Morning Report: Stocks begin second half of 2023 with modest gains

Stocks rose slightly Monday in a shortened session that kicked off the second half of what’s already been a stellar year on Wall Street.

The Dow Jones Industrial Average added 10.87 points, or 0.03 per cent, to finish at 34,418.47. The S&P 500 climbed 0.12 per cent to end at 4,455.59, while the Nasdaq Composite advanced 0.21 per cent to 13,816.77.

Tesla shares jumped 6.9 per cent after the electric vehicle maker reported delivery and production numbers that beat analysts’ expectations. Other electric vehicle stocks including Rivian, Fisker and Lucid rose in tandem.

Rivian Automotive exceeded production expectations by building 13,992 electric trucks and vans in the second quarter, boosting their stock by 17.4 per cent, while reaffirming their goal to manufacture 50,000 vehicles this year, following strong deliveries reported by Tesla and BYD.

Monday’s shortened session marked the start of a new trading month, quarter and half. On Friday, the Nasdaq Composite closed out its biggest first-half gain since 1983, surging 31.7 per cent, while the S&P 500 jumped 15.9 per cent for its best first-half performance since 2019. The Dow Jones Industrial Average lagged, climbing a modest 3.8 per cent during the period.

Those gains came as enthusiasm around artificial intelligence boosted tech stocks. Recent data showing a resilient U.S. economy despite higher rates also lifted investor sentiment, easing some fears on Wall Street of a long-awaited downturn.

The ISM’s manufacturing purchasing managers’ index for June came in slightly worse than expected. June’s reading was once again below 50, signalling that economic activity was declining. Later in the week, investors will be following data on the job market.

US hiring is expected to slow in June with an estimated addition of 200,000 jobs, supporting the Federal Reserve's interest rate plans, while the unemployment rate is predicted to decrease to 3.6 per cent and average hourly earnings growth to remain stable at 0.3 per cent.

In international news, and in response to US-led semiconductor restrictions, China has announced export restrictions on gallium and germanium, key metals used in chipmaking and communications equipment, citing the need to protect national security and interests, requiring exporters to obtain permits from the Ministry of Commerce starting in August.

Influential OPEC+ members, Saudi Arabia and Russia, will extend or increase oil production cuts in August to boost crude prices, with Saudi Arabia extending a 1 million barrels-per-day cut and Russia implementing an additional voluntary supply reduction of 500,000 barrels per day, resulting in a slight rise in oil prices.

And JSR, a Tokyo-based company controlling a critical link in the global semiconductor supply chain, accepts a $6.4bn government-backed take-private deal from JIC, driven primarily by geopolitical considerations in the US-China chip wars.

Overall, all US sectors closed higher except for Health and Tech. Consumer Discretionary was the best performer.

US markets closed early ahead of the Fourth of July holiday. They will be closed Tuesday as well.

Futures

The SPI futures are pointing to a 0.01 per cent fall.

Currency

One Australian dollar at 7:30 AM was buying 66.71 US cents.

Commodities

Gold has gained 0.01 cent. Silver has gained 0.4 per cent. Copper has gained 0.92 per cent. Oil has lost 1.2 per cent.

Figures around the globe

European markets closed lower. London’s FTSE lost 0.06 per cent, Frankfurt lost 0.41 per cent, and Paris closed 0.18 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei added 1.7 per cent yesterday, Hong Kong’s Hang Seng gained 2.06 per cent and China’s Shanghai Composite closed 1.31 per cent higher.

Yesterday, the Australian sharemarket closed 0.59 per cent higher at 7246.12.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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