(Bloomberg) -- The best week in over a year for Australia’s mining shares is at risk of reversing as concerns deepen over China’s growth trajectory.
Weakening factory output and consumption data in the world’s No. 2 economy may hurt the sector following the S&P/ASX 200 Materials Index’s 4.2% climb last week, its best since July 2023. The gains were driven by a rally in lithium and gold miners.
Read: China’s Deepening Slowdown Tests Xi’s Tolerance for Growth Miss
“The improvement in miners came off the back of very bearish positioning unwinding with some easing in financial conditions and mulling out of China,” said Matthew Haupt, a portfolio manager at Wilson Asset Management in Sydney. “To sustain the rally we will need to some see formal policy tweaks or better economic data,” he said.
Morgan Stanley trimmed China’s real gross domestic product forecasts to 4.6% and 4.2% for 2024 and 2025, citing falling consumer demand amid a deflationary spiral, analysts including Robin Xing wrote in a note Saturday.
Mining shares edged higher on Monday morning.
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