- Summary:
- The Lloyds share price has been chaotic for the past few weeks but has traded within a narrow range of between 38p and 43p since Sept 28.
The Lloyds share price has been chaotic for the past few weeks but has traded within a narrow range of between 38p and 43p since September 28. Today, with prices down by 3 per cent following a huge gap-down of almost 5 per cent, the choppy market is poised to be extended.
Today’s price drop comes amidst concerns that the new chancellor, Jeremy Hunt, will introduce windfall taxes targeting banks and energy companies. If the changes are made, the banking industry will see some of the profits made through the recent rise in interest rates slashed. If Hunt goes ahead with the planned windfall tax, it is expected to be received negatively in the markets and might see most banks’ share prices falling for the short term.
However, the recent inflation data from the UK, which was announced to be standing at 10.1 for the month of September, has also raised concerns for investors. The inflation rate, which is UK’s joint highest in 40 years, is likely to continue hammering UK households and businesses as we head to a tough winter. This has also put most investors on edge, with most fearing the economy may be headed for a recession.
Lloyds Share Price Analysis
Today’s 3 per cent drop is a glimpse of what is to come if the current chancellor goes ahead with his plan of implementing the windfall tax. There is a high likelihood that we might see Lloyds share price enter a long-term bearish trend and finally trade below the 38p price level.
However, based on the chart below and the recent price action, I expect the current sideways market to continue for the next few trading sessions. I do not expect the prices to trade above or below the ranges of 38p and 43p. Trade outside of these ranges will invalidate my analysis and establish new trends.
Lloyds Daily Chart
