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European stocks and US futures rose on Monday, after better-than-expected data from China added to bullish momentum driven by big US technology stocks such as Tesla.
The Stoxx 600 Index rose across the European region by 0.2 percent, supported by the strong performance in energy and basic materials stocks. London’s energy-focused FTSE 100 rose 0.3 percent, and France’s CAC 40 rose 0.2 percent.
Markets got a boost on Monday after a survey of the private sector pointed to resilient factory activity in China, easing investor concerns about the country’s stalled recovery after three years of Covid-19 restrictions. Adding to optimism, shares of electric car maker Tesla rose 6.7 percent in pre-market trading in New York after beating expectations.
In China, the Caixin manufacturing PMI fell to 50.5 in June, but was above the consensus of economists polled by Reuters of 50.2. Readings above the neutral 50 mark indicate that the majority of respondents report an expansion in manufacturing activity.
The People’s Bank of China last month cut its record lending rates for the first time in nearly a year, as policymakers offered cautious monetary support in a bid to spur stronger growth.
“There is still optimism that Chinese growth will materialize,” said Michael Metcalf, head of macro strategy at State Street Global Markets.
The news boosted Europe’s energy and basic materials sector, which has become particularly vulnerable as investors increasingly bet that a higher interest rate environment will soon slow large economies around the world.
London-listed mining companies Anglo American and Glencore gained 4 percent, while the Stoxx 600 Basic Resources Index advanced 2.4 percent on Monday.
“You don’t need a lot of good material news for there to be a rally, because investors are already prepared for a recession,” Metcalf said.
Chinese blue-chip indices advanced, with Hong Kong’s Hang Seng index adding 2.1 percent, while China’s CSI 300 index rose 1.3 percent. In Japan Topix added 1.4 per cent.
Meanwhile, contracts tracking the technology-focused Nasdaq 100 index on Wall Street rose 0.2 percent, while contracts tracking the S&P 500 were flat before the New York open.
That added to the rally on Wall Street on Friday, when the Nasdaq Composite posted its best first half of the year since 1983, with its 32 percent gain supported by a handful of big tech stocks. Tesla rose after the electric car maker announced the day before that it delivered a record 466,000 vehicles in the second quarter of the year, beating market estimates by about 445,000.
Investors turned to the US ISM manufacturing index, due later in the day, which is expected to remain broadly unchanged at 47 in June, indicating a halt to factory activity in the country amid rising interest rates.