The Rolls-Royce share price is up by a percentage point in the early hours of today’s trading session despite worsening market conditions such as the pound sinking to its lowest level ever and the Bank of England stating the UK has entered a recession.
Today’s price gain may be in response to the recent UK mini-budget expected to shake the markets and benefit the wealthy and companies such as Rolls-Royce. The mini-budget, which has been fronted as the panacea to the UK’s current rising cost of living, will see the reduction of the tax rate in the country and cuts to national insurance and stamp duty.
The mini-budget also quelled the uncertainty that most investors are experiencing in the UK. in fact, part of the reason we have had a strong bearish trend throughout the year is the fear of recession. With the recent announcement that the UK had entered into a recession, the mini-budget is a reassurance that the economy will stabilize and gives confidence to long-term investors, which is bound to have a positive effect on Rolls-Royce’s share price.
Unfortunately, despite today’s price gain, I expect the next few weeks to be bearish. Part of the reason for this analysis is due to the UK economy going into recession, the plummeting Sterling Pound, which is currently at its lowest level ever, and a new administration which is still not settled.
Despite the recent mini-budget, it is also unclear how investors will respond to the enormous tax cuts amidst a recession.
Therefore, my Rolls-Royce share price prediction expects the prices to trade below the 70p price level in the next few trading sessions. There is a high likelihood it may even fall as far back as below the 65p price level. A trade above the 80p supply level will invalidate my bearish analysis.
This post was last modified on Sep 26, 2022, 12:40 BST 12:40