HSBC Share Price Forecast After the Impressive Quarterly Earnings

Summary:

In this HSBC share price forecast, we explain what to expect after the company released impressive quarterly earnings today

The HSBC share price is in the spotlight today after the company reported strong quarterly earnings. The stock rose by 0.90% yesterday in London. Today, it rose by more than 2.55% in Hong Kong, becoming the second-best performer after Meituan.

HSBC news: In a report published earlier today, HSBC said that its profit before rax rose by 79% from a year ago to $5.8 billion. This was substantially higher than the median estimate by analysts, who were expecting it to come in at $3.3 billion. Its revenue rose by 5% to $13 billion while its net interest margin fell to 1.33%. Its common equity tier 1 capital ratio remained unchanged at 15.9%. In a statement, the management said:

“I am pleased with our revenue and cost performance, but particularly with our significantly lower expected credit losses.”

HSBC earnings were good, but not extremely surprising. Furthermore, the company set aside billions of dollars in reserves last year as the number of defaults rose. This process was in line with accounting standards. Therefore, since some of these defaults have not materialized, the company decided to bring them back as profits. Other banks like Goldman Sachs, JP Morgan, and Citi also reported strong profits.

The results came at a time when HSBC has been attempting to grow its Chinese business. Recently, it has moved some of its senior officers from London to Hong Kong.

HSBC share price forecast

The daily chart shows that the HSBC shares have been in a tight range recently. It has remained between the support and resistance levels at 412p and 456p. The stock is also between the 50% and 61.8% Fibonacci retracement level while the 25-day and 15-day moving averages have remained close to the price.

Since this consolidation comes after the stock made some modest moves, there is a possibility that it will break-out higher in the near term. If this happens, the stock will likely first retest the resistance at 456p as it targets the next key level at 477p, which is along the 38.2% Fibonacci retracement level. However, a drop below the support at 412p will invalidate this trend.