ASX rallies on Chinese economic data and US minerals deal

Trading saw the index reach an intraday peak of 9034.4 points.

The broader All Ordinaries index gained 31.4 points, finishing 0.34 per cent higher at 9,324.6.

China’s Economic Performance Lifts Australian Markets

China's economy expanded by 4.8% in the third quarter compared to the same period last year, following 5.2% growth in the second quarter.

Economists had predicted a sharper slowdown, making the actual figures a pleasant surprise. Looking at the first nine months of 2025 together, China's economy has grown by 5.2% year over year.

The service sector led the way in the third quarter, growing 5.4% annually. This outperformed manufacturing and construction, which rose 4.2%, and farming, which grew 4.0%.

September's industrial output jumped to 6.5% growth, likely supported by steady overseas orders for Chinese goods.

However, weaker quarter activity data suggests favourable price adjustments helped inflate these growth numbers.

The third quarter's results keep China on track to meet its target of roughly 5% growth in 2025.

This solid performance could ease pressure on Beijing to roll out aggressive new stimulus measures soon.

Australia ships massive quantities of iron ore, coal, and natural gas to Chinese factories and power plants.

This means Chinese economic health directly affects Australian prosperity.

Strong demand for these resources pushes the AUD higher in forex trading markets and boosts local stock prices simultaneously.

The correlation works through a clear chain reaction.

When China's economy grows, factories need more raw materials. Australian mining companies sell more commodities at better prices, increasing their share values.

At the same time, international buyers need Australian dollars to pay for these exports, strengthening the AUD against other currencies.

This cross-market correlation means positive Chinese data often triggers coordinated rises in Australian equities, the currency, and commodity prices simultaneously.

Forex trading desks watch Chinese economic releases closely because they reliably predict AUD movements.

US-China Trade Optimism Drives Broad Market Rally

Progress in US-China relations also injected fresh confidence into Australian markets on Tuesday.

President Trump recently described existing tariffs on Chinese goods as unsustainable, hinting that active negotiations could produce a comprehensive trade deal.

Bloomberg analysts interpreted these remarks as a meaningful shift in tone.

The statement eased fears of a prolonged global economic slowdown, prompting investors to return capital to riskier assets.

Australian equities felt the positive ripple effects immediately.

The major banks sector climbed 1.66%, while ASX 20 blue chip stocks added 0.78%. Commonwealth Bank rose 2.6%, reflecting renewed appetite for financial stocks.

Lynas Rare Earths surged 6.6% as investors bet on stronger demand for critical minerals if trade tensions ease. Wesfarmers edged up 0.97%, showing steady gains in the retail conglomerate space.

Individual stock movements painted a mixed picture despite the overall market strength.

Zip Co jumped 4.3% and hit a 52-week high after announcing that fiscal first-quarter cash earnings nearly doubled to AU$62.8 million.

The buy now, pay later company's strong performance signals improving consumer spending patterns and better credit quality.

However, auto parts retailer Bapcor crashed 18% after revealing declining sales figures that disappointed analysts.

Mining company Deep Yellow dropped 19% following the sudden departure of its chief executive, creating uncertainty about the company's strategic direction.

Real estate stocks captured significant investor interest throughout the session.

Property investment trusts rallied on expectations that easing trade tensions could support economic stability and keep interest rates favourable.

Australian Financial Group led real estate-exposed stocks with a 7.95% gain, while Liberty Financial Group added 5.45%.

The strength in property stocks suggests investors believe improved trade relations could sustain consumer confidence and property market activity in the months ahead.

Australia-US Minerals Partnership Lifts Mining Sector

Australian markets received an additional boost from a landmark minerals agreement between Canberra and Washington.

The deal injected renewed confidence into commodity stocks recently suffering from profit-taking after earlier gains.

Mining companies led the rally with a 1.7% sector-wide advance, helping nine of the eleven market sectors close in positive territory.

The agreement establishes Australia as a strategic supplier of critical minerals to American technology and defence industries.

Tony Sycamore, market analyst at IG Australia, noted that this positions Australia's world-class mining sector to challenge China's current dominance in these essential materials directly.

The strategic importance extends beyond economics, as Western nations seek to diversify supply chains away from geopolitical rivals.

Individual mining stocks posted impressive gains on the news. Alcoa shares jumped 7.5% to close at $59.68, reflecting investor excitement about confirmed government backing.

Arafura Rare Earths experienced even more dramatic movement, surging nearly 26% during trading before settling essentially unchanged at 48 cents by day's end.

The volatility indicated strong initial enthusiasm tempered by profit-taking as the session progressed.

The agreement commits substantial capital from both governments.

Prime Minister Anthony Albanese and President Donald Trump pledged $US1 billion each toward mining projects over the next six months.

Specific investments include $US200 million in equity for Alcoa's gallium production facility in Western Australia.

Gallium serves as a crucial component in semiconductor manufacturing and advanced electronics.

Additionally, the deal allocates $US100 million for a stake in the Arafura Nolans rare earths operation, a project backed by mining magnate Gina Rinehart.

Rare earth elements remain essential for electric vehicle motors, wind turbines, and military applications, making the investment strategically significant for both nations.

Outlook for Australian Investors

Australia’s close economic ties with China and its growing minerals partnership with the US continue to shape investor sentiment across the ASX.

The strong Chinese growth data has renewed confidence in Australia’s export sectors, while the new mining agreement with Washington adds another layer of long-term stability.

Investors will likely see more activity in mining, property, and financial stocks as trade conditions improve and demand for Australian resources rises.

Although short-term volatility will remain, the broader outlook for Australian markets appears optimistic as global partnerships strengthen and economic momentum builds.