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US tech stocks lifted by strong Tesla earnings

European stocks and US futures rose on Monday, after better than expected data from China added to bullish momentum driven by large US technology stocks such as Tesla.

Europe’s region-wide Stoxx 600 added 0.2 per cent, lifted by strong performance in energy and basic materials stocks. London’s energy-focused FTSE 100 rose 0.3 per cent and France’s Cac 40 gained 0.2 per cent.

Markets received a boost on Monday after a private sector survey pointed to resilient factory activity in China, easing investors’ concerns over the country’s stalled recovery after three years of Covid-19 restrictions. Adding to the optimism, electric-car maker Tesla shares rose 6.7 per cent in pre-market trading in New York after beating expectations.

In China, the Caixin manufacturing purchasing managers’ index fell to 50.5 in June, but was above the 50.2 consensus of economists polled by Reuters. Readings above the neutral 50 mark indicate the majority of respondents reporting an expansion in manufacturing activity.

The People’s Bank of China had last month cut its benchmark lending rates for the first time in almost a year, as policymakers extended cautious monetary support in an effort to spur more robust growth.

“There is still optimism that Chinese growth will come through,” said Michael Metcalfe, head of macro strategy at State Street Global Markets.

The news bolstered Europe’s energy and basic materials sector, which became particularly vulnerable as investors increasingly bet that a high interest rate environment will soon slow big economies across the world.

The London-listed mining companies Anglo American and Glencore gained 4 per cent, while the Stoxx 600 Basic Resources index advanced 2.4 per cent on Monday.

“You don’t need much good news on materials for there to be a rally, because investors are already ready for a recession,” said Metcalfe.

China’s blue-chip indices advanced, with the Hong Kong’s Hang Seng index adding 2.1 per cent, while China’s CSI 300 rose 1.3 per cent. In Japan the Topix index added 1.4 per cent.

Meanwhile, contracts tracking Wall Street’s tech-focused Nasdaq 100 gained 0.2 per cent, while those tracking the benchmark S&P 500 were flat ahead of the New York open. 

That added to a rally on Wall Street on Friday, when the Nasdaq Composite recorded its best first half of the year since 1983, with its 32 per cent gain powered by a handful of large tech stocks. Tesla rose after the electric-car maker announced a day earlier that it delivered a record 466,000 vehicles in the second quarter of the year, exceeding market estimates of about 445,000.

Investors turned to the US ISM manufacturing index, coming out later in the day, which is expected to have remained broadly unchanged at 47 in June, in a sign that the country’s factory activity was stalling amid rising interest rates.

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