ASX down: China stimulus does little to lift Aussie iron ore

The struggling Chinese economy has few rays of hope for Australian miners, as the big iron ore producers sink the ASX to a loss on Monday.

Underwhelming stimulus from Beijing has done little to pump the Australian shares as the Chinese building market drags down the local resources sector.

Bundles of trillions of yuan for the building sector and debt-ridden local governments announced on Friday were not enough to boost iron ore prices or Aussie miners when the local market opened on Monday.

BHP had its worst day in six months, slipping 4.1 per cent. The local materials sectors dragged the ASX200 to a 0.35 per cent loss, losing 28.9 points to close at 8,266.2.

Fortescue’s woes rolled into another sizeable hit, as Twiggy Forrest’s firm lost 6.7 per cent, and is down 23 per cent on this time last year.

Rio Tinto, South32, BlueScope Steel, Lyans Rare Earths and Mineral Resources all lost more than 2.6 per cent each.

Seven of the 11 ASX sectors finished in the green Monday, but losses in resources were too much and sunk the local bourse to a 28 point loss. Picture: NewsWire / Max Mason-Hubers

Chinese subsidy schemes, where consumers get cashback for trading in old cars or appliances, have helped China somewhat, but the economy has been massively weighed down by local government debt and a failing building sector since the pandemic.

On Friday, Beijing announced a 10 trillion yuan ($A2.1 trillion) funding pool on offer for the struggling local governments.

But the package is relatively less than the mammoth 2008 Chinese stimulus kick, and fell flat with investors.

The iron ore price subsequently fell 1.3 per cent to US$103.82, down 18 per cent on a year ago.

Locally, Champion Iron was whacked more than 9 per cent on Monday, to close at $5.64.

In the doldrums with resources was the consumer staples sector. The 13 largest companies in the sector all lost ground, most notably a2 Milk (down 6.8 per cent) and pub operator Endeavour Group (down 4.8 per cent).

BHP suffered its largest daily share price loss in six months. Picture: BHP

Endeavour reported flat quarterly sales numbers. A2 Milk is struggling to sell its infant formula into the soft Chinese economy, though shares in the dairy giant are up 28 per cent on 12 months ago.

Elsewhere, Woolworths faces strike action from warehouse workers in the run up to Christmas; the supermarket’s shares fell 1 per cent on Monday.

On the whole, seven of the 11 ASX sectors finished with a gain. Information tech led the way, as the sector’s largest listing WiseTech rebounded from recent scandals concerning founder and now-departed chief executive Richard White.

WiseTech gained 2.2 per cent Monday, on the back of 108 per cent market cap growth in the past year.

In legal news, shares in Perth-headquartered, west African miner Resolute fell 32 per cent on Monday after three senior staff, including the chief executive, were detained in Mali by the African nation’s anti-corruption and financial crime unit.

In financials, the ASX’s largest company marked over a major milestone. Commonwealth Bank ticked over $150-per-share for the first time, ultimately closing at $149.79. The bank also became the first Australian company to be worth $250bn.