Equities report: Tesla troubles appear to be stacking up

US stock markets continue to present some volatility, with the NASDAQ 100, DOW JONES 30 AND S&P 500 moving in an upwards fashion. We recognise that there are a number of fundamental factors that could affect US and European stock markets and we are to discuss the fundamental environment surrounding Exxon Mobil, Tesla and end the report with a technical analysis of Exxon Mobil’s stock price.

Tesla (#TSLA) denies claims about its Berlin factory

Tesla after missing its Q3 delivery expectations last week seems to be in trouble over alleged health and safety provisions at its gigafactory near Berlin.  The electric manufacturer can’t seem to catch a break the past month and with its earnings report being due out next week, it may not bode well with investors, should public sentiment towards the company sour. Furthermore, according to a report by Reuters, local authorities in Brandenburg had reported an unusually high number of work-related incidents in the factory, a claim which has been rigorously denied by the company. The report, detailed accidents which includes serious injuries such as burns, hydrochloric acid or amputated limbs, which could have severe implications for Tesla (#TSLA) should legal action be taken against the company, it could potentially weaken the company’s sales and revenue stemming from Europe and as such could weigh on the company’s stock price. However, it appears that the report has had virtually no impact on the company’s stock price and as such, should the issue be resolved, we may see no long-term impact on the company.

Exxon Mobil to buy rival Piooner for nearly $60 billion in stock

Exxon Mobil (#XOM) according to Reuters will be buying it’s US based rival Piooner Natural Resources in an all-stock deal with is valued at $59.5 billion. The deal would make the company the biggest producer in the largest U.S oilfield by securing a decade of low-cost production, as Piooner is considered to be the Permian Basin’s largest operator, accounting for a 9% of gross production. The increase in market share of Exxon Mobil and the securing of a greater share of the Permian Basin, which is known for its low cost of production, could boost the company’s share prices. In addition, by securing future avenues of revenue it could bolster a long-term support for the company’s stock price.  Furthermore, the acquisition would be the largest deal of Exxon since 1998 when it purchased Mobil Oil and would mark the largest acquisition this year so far by any company. However, the deal is still subject to scrutiny by regulators and as such could face heavy opposition before being allowed to go through. Nonetheless, according to some antitrust experts who spoke to Reuters, claim that the company’s have a good chance of completing their deal, as together they would still account for a small fraction of the global oil and gas market share.

Earning season is back

It’s that time of the year again where the earnings season has returned. This week we note a pretty relaxed schedule but still an important week, as we note Wells Fargo (#WFC), JP Morgan Chase (#JPM) and Citigroup (#C) are all expected to post their earnings for Q3 on Friday. Starting off with Wells Fargo (#WFC) the corporation is forecasted to report its earnings per share at $1.24, a decrease from last quarter which had it’s EPS at $1.25, in addition to a reduction in its revenue which is anticipated to be reduced to $20.12 billion compared to last quarters revenue of $20.53 billion. JP Morgan Chase (#JPM) is forecasted to report its EPS at $3.86, a reduction from last quarters $4.37. In addition, their revenue is also expected to decrease to $39.49 billion, from $41.3 billion which was reported last quarter. Lastly, Citigroup (#C) is also expected to report lower EPS and Revenue at $1.27 and $19.23 billion respectively.

テクニカル分析

Exxon Mobil (#XOM), Daily Chart

Support: 108.10 (S1), 104.10 (S2), 98.90 (S3)

Resistance: 111.90 (R1), 115.60 (R2), 120.15 (R3)

Exxon Mobil (#XOM) appears to be moving in a sideways fashion. We maintain a neutral outlook for the stock and supporting our case is the RSI Indicator below our Daily chart which currently registers a figure near 50, implying a neutral market sentiment. For our neutral outlook to continue, we would like to see the stock remaining confined between the 108.10 (S1) and the 111.90 (R1) support and resistance levels respectively. On the other hand, for a bullish outlook we would like to see a clear break above the 111.90 (R1) resistance level, with the next possible target for the bulls being the 115.60 (R2) resistance ceiling. Lastly, for a bearish outlook we would like to see a clear break below the 108.10 (S1) support level with the next possible target for the bears being the 104.10 (S2) support base.

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