.6 ($149.17) per tonne.
The context: More fiscal measures are expected to be announced before China's week-long holidays starting on 1 October, after a meeting of the Communist Party's top leaders showed an increased sense of urgency about mounting economic headwinds, Reuters reported.
China plans to issue special sovereign bonds worth about 2 trillion yuan ($414.4 billion) this year as part of fresh fiscal stimulus, according to two sources with knowledge of the matter.
What they said: "With the stimulus aimed at supporting the property sector, iron ore prices were always going to get a tailwind," Westpac senior economist Pat Bustamante said in a note.
The sources: Reuters, Westpac IQ
