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The HSBC (LON: HSBA) share price has outperformed other British banks like Lloyds, Barclays, and Virgin Money. It has soared by more than 20% this year while the other UK bank stocks have been in the red this year. The shares have also underperformed the SPDR S&P Bank ETF, which has dropped by ~18% this year.
HSBC turnaround continues
HSBC is still implementing a turnaround strategy as it seeks to grow its revenue and profitability. The company is already exiting some of its top underperforming markets. For example, it is in the process of exiting its Canadian business by selling its business to RBC. Canada is now consulting about whether to approve the deal.
HSBC has also exited other markets like the United States and France. At the same time, the company has bought Silicon Valley Bank’s (SVB) UK business. Most importantly, the management recently won shareholder backing about its strategy after Ping An made the case for breaking up the company.
The next important catalyst for the HSBC share price will be the upcoming American bank earnings that will start this week. Some of the biggest banks that will publish their results this week are JP Morgan, Wells Fargo, and Citigroup.
HSBC is very different from these banks since it operates mostly in Europe and Asia. It will also publish its results on August 1st. Still, these results will provide a sentiment about the state of the banking sector.
As I wrote here on Monday, most analysts expect these banks to benefit from the high-interest rate environment. This high interest usually increases their net interest income. On the other hand, rising rates in a period when the economy is slowing leads to higher delinquencies. As such, most analysts expect that the biggest American banks to put over $7 billion in provisions.
The most recent results showed that HSBC’s profit before tax of tax of over $12.9 billion, up from the previous $9 billion. Its revenue jumped over $8.6 billion as interest rates rose. Its Return on Tangible Equity rose to 27.3%.
HSBC share price forecast
The daily chart shows that the HSBA stock price rose to a high of 626p on July 3rd. This is an important level since it was the highest point on March 7th of this year. The shares have moved below the 50-day and 25-day volume-weighted moving averages (VWMA). That is a sign that bears are gaining traction.
The Relative Strength Index (RSI) has moved below the neutral point at 50. Therefore, there is a likelihood that the shares will likely continue falling as sellers target the key support at 577p, the 23.6% retracement level.
The post HSBC share price loses momentum ahead of bank earnings appeared first on Invezz.
