This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
With all the major UK banks at one point or other coming within sniffing distance of multi-year lows in 2016, the question remains: is now the time to buy?
US banking giants Bank of America and Wells Fargo published modest, yet slightly-better-than-expected trading results this week and this has brought attention back to the UK 100 ’s big 5 and their own potential to meet or even exceed already low expectations.
The UK 100 index loves a weakening US dollar. You can thank the recent dollar slide for 2016’s big commodity price jump and indeed the index’s rise to its YTD high (6376) this week! Unfortunately, it also hates poor US banking results! But with US banks posting results pretty much in-line, what can we expect from the index and its own recently whacked Banking Stocks?
We clamoured to make our clients aware that Barclays stock had hit a 5yr low of 145p last week. Shares have since rallied 17% back up to 170p, yet are still a massive 25% away from the analysts’ average target price of 213p (Source: Bloomberg, 15 Apr). We shouted when Lloyds Banking Group shares hit a 4yr low at 55p before rallying 23% back to current levels around 68p. Again, they’ve got another 23% to go to reach the average target price of 84p (again, Bloomberg, 15 Apr). With daily 5% moves not uncommon upon issue of results from the banking sector, and huge moves still needed to get back to 2015 highs, there could be trading opportunities for everyone, and potentially oversold Banking Stocks should be strongly considered!
So put these dates in you diary: 16 April (Standard Chartered (STAN)), 27 April (Barclays (BARC)), 28 April (Lloyds (LLOY)), 29 April (Royal Bank of Scotland (RBS)) and 3 May (HSBC (HSBA)).
Next, to receive the latest on the banking sector earnings over the coming weeks (before the 8.00am LSE open), Sign up to our Free Research and watch out for the ‘movers & shakers’ in our daily 7.45am breakfast buffet!
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
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