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Lloyds Banking Group Jumps On Fed Fresh Stimulus Package

Lloyds share price started the trading session gaping higher as investors sentiment improved after the new intervention by the Fed. Lloyds is the leading UK based financial services company providing a wide range of banking and financial services, basically on personal and commercial clients. Lloyds primary business is retail banking, commercial and corporate banking, general insurance, and life, pensions and investment provision.

The banking sector will be pressured by low-interest rates environment and a narrow spread in the loans offered. Lloyds will not pay any dividend until the end of 2020 after the BOE decision, so the Lloyds key capital ratios have actually improved quarter-on-quarter. The bank paid 2.26 per share as dividend in 2019. 

The mortgages continue to be the vast majority of the Lloyds assets, and these are considered safer loans. The lockdown of the UK property market will mean new loans growth will be very slow. If the UK economy avoids a severe recession, that might increase loan demand in the second half of the year.

Lloyds First Quarter Results

First-quarter net income shrunk 10.6% year-on-year to £4.0 billion as the lower interest rates and increased competition weighed on banks performance. The pre-tax profit for the Q1 was £74 million, down 95% due to a £1.43 billion provision under the new guidelines which require banks to factor in a dismal outlook for the UK economy as well as setting aside money for bad loans. The Net interest income fell 4% year-on-year to $3.0 billion. 

Lloyds has withdrawn the previous guidance for the next quarter results amid the uncertainty due to the coronavirus crisis.

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Lloyds share price Technical Analysis

Lloyds is 4.54% higher at 32.94 today after the share price found support yesterday at the 50-day moving average, giving the bulls the upper hand at least for the short term. The long term outlook for Lloyds remains bearish as long as the Lloyds share price trades below the 100-day moving average. 

In the upside first resistance for Lloyds stock is at 33.08. Next supply zone will be met at 33.57 the high from June 11. If the price breaks that resistance the next hurdle is at 37.01 the top from June 10.

On the flip side, first support for Lloyds is at 32.36 the daily low. The 50-day moving average at 31.11 will provide the next support zone. If sellers break that support, then the next level to watch is at 29.87 the low from May 29.  

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