Global mining index soars as China, US stimulus converge 

The S&P/TSX Global Mining Index has gained 14% since Sept. 6 in its biggest jump this year after central banks cut interest rates, the United States signalled more battery metal funding and China stimulated its sluggish economy.  

The index, which includes the largest majors such as BHP (LSE: BHP; NYSE: BHP; ASX: BHP), Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) and Freeport-McMoRan (NYSE: FCX), hit 203.6 points on Tuesday from 177 points 19 days earlier. Tuesday’s 3.5%-jolt was the strongest single-day increase so far this year.  

China’s central bank this week shifted its approach on a few fronts as the country strives to expand its economy by 5% this year. Its similar target last year was the lowest in more than three decades.  

The U.S. Federal Reserve cut its benchmark rate by 50 basis points on Sept. 18 in a move going beyond tackling inflation to help boost employment. Also, Washington conditionally handed out some of its US$7 billion in Biden administration funding for the domestic electric vehicle supply chain.  

Beijing, which controls the world’s largest mining and metals industry, said it will start using asset prices and inflation to set monetary policy targets instead of credit growth. It also lowered the reverse repo rate, which sets the cost of short-term borrowing for commercial banks, by 20 basis points. It moved to cut interest rates on outstanding mortgages by 50 basis points, which could benefit 50 million households, it said.