FTSE 100
Lloyds share price is little changed today. The stock is trading at 30.42p, which is slightly lower than the intraday high of 31.31p. It is also higher than Friday’s low of 29.22p. Meanwhile, Barclays share price is down by 0.30% while RBS stock is up by about 0.05%. Lloyds stock is probably reacting to a new upgrade by UBS.
The coronavirus pandemic has affected most industries significantly. In first quarter results, all banking groups in Europe, Asia, and the United States announced vast amount of money in provisions for bad debt. According to the Financial Times, the biggest lenders in the United States allocated more than $25 billion in provisions.
Therefore, banking investors are cautiously waiting for financial results from the biggest banks in the United States that will start tomorrow. Among the key banks that will report this week are Wells Fargo, Bank of America, Goldman Sachs, and PNC Financial.
While these are the bank to watch, investors will always be watching banking shares in Europe and Asia. In the UK, Lloyds share price will be watched because of its exposure to provisions and its lack of a trading business. As I have written before, Lloyds is vulnerable because, unlike Barclays and HSBC, the firm does not have a FICC business. Instead, it depends mostly on interest and credit income.
Therefore, I expect that Lloyds stock will experience significant fluctuations this week. This is despite the fact that the company is expected to release its quarterly results near the end of the month.
Lloyds shares are trading at 30.42p, even after a significant upgrade by UBS on Friday. The Switzerland-based bank said that it expects that Lloyds share price will rise to 45p. That is a 40% increase from the present level.
UBS is not the only bank optimistic about Lloyds share price. In a note to clients last week, analysts at Shore Capital reiterated their buy rating. Meanwhile, those at RBC expect the shares to jump to 40p while those at Jefferies, Morgan Stanley and HSBC expect the stock to move about 45p. Goldman Sachs is the only bank bearish on the stock. In total, the consensus target of Lloyds stock price is about 47p as shown below.
As shown below, Lloyds share price is trading below the 50-day and 100-day exponential moving averages. It is also 3ps above the 27, the lowest point this year and the lowest level in almost a decade.
The price has also formed a descending channel that is shown in purple below. It is along the upper side of the channel. Therefore, in the short term, there is a possibility that the shares will move lower as bears attempt to test the lower side of the channel at around 28p.
On the flip side, a move the upper side of the channel and a further move above 32p will signal that bulls have prevailed. That will see the price continue rising as bulls aim for the 100-day EMA at 36p.