FTSE 100
After yesterday’s big surge on the appointment of Charles Nunn as Lloyds Bank’s new CEO, Lloyds share price has beaten a retreat on Wednesday after analysts at Deutsche Bank questioned the bank’s ability to meet market forecasts.
Deutsche Bank also cited the increased risk of non-performance of loans and the costs associated with them as part of the headwinds many of the UK’s top lenders will face. Deutsche Bank has, however, lifted its price targets for Lloyds from 32p to 35p.
Last week, the UK Office for Budget Responsibility (OBR) provided forecasts of the UK economy’s contraction by 11.3% in 2020, the largest expected drop in nearly 300 years. Unemployment is also expected to peak at 7.5% in Q2 2021. Under such conditions, lenders’ earnings are adversely affected due to increased defaults on mortgages and loans.
Lloyds’ share price is down 0.75% as of writing.
Deutsche Bank expects Lloyds’ share price to be capped at 35.00. This expectation would have to rely on bears being able to overwhelm the support at 37.02 and recent lows at 35.97 but to stay above the 18/19 November lows at 34.77 to be actualized.
The price to beat for buyers in the short term is 40.66 (25 November high). Price needs to edge above 38.26 for the door towards a retest of 40.66 to be opened. A break of 40.66 allows Lloyd’s share price to aim for 41.555 (10/11 March lows).
