- Summary:
- Barclays share price is up sharply as traders react to the upbeat bank earnings from Europe and the US. Investors believe that bank shares will rise
Barclays share price is among the best-performing in the FTSE 100. It is up by more than 3.77%, making it fourth only to IAG, Rolls Royce, and Standard Chartered, that are up by 5.6%, 5.5%, and 4%, respectively. Other banks, too, have done well. RBS and HSBS share prices have risen by more than 3% while Lloyds share price is up by more than 1.8%. There are three primary reasons why Barclays share price is rising today.
Upbeat financial results from European banks
Barclays share price is rising because of European banks. The most recent was UBS, the giant Swiss bank, which released its earnings today. The bank profit declined by 11% to $1.23 billion in the second quarter. This was better than the $973 million that analysts polled by Bloomberg were expecting.
Its operating income declined to $7.4 billion from the previous $7.5 billion while its return on tangible equity declined by 9.6% from 11.9%. The common equity tier 1 capital ratio remained unchanged at 13.3%. At the same time, it allocated more than $272 billion to credit loss expenses.
The bank also attracted more than $9 billion of new money from its wealthy investors. In fact, its wealth management profit in Asia helped to offset a drop of business in the United States.
As a result, the company said that the worst was possibly behind it as the world economy continues to reopen.
UBS is not the only bank to report impressive results. Yesterday, Julius Baer said that its profit rose by 43% in the second quarter. As a result, the Swiss banks have talked about restarting their dividends. Just last week, American banks reported impressive trading revenue.
Therefore, Barclays share price is rising because investors expect its trading revenue to jump when it releases its second quarter revenue later this month. Unlike other banks like RBS and Lloyds, Barclays has among the biggest trading business in Europe.
Other reasons why Barclays stock price is rising
In addition to the impressive banking results, Barclays share price is rising because of the coronavirus vaccine and the large stimulus package agreed earlier today in Europe. The bank’s business will benefit from the two as the economy reopens. Finally, as shown below, most analysts believe that the bank’s share price is relatively cheaper.
Analysts at Goldman Sachs recently lowered their target for the shares to 135p, which is 15 points above the current price. Similarly, analysts at Citigroup expects the shares to rise by 5 points to 120p. Those at Deutsche Bank and UBS expect Barclays share price to rise to 135p and 140p, respectively. In a report last week, an analyst at Morningstar also made the case for European banks, saying that they are trading at extremely low multiples.
Barclays share price analysis
The daily chart shows that Barclays share price has been moving sideways in the past few weeks. At the current price, it is along the 100-day EMA and slightly above the 50-day EMA. Also, the price is along the 38.2% Fibonacci retracement level. It is also above the ascending trend line shown in red.
Therefore, the price is likely to continue rising so long as the price remains above this line. If it does, the next target will be 130p, which is an important psychological level that is also along the 50% retracement level.
Barclays share price forecast
