Asian iron ore futures jump on China stimulus optimism

Iron ore futures in Asia rose Monday after China’s Ministry of Finance said it was ready to significantly boost spending but failed to provide detailed answers to the size and scope of the stimulus.

China Finance Minister Lan Fo’an stopped short of providing specific fiscal stimulus details in an interview on Saturday, but said there would be a significant bond issuance to help local governments and reverse the deepening property crisis.

Asian investors appeared to take the view that China’s government remains determined to lift the economy out of its growth funk, as Dalian Commodity Exchange iron ore contracts (SCO:COM) jumped as much as 3.2% to an intraday high of 810 yuan/metric ton, and Singapore Exchange futures rose 1.4% to $107.90/ton, according to Reuters.

But Western investors seem unconvinced by China’s stimulus comments, dragging down industrial metals on the London Metal Exchange, where copper futures (HG1:COM) fell as much as 1.1% on Monday to $9,683/ton.

Goldman Sachs upgraded its forecasts for China’s economic growth in 2024 and 2025 following the weekend announcements, now seeing China’s gross domestic product expanding 4.9% this year vs. 4.7% previously and 4.7% next year from its previous guidance of 4.3%.

Potentially relevant stocks include BHP (NYSE:BHP), Rio Tinto (RIO), Vale (VALE), Fortescue (OTCQX:FSUMF), Glencore (OTCPK:GLCNF) (OTCPK:GLNCY), Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY), Freeport McMoRan (FCX), Southern Copper (SCCO), Hudbay Minerals (HBM), Teck Resources (TECK).