Why Lloyds Share Price May Be In For a Rough Ride

The Lloyds share price continues to respond negatively to reports of the company’s profits dropping by 26 per cent in the third quarter. The report also indicated the bad debt charges had risen, with the company pointing the Uk economy was heading to darker times. 

According to the financial reports, the company’s pre-tax profit for the third quarter fell to  £1.5 billion, a 26 per cent decline year-on-year. The profits were also below the forecast of £1.8, which most analysts were anticipating. 

Based on the data, its failure to meet the forecast was triggered by the bank’s decision to take £668 million of charges due to worrying signs of defaults that the company anticipates will happen due to the worsening economic conditions. Therefore, despite the rising cost of loans due to the Bank of England raising interest rates, the company’s earnings miss is likely playing a significant role in the current horizontal trend in the markets. 

Lloyds share price

As seen above, many factors have impacted Lloyds share price performance in the markets, among them the rising cost of living, which has put them on edge and made them raise their provisions from the anticipated £285 to £668 million.

The continued rise in interest rates, which in most cases would have meant the company’s profits continuing to grow, has come at a time when Lloyds Bank is recovering from the market instability triggered by the Kwasi Kwarteng’s disastrous “mini” Budget. 

Therefore, the company’s recovery has had many hindrances for the past few weeks. Looking at the chart below, it is likely that we might continue to see the share price continuing to struggle, with a likely continuation of the current horizontal trend a possibility.

Therefore, my Lloyds share price forecast for the next few trading sessions expects it to trade within a narrow range of between 40p and 45p. A trade above or below these price levels will invalidate my horizontal trend analysis.

Lloyds Daily Chart