HSBC Share Price: Rising Wedge Points to a Bearish Breakout

Summary:
• The HSBC share price has come under intense pressure as investors focused on the upcoming interest rate decision by the Bank of England

The HSBC share price has come under intense pressure as investors focused on the upcoming interest rate decision by the Bank of England (BoE). The stock dropped to a low of 524p, which was lower than this month’s high of 540p. It has risen by more than 12% this year, meaning that it has outperformed the FTSE 100 and FTSE 250 indices.

BoE interest rate decision

HSBC share price has had two key catalysts this week. First, it was reported that Hang Seng Bank was in talks with Chubb, the leading casualty and property insurer in the world. The bancassurance deal will see Hang Seng provide insurance brokerage services on behalf of Chubb. This was a notable deal since HSBC has a 62% stake in Hang Seng Bank.

The other catalyst for the HSBC Bank was central bank decisions. On Wednesday, the Federal Reserve decided to hike interest rates by 0.75%. It was the third jumbo rate hike this year and the bank decided to continue hiking in the coming months.

The Fed’s decision is important for HSBC because of its strong market share in Hong Kong. Historically, Hong Kong’s Monetary Authority usually tracks the Fed because of the peg on the HKD. Indeed, HSBC decided that it will hike its prime rate by 12.5 basis points for the first time since 2018.

The Bank of England will also conclude its two-day meeting this week. Analysts expect that the bank will also deliver its seventh rate hike since December last year. It will likely hike rates by 0.50% even as recession risks continued. 

The BoE rate hike is important for HSBC because of its large market share in the country. It is estimated that the bank has the fourth-biggest market share in the country after Lloyds, Barclays, and NatWest. As such, higher rate hikes will likely lead to more interest income margin.

HSBC share price forecast

The daily chart shows that the HSBA share price has been moving sideways in the past few days. It is now trading at 524p, which is slightly below this week’s high of 542p. It has moved slightly below the 25-day and 50-day moving averages. A closer look shows that it has formed a rising wedge pattern that is shown in red. 

Therefore, there is a possibility that the HSBC stock price will have a bearish breakout as sellers target the next key support at 500p. A move above the resistance point at 540p will invalidate the bearish view.