ASX 200 Climbs 0.7% at Midday as BHP and Copper Miners Lead Broad Rally to Start the Trading Week in Sydney

SYDNEY — Australian shares climbed on Monday, led by a strong rebound in mining stocks after a rally in global commodity prices, as investors returned from the weekend in a more upbeat mood following gains on Wall Street.

The benchmark S&P/ASX 200 index was up 61.1 points, or 0.70%, at 8,777.7 by midday Sydney time, extending Friday's advance.

The index had closed Friday up 0.65% at 8,716.6, ending the week on a positive note. Futures trading had pointed to a stronger start on Monday, with the SPI 200 contract signaling a gain of about 37 points before the open after a strong session in the United States.

Miners bounce back

Resources stocks did much of the heavy lifting in morning trade. The S&P/ASX 200 Materials Index rose about 1.8% by late morning, with gains spread across copper, lithium, coal and gold producers.

The rebound followed broad-based gains in commodity prices overnight, lifting mining stocks from what had been close to a 10-week low. The materials sector has been roughly flat over the past month and remains about 10% below its record high set on Aug. 25.

Mining heavyweight BHP Group rose 2.5% to 62.49 Australian dollars in early trade, giving the broader index a significant boost given its size. South32 climbed 2.6%, while Mineral Resources added 2.7%.

Copper producer Sandfire Resources was among the biggest gainers, rising 3.4%, after a rally in copper-focused stocks overseas. A U.S.-listed exchange-traded fund tracking copper miners jumped 4.3% overnight, while funds tracking gold and silver miners also posted strong gains.

Lithium stocks joined the rally, with Liontown and PLS Group each up about 3%. Steelmaker BlueScope Steel rose 3%, while coal miner Stanmore Resources gained 2.9%.

Gold miners also advanced. Northern Star Resources rose 2.1% and Capricorn Metals added 2.3%.

Technology stocks rally

Technology shares also contributed to the gains, rallying in early trade after a difficult stretch for the sector. Australian tech stocks have struggled in recent weeks as higher interest rates weighed on companies whose valuations depend on future profits.

Rates remain in focus

Despite Monday's gains, the broader backdrop for Australian equities remains challenging.

The Reserve Bank of Australia recently raised its cash rate to a 15-year high and warned it could tighten again if inflation remains stubborn. Investors are weighing whether the central bank will deliver another increase at its November meeting.

Higher borrowing costs have weighed on consumer sentiment and rate-sensitive sectors, while supporting bank profits by widening the gap between what lenders earn on loans and pay on deposits. At the same time, Australian government bond yields have climbed to multi-year highs amid a persistent global bond selloff, adding pressure on equity valuations.

Global backdrop

Sentiment was helped by Wall Street's strong finish to last week. Risk appetite had already improved on Friday after U.S. President Donald Trump pledged to halt attacks on Iran ahead of November's midterm elections, easing some concerns over geopolitical tensions and oil prices.

Still, elevated oil prices remain a concern for investors, as they feed into inflation and complicate the outlook for central banks around the world.

How the week has shaped up

Monday's gains build on a choppy period for Australian shares. The ASX 200 has spent recent weeks trading in a narrow range below the record levels it reached earlier in the year, when the index climbed above 9,000 points.

The index fell sharply on Thursday last week as miners and banks weighed, before rebounding on Friday. Gains in banks and gold stocks helped lift the market at the end of last week, offsetting weakness in major miners at that time.

With miners now joining the rally, analysts will be watching whether the momentum can continue through the afternoon session and into the rest of the week.

What to watch

Investors will be keeping an eye on commodity prices, particularly iron ore and copper, given their heavy influence on Australia's largest listed companies. Movements in global bond yields and any fresh signals from the Reserve Bank about the path of interest rates are also likely to shape market direction in the days ahead.

Corporate news is also expected to drive individual stock moves, with quarterly production updates from major miners due in the coming weeks.

The Australian market will close at 4 p.m. Sydney time.