Barclays share price currently trades at a key resistance level as the market awaits a catalyst for the next move in the stock. The share price is now 37.5% higher from the mid-March lows in global stocks and this is outperforming the benchmark FTSE100, which is only 27% higher over the same period.
Barclays has fared better than some of its peers since the effects of the virus lockdowns sent shockwaves through the economy and HSBC Holdings is down -22% from the depths of the crisis, which is a a sign of Barclays’ diversification. HSBC has also been hit by the economic and political situation in Hong Kong.
Barclays last reported earnings on July 29th and although the stock dipped after those results, the current price means that the stock is flat over the last month. The bank reported 4.0p earnings per share (EPS) for the quarter, which was lower than analysts estimates and 66% lower than the H1 2019 result of 12.1p. Income for the first half was £11.6bn, which was an increase on the £10.8bn seen in the first half of 2019.
Barclays also reported an increase in their tier 1 asset ratio (required to pass banking stress tests) to 14.2%, despite posting higher impairment requirements. The results were a fair performance and the bank currently trades at a P/E ratio of 17.3x earnings.
Alongside this, the Barclays share price represents a valuation of 0.33x book value, however investors are wary of paying fair value for banking assets in the midst of the current economic backdrop. Investors will be looking for the next driver for price but with earnings a few months away, that will likely be related to the recent resurgence of the virus in Europe.
Barclays Technical Outlook
Drawing fibonacci retracement levels from the mid-March low in Barclays share price we can see that the current level is important. 110.50 represents a 38.2% retracement of the rebound and it provided a key level of support in June and July.
The price is currently making a potential double top in August which would suggest a move lower is on the cards. The 30th July low at 98.72 would be the first target. If the share price can move above 111.00 then the bear case would be negated and a move to 120.00 would be the next goal.