URGENT UPDATE: A new report from Wilsons Advisory and Canaccord Genuity confirms a significant turnaround for ASX resources shares, particularly in the mining sector. Equity Strategist Greg Burke states that after a challenging three-year downturn, momentum is finally shifting positively, driven by broad-based strength across major commodities.
The report indicates that despite earlier pessimism surrounding China’s economic growth, particularly in its property sector, investor sentiment is improving. This is critical as the property market remains central to iron ore demand. Analysts predict that while China’s economy may slow further, a more supportive global macro environment is emerging, aided by easier monetary policies and increased credit availability.
Mr. Burke highlights several catalysts for this rebound, including rate cuts in the US which should stimulate global commodity demand, and the potential impact of Trump’s ‘Big Beautiful Bill’ set to take effect early next year. This bill is expected to boost US manufacturing, further enhancing global growth prospects.
WHAT INVESTORS NEED TO KNOW: The report identifies key stocks for investors to target. In the gold sector, Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) are recommended as top large-cap exposures. Wilsons Advisory projects a price target of $12.25 for Evolution Mining and $34.50 for Northern Star Resources. Evolution Mining is highlighted for its strong operational performance and attractive free cash flow yield, while Northern Star is noted for its significant medium-term upside due to robust production growth projections.
For iron ore, BHP Group (ASX: BHP) is positioned as the preferred choice. The report emphasizes BHP’s status as the lowest-cost producer globally, with a diversified commodity mix that includes approximately 45% of its EBITDA expected to come from copper. This diversification is seen as valuable given the structural headwinds facing iron ore demand.
The implications of this report are profound as it suggests a shift in the ASX mining sector that could impact investor strategies significantly. As global commodity price forecasts are upgraded, stronger earnings expectations for the ASX mining sector are likely to follow.
WHAT’S NEXT: Investors are urged to monitor these developments closely as broader economic conditions evolve. With potential large-scale stimulus measures anticipated in China by 2026, the prospects for commodity pricing and resource shares could improve markedly.
For those considering investments, it is crucial to stay updated on these stocks and the overall market sentiment. As Scott Phillips, a Motley Fool investing expert, suggests, while BHP Group is a strong contender, there may be even better opportunities in the market right now.
This developing story offers critical insights into the ASX resources sector, making it a must-follow for investors looking to capitalize on potential gains in the coming months. For real-time updates and further analysis, stay tuned as we track the trends shaping the market.
