The Barclays share price is loitering near its highest level since December 2019 ahead of the earnings season by the big American banks. The BARC stock has surged by more than 30% this year, outperforming all other UK banks like Lloyds, NatWest, HSBC, and Standard Chartered. Its stock is trading at 118p in London.
Balclays stock vs Lloyds, NatWest, HSBC, and Standard Chartered
What happened: Barclays share price has done well because of several reasons. First, the company has announced that it will start buying back its stock and paying dividends in line with the recommendations by the Bank of England.
Second, the firm is expected to turn some of its last year’s losses into profits this year. While the bank allocated billions of pounds into provisions, it does not mean that customers had such defaults. Instead, it was to meet the newer accounting standards. Therefore, of these provisions will be added back into the company’s profitability.
Third, Barclays has started pivoting towards Asia. According to Bloomberg, the CEO has started mapping a plan that will see the bank start focusing more on the region, which has emerged from the pandemic better than others. Other Western banks like HSBC and Goldman Sachs have been planning an entry strategy to China, the fastest-growing economy in the world.
Fourth, Barclays has been unscathed in the recent prime broker crisis that has hit companies like Credit Suisse and Nomura. Further, the UK economy is recovering faster and the recent volatility in the market means that its FICC business will do well this year. In a note yesterday, analysts at Deutsche Bank wrote:
“We expect a good Q1 results season on this basis and expect consensus upgrades. At current share prices, we see 18% upside potential at UK banks – we upgrade Lloyds to buy to join Barclays, Virgin Money and Standard Chartered.”
Looking ahead, the Barclays share price will react to earning season by the big American banks that will publish their earnings this week. They include Citi, Wells Fargo,and JP Morgan. These results will prepare investors on what to happen with Barclays.
The daily chart shows that the BARC stock price has been rising recently. It has formed an ascending channel that is shown in green. It is along the lower line of this channel. Also, it is above the important support at 158p and the 15-day and 25-day moving averages.
Therefore, at this stage, the outlook for the stock is neutral. There is a possibility that bulls will attempt to test the upper side of the channel at 200p. But a drop below the support line will invalidate the bullish case.
