ASX Rallies Amid Chinese Stimulus Measures; Mining Stocks Surge

The Australian share market experienced a notable rally on Thursday, with the mining sector playing a key role in driving gains. The uptick occurred as China made further commitments to economic stimulus aimed at reaching its growth targets.  

The S&P/ASX 200 Index rose by 1%, translating to a 77.3-point gain, closing at 8203.7. The market saw broad-based strength, with 10 out of 11 sectors advancing, despite a subdued performance in U.S. markets. The All Ordinaries followed suit, increasing by 1.1%. 

Mining Sector Gains 

The rally in Australian miners came on the back of rising iron ore prices in Singapore, which crossed $US98 per tonne. Chinese President Xi Jinping, during the monthly Politburo meeting, called for increased fiscal spending to reinforce the country's economic stimulus efforts. These measures, initiated by China’s central bank earlier in the week, are aimed at stabilizing key sectors, including the property market, a significant consumer of iron ore. 

Efforts to limit new commercial housing construction were also part of the government’s strategy to support the struggling property sector. This development positively impacted the major mining stocks. Rio Tinto Limited (ASX:RIO) rose by 2%, closing at $123.22. BHP Group Limited (ASX:BHP) gained 1.6% to $43.36, capping off a 7.6% rise for the week. Fortescue Metals Group Limited (ASX:FMG) climbed by 2.9% to $19.40. 

Analysts attributed these movements to expectations of further stimulus from the Chinese government, which could bolster commodity demand. IG analyst Tony Sycamore noted that the recent policies have helped the mining sector recover from earlier losses, alongside a surge in commodity prices. 

Strong Performance in Consumer Discretionary Sector 

The consumer discretionary sector also delivered robust gains, climbing 2%. Wesfarmers Limited (ASX:WES) rose by 1.5%, closing at $70.99, while Aristocrat Leisure Limited (ASX:ALL) advanced by 2.8% to $58.09. JB Hi-Fi Limited (ASX:JBH) also posted a 3% increase, closing at $80.98, as investors showed confidence in the sector. 

Key Corporate Updates 

In company news, Star Entertainment Group Limited (ASX:SGR) released its financial accounts after being suspended from trading for nearly a month. The casino operator posted a significant full-year loss of $1.7 billion as it faced liquidity challenges. The company’s shares are anticipated to resume trading later in the week. 

Meanwhile, diversified conglomerate Washington H Soul Pattinson (ASX:SOL) reported a 27.8% decline in net profit for FY24, down to $498.8 million. Despite this, the company's shares climbed 2.2%. The result was driven by reduced contributions from its stakes in Brickworks Limited (ASX:BKW) and New Hope Corporation Limited (ASX:NHC). 

Regal and Platinum Asset Management 

In asset management news, Platinum Asset Management (ASX:PTM) rejected a takeover bid from Regal Partners Limited (ASX:RPL). Platinum's board stated that the proposal undervalued the company. Platinum's shares rose by 1.8%, closing at $1.145, while Regal Partners gained 2.3%, closing at $3.60.  

Stockland’s Acquisition Cleared by ACCC 

Stockland (ASX:SGP) saw a slight increase of 0.4% to $5.31 after the Australian Competition and Consumer Commission (ACCC) approved the company’s proposed acquisition, in partnership with Supalai, of 12 residential master-planned communities from Lendlease Group (ASX:LLC). The ACCC accepted a court-enforceable undertaking as part of the deal. 

Brickworks Reports Earnings 

Brickworks Limited (ASX:BKW) rallied strongly, posting a 7.2% rise to $28.52. The company exceeded expectations with its underlying profit figures, despite reporting a net loss of $119 million for FY24. The loss was largely attributed to a non-cash property devaluation of $215 million and a $15 million loss on property sales. The underlying strength in the company’s earnings has been attributed to its diversified operations and a solid performance from its building materials division. 

Market Outlook 

The rally on the ASX highlights the significant impact of China’s policy decisions on global markets, particularly in commodity-focused economies like Australia. With further fiscal stimulus expected from China, there is potential for continued strength in the mining sector, which could contribute to broader market gains. Investors remain focused on updates from key sectors such as mining, consumer discretionary, and real estate, all of which are poised for further developments in the coming weeks. 

As stimulus measures from China continue to unfold, and with earnings updates from major companies on the horizon, the Australian market is positioned for ongoing volatility and potential opportunities across various sectors.