- Summary:
- In this HSBC share price analysis, we explain what to expect in the near term now that the shares have made a modest recovery.
The HSBC share price is trading at a key resistance level as the recovery rally accelerates. The stock rose to a high of 412p, which was the lowest level on April 22. A quick look at today’s market activity shows that it is one of the most heavily traded stocks in the FTSE 100. Other top-volume stocks in the index are Lloyds, Rolls-Royce, Barclays, and Vodafone.
HSBC share price has been in a strong comeback after it crashed to 390p in July. The shares have risen by more than 6% since then. This bullish trend is mostly because of the strong earnings the company released last week. The company said that its pre-tax profit rose to more than $5.1 billion. This was higher than the median estimates of $3.7 billion. As a result, the firm said that it will boost its dividend and share buyback program.
HSBC unlocked about $700 million of its last year’s provisions. It then retained about $2.4 billion of these funds in its reserves. Also, the company said that it expects that interest rates will rise in the US and UK. If this happens, the company will likely boost its earnings.
Still, HSBC share price has a key risk. In a report yesterday, Chinese regulators announced a five-year program to boost regulations in the country. The regulators did not explain the businesses that will be affected although the recent measures have been on tech firms.
HSBC is highly exposed to China, where it is seeking to become a leading wealth manager. Therefore, as a leading company with Western roots and the fact that it competes with state firms, we could see it being targeted. This is a major risk for the firm.
HSBC share price analysis
Now, turning to the four-hour chart, we see that the HSBC stock price has been in a strong bullish trend. The stock has managed to move above the 23.6% Fibonacci retracement level. It has also risen above the key 25-day and 50-day moving averages. Also, it is now approaching a key resistance at 412p.
Therefore, the stock will likely keep rising as bulls target the 50% retracement at 426p. However, a drop below 400p will invalidate the bullish view.
