Weekly Equities Outlook: TSMC, Shell & Levi Strauss

TSMC trading update

TSMC, the world's largest contract chipmaker, is due to release September sales data, which should provide further insight into broader semiconductor demand.

The update comes amid reports that TSMC is considering forming a high-tech strategic partnership with the US. In March, the firm announced plans to expand its investment in the US to $165 billion, including three new manufacturing plants, advanced packaging facilities, and an R&D center.

TSMC’s share price is up 30% year-to-date, trading at an all-time high amid ongoing strong demand for its chips and a revival of the AI trade, which has lifted Nvidia and the Nasdaq to record highs.

In August, the firm posted a 33% increase in net revenue. September's monthly sales data, released on Thursday, will give investors some idea of what to expect from Q3 earnings, due out on the 16th of this month.

How to trade TSM trading update

TSMC's share price has risen sharply from its April low, reaching a record high of 290. The RSI is overbought, so some consolidation or a move lower could be coming. However, any dip is likely to be considered a buying opportunity.

Buyers will likely look to extend gains to 300 and beyond, reaching fresh record highs.

Support is seen at 245 in July and August, and 223 below here.

Shell trading update

Shell is expected to release a third-quarter update on Tuesday, October 7. The update comes as oil prices fell by over 7% this week, ahead of Sunday's OPEC+ meeting, where the oil group is expected to increase output potentially by up to 411,000 barrels per day, as Saudi Arabia seeks to boost its market share. This would be an increase of almost three times that of the October rise. 

Despite falling oil prices, Shell's share price trades some 9% higher, although this is underperforming the FTSE 100 which has risen 15% this year and trades at record levels.

 In Q2, Shell reported adjusted earnings of $4.3 billion, a 32% increase, which exceeded expectations of $3.74 billion. This week's update precedes the release of the full Q3 results, scheduled for October 30th.

How to trade the SHEL trading update?

Shell is trading in a rising triangle formation, but has failed to rise meaningfully above 2740 resistance. Buyers supported by the RSI above 50 will look to extend gains above 2740, the September high, and move towards 2780, the 2025 high.

Support can be seen at 2600, the September low, and the 100 SMA. A break below here exposes the 200 SMA at 2550.

 

Levi Strauss Q3 earnings preview

Levis will report Q3 earnings on October 9th, and they come as the share price trades at a 52-week high, with investors building on momentum from an upbeat Q2 performance in July.

The denim retailer posted EPS of $0.22 in Q2, well ahead of the $0.13 forecast. Revenue was $1.45 billion, beating the $1.37 billion forecast.

The share price has seen a notable rally in recent months, with investors appearing optimistic about Q3 results as the company continues its turnaround plan.

Under the leadership of CEO Michelle Gass, who took over in January of last year, Levi has advanced its transformation and turnaround into a direct-to-consumer brand, with DTC sales now accounting for more than 50% of total revenue. The company is also expanding beyond denim into a lifestyle brand.

Positive sentiment is also being bolstered by American Eagle's strong Q2 results, in which denim accounts for approximately 40% of sales. Levi’s marketing initiatives, including a partnership with Beyoncé, are expected to help the brand appeal.

Data released last month showed that personal spending in the US remains strong despite inflation ticking higher. Retail sales also rose strongly in August, up 0.6%. However, there are some signs that consumer confidence is starting to fade.

How to trade LEVI earnings?

The Levi share price trades within a rising channel dating back to April and is pushing above 24.50 to test the mid-point of the rising channel. Although the RSI is very overbought, some consolidation could be on the cards, or a move lower.

Buyers could aim for 27.50, the 2021 high. Support can be seen at 21.50, the September low, and below here at 19.10, the August low.