Fortescue, Rio Tinto, and BHP all saw their shares jump more than 13% after the Chinese government announced major plans to stimulate China's economy.
👉 Background: Some of Australia’s largest companies are mining companies eg. BHP Group, Fortescue and Rio Tinto. The value of these companies ebbs and flows based on the demand for their natural resources like copper, iron ore, coal and lithium.
👉 What happened: Last week, Fortescue, Rio Tinto, and BHP all saw their shares jump more than 13% after the Chinese government announced major plans to stimulate China's economy, including cash rate cuts and support to property developers.
👉 What else: The Chinese property market has struggled since the pandemic. In fact, the price of iron ore had dropped over 35% this year thanks to weak demand. But this new support has mining companies hyped up once again.
💡When China sneezes, Australia’s miners catch the flu—or in this case, a much-needed dose of financial medicine!
💡At the moment, China accounts for nearly half of the copper demand in the world. On top of that, China also buys nearly 75% of the global iron ore.
💡Increasing property development means China will need more building resources like steel, which is made from iron ore, and is mined out of these Australian-owned mines. So, the price of iron ore has jumped and Aussie miners are rejoicing.
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