Barclays shares have broken above March and April highs with potential to challenge the downtrend from last August as markets react favourably to Q1 results. This comes on the back of yesterday’s very bullish response to an update from emerging-markets focused peer Standard Chartered (STAN) which saw its stock put on over 10%. It  also follows a largely positive results season for stateside counterparts. This morning’s reaction is in spite of a 7% drop in net profits and 11% decline in revenues as costs rise and the investment bank division continues to weigh although it remains the focus of non-core disposals (African ops) and a major turnaround. Weak group results had nonetheless been flagged up last month.

The positive read would, appear to derive from comments from new CEO and investment bank veteran Jes Staley who said that the key division’s performance had been resilient and his plans are to keep it roughly as is, avoiding any drastic downsizing that might have been on the cards under the tenure of ex-CEO and retail bank focused Antony Jenkins. Investors are perhaps hopeful that things are on the up from the group, with better returns on the horizon via a revamped investment banking division – the one that made it such a success in years gone by. It may be too early to comment on Q2, on account of a challenging environment and work still to do, but BARC shares have plenty to say this morning.

Mike van Dulken, Head of Research, 27 April