The FTSE 100's mining giants, including Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) and Glencore PLC (LSE:GLEN), surged to initial gains on Monday after what seemed like encouraging economic data from China.
Upbeat macroeconomic numbers from the world's second-largest economy is often taken as pointing to strong demand for industrial metals.
Data out of Beijing on Monday showed exports from China rose 5.8% year-on-year in June in US dollar terms, higher than the 5% that was forecasta and improving from the 4.8% increase in May.
The US was the biggest drag on annual export growth in June despite a slower pace of decline, while exports to non-US markets also lost momentum, led by a sharp deceleration from Europe and Latin America.
In contrast, Asian and Hong Kong markets saw stronger gains, with Vietnam continuing to be the largest positive contributor within the ASEAN region.
The improvement was mainly driven by less negative US export growth, more than offsetting the slowdown in non-US market demand, said economist Kelvin Lam at Pantheon Macroeconomics.
"Overall, we believe the temporary tariff reprieve granted at the US-China emergency trade talks in London in May has given Chinese exporters some breathing space, with rising front-loading demand from US importers rushing to place orders ahead of the 12 August expiry, which was underscored by survey data recently," Lam said.
He predicted that the stronger-than-expected external trade performance over the past three months is likely to support GDP growth in the second quarter for China, which is due to be published on Tuesday, offsetting relatively sluggish domestic demand that has seen a drag from a softer property market.
Looking ahead, the Chinese delegation is reportedly scheduled to meet with US trade officials again in the coming weeks, though trade uncertainty remained elevated.
The new trade agreement between the US and Vietnam includes a 40% tariff on trans-shipped goods, a move that Lam said was "clearly aimed at Chinese exporters and designed to further isolate China from global supply chains".
"The extent of the impact on Chinese exporters will depend on how 'trans-shipment' is ultimately defined, but Beijing has already warned it will retaliate if any clauses are found to harm its national interests."
Share price gains around 1% for the heavyweight miners dissipated as the morning's trading wore on, with Rio Tinto shares up 0.2%, Glencore flat, Antofagasta PLC (LSE:ANTO) down 0.4% and Anglo American PLC (LSE:AAL) down 0.8%