- Summary:
- The Rolls-Royce share price has been under intense pressure. Here's what could happen in the near term for the engineering giant
Rolls-Royce share price is down for the fourth consecutive day as investors assess the recovery of the airline sector. The stock is down by more than 1.65%, making it the fourth worst-performer in the FTSE 100 index after BT, BP, and IAG that have fallen by more than 1%.
What’s happening: RR share price rallied in the fourth quarter of 2020 as investors placed a bet on the coronavirus vaccine. They argued that the vaccine would slow the spread of the virus and restart global travel.
However, in recent days, the situation has gotten worse even as countries have continued to provide more vaccinations. For example, while the UK was the first country to start vaccinations, the number of cases has continued to rise. In fact, the country has recently been forced to another lockdown.
The same trend is happening in other countries like the United States, where several states have announced lockdowns. And in China, the country is now dealing with a new outbreak that could also slow the aviation sector in the biggest market.
And now, in a statement, earlier today, the head of Australia’s health sector warned that the country could close its borders throughout this year. Therefore, while air travel will see a better year, there are concerns that the growth will be relatively slower.
Why it matters: Rolls-Royce is a leading manufacturer of aircraft engines. Its engines are mostly popular with wide-body jets that move across different countries. Therefore, with most borders being closed, the company suffered losses in 2020. As a result, it implemented layoffs and dilution of shares through its capital raising.
Rolls-Royce Share Price Technical Analysis
On the daily chart below, we see that the Rolls Royce share price has been under pressure lately. It is trading at 104.00, which is slightly below the December high of 136. The price is at the same level as the 50-day and 25-day exponential moving averages.
It is also slightly above the vital support level at 94.0p. Therefore, in the near term, the path of least resistance for the RR shares is lower. If this happens, as I wrote before, there is a possibility that it will drop to the support at 94p.
RR share price chart
