Aviva Share Price Drops for a 3rd Day After UK Tax Cuts

Summary:
• The recent UK tax cuts continue to create a market shock, sending the Aviva share price lower for a third straight day.

Sentiment around the Aviva share price has soured further this Monday, leading to a 2.32% drop in the stock. The decline seen on the day follows two days of selling action on the stock culminated in last week’s 2.39% drop. 

The Aviva share price has seen its year-to-date performance fall to -30% after the recent surge that followed its promising half-year results. The drop seen in the Aviva share price stems from the market shock produced by the recent mini-budget speech by the new Chancellor of the Exchequer, Kwesi Kwarteng.

This speech unveiled the most radical tax cuts in more than 50 years. This appears to have overpowered any positive sentiments that followed the company’s decision to conduct a fresh share buyback program, just months after returning 4.75 billion to investors.

From a technical analysis standpoint, the intraday drop is on the verge of testing the monthly support at 407.4. The price picture currently resembles that of a double top, with the progressively declining highs seen on 11 August and 20 September indicating that the recovery move of August 2022 appears to have stalled. Here is the Aviva share price outlook heading into the last quarter of 2022. 

Aviva Share Price Forecast

The day’s decline has confirmed the breakdown of the 422.5 support level (21 June high and 24 August low). This has allowed the bears to aim for the 407.4 (17 June low) as the next viable target. Below this level, the 5 August low forms the next downside target at 396.7.

Additional downside targets that serve as potential harvest points for the bears include the 16 May and 14 July lows at 383.8 and the 372.9 support level formed by the 14 October 2020 high in role reversal. On the flip side, the bulls need to build on the intraday rejection of the downside move at the 407.4 support level, targeting a breach of the 

422.5 resistance to clear the way northwards. This northbound move would target the barrier formed by the 438.5 resistance (31 May and 21 September 2022 high). Above this level, attaining the 463.9 resistance (17 August high) closes the downside gap of 18 August 2022. There are additional harvest points for the bulls at 476.6 (7 March 2022 low) and 493.3 (30 November 2021 low).

Aviva: Daily Chart