Why did these 6 ASX 200 mining shares experience double-digit growth this week?

MotleyFool
2024-09-27

What a week for ASX 200 mining shares!

At the time of writing, the S&P/ASX 200 Materials Index (ASX: XMJ), which incorporates all the mining shares, is up by an extraordinary 9.28% for the week.

Among the winners this week were six major ASX 200 mining shares, as outlined below.

At the time of writing, this is the 5-day performance of the following stocks:

  • BHP Group Ltd (ASX: BHP) shares up 13.28% to $44.70
  • Rio Tinto Ltd (ASX: RIO) shares up 13.64% to $126.80
  • Alcoa Corporation CDI (ASX: AAI) shares up 15.5% to $57.31
  • Fortescue Ltd (ASX: FMG) shares up 16.57% to $20.23
  • Sandfire Resources Ltd (ASX: SFR) shares up 18.48% to $10.68
  • Champion Iron Ltd (ASX: CIA) shares up 28.5% to $7.26

What's driving up ASX 200 mining shares?

As the following five-day chart shows, these 6 ASX 200 mining shares began surging on Tuesday.

That was the day we learned of new stimulus measures to be rolled out in China. This news sparked a sell-down of ASX 200 bank shares and a buy-up of ASX 200 mining shares.

The People's Bank of China announced a 0.2% cut to the seven-day repo rate, a 0.5% cut to rates on existing home loans, and a 0.5% reduction in local banks' capital reserve requirements.

The stimulus measures are designed to help China meet its 5% economic growth target in 2024.

Stimulus in China typically leads to stronger industrial activity, which bodes well for metals demand.

That's why ASX iron ore shares like BHP, Fortescue, Rio Tinto and Champion Iron have done so well this week. According to Trading Economics, the iron ore price has risen by 1.06% over the past five days.

ASX 200 copper shares and aluminium shares have also advanced.

BHP, Sandfire Resources and Alcoa CDI shares are up, largely due to a 7.25% increase in the copper price and a 5.98% bump in the aluminium price over the past five days.

CBA senior economist Belinda Allen commented that copper futures had jumped to a near 16-week high "propelled by hopes of firmer metals demand after China announced fiscal stimulus measures".

According to Trading Economics analysis:

Copper futures traded around $4.6 per pound on Friday and were set to gain about 7% this week as China implemented various stimulus measures to support economic growth, boosting the demand outlook in the world's largest copper consumer. 

Trading Economics said aluminium futures rose to $2,560 per tonne — its highest price in more than three months — on Friday due to the new economic stimulus.

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