Lloyds share price started October well as global stocks rebounded. The shares rose to a high of 43.25p on Tuesday, which was the highest point since September 27. It has risen by more than 6.7% above the lowest level last week. Other UK banks like Barclays and Natwest have also rebounded.
Lloyds Bank share price has crashed by more than 14% this year amid heightened concerns about the economy. The fear among investors is that the company’s business will continue to deteriorate in the coming months as the UK economy worsens. With energy prices at an elevated level, most analysts believe that the economy is heading towards a recession.
Banks tend to underperform during a recession since the number of delinquencies increase and mortgage growth deteriorates. At the same time, other drivers of the economy such as consumer spending and savings tend to worsen.
Lloyds will react to two main events in November. First, the company’s shares will react to the upcoming bank earnings season in which American companies will publish their results. Lloyds Bank itself will release its results on 27th October. These results will provide more data on growth and the company’s profitability.
Second, Lloyds stock price will react to the developments on Credit Suisse. The Swiss bank has been on trouble as investors see it as the weakest link in the financial market. Credit Suisse share price plunged this week after a memo by its CEO backfired.
The four-hour chart shows that the LLOY share price has been under intense pressure in the past few weeks. It has managed to crash by more than 13% from its highest level in September. Along the way, the shares have moved below all moving averages.
Most recently, however, the stock has staged a recovery as global stocks rebound. The Relative Strength Index (RSI) has moved above the neutral level of 50. Therefore, the stock will likely continue recovering in October ahead of the upcoming quarterly earnings season. If this happens, the stock could rise to about 48p. A drop below the support at 42.35p will invalidate this view.
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