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Highlights

  • ASX mining sub-index (XMM) up 0.6%, hits highest level since March 31.

  • Iron ore futures rally to two-week highs on optimism from US-China temporary trade deal.

  • Mining heavyweights BHP, Rio Tinto, and Fortescue jump between 2.5% and 3.6%.

Australian mining stocks are enjoying a second day of gains, with the S&P/ASX 200 Materials Index (XMM) rising 0.6% on Tuesday and touching its highest level since March 31.

The rally comes on the heels of a temporary trade agreement between the United States and China.

Earlier in the session, the mining sub-index surged as much as 1%, before paring some gains on concerns that the current truce may be short-lived and that near-term demand from China could remain subdued due to ongoing economic headwinds.

Iron Ore Futures Lift Mining Sentiment

Driving much of the optimism is a rebound in iron ore futures, which climbed to their highest levels in more than two weeks. This follows news of easing trade tensions between the world's two largest economies.

Although analysts are cautioning against reading too much into a preliminary agreement, the move has nonetheless provided a short-term boost to investor sentiment, especially in the materials sector, which is heavily reliant on exports to China.

Big Miners Lead the Charge

The broader gains in the sub-index were led by Australia's major iron ore producers:

  • BHP Group Ltd (ASX:BHP) rose 2.5% to AU$39.40,

  • Rio Tinto Ltd (ASX:RIO) added 3.1%, and

  • Fortescue Metals Group Ltd (ASX:FMG) surged 3.6%.

All three are heavily exposed to fluctuations in iron ore pricing and Chinese steel demand, making them highly sensitive to geopolitical and macroeconomic developments like the US-China deal.

Strong Year-to-Date Performance

As of the previous close, the mining sub-index had climbed 2.8% year-to-date.