Will the HSBC Share Price Maintain the Post-Earnings Jump?

The HSBC share price is set to rebound in London after the company published strong quarterly results. The stock jumped by more than 2% in Hong Kong, becoming the best performing in the Hang Seng. 

HSBC earnings

HSBC will be the top bank stock to watch in London on Monday. This is after the company published strong quarterly and half-year results. In a report, the bank said that its pre-tax profit doubled to more than $10.84 billion in the first six months of the year. This was substantially higher than what the firm made in the same period in 2020.

HSBC’s revenue retreated by 4.5% to $25.5 billion. Other key highlights of the report was that it released $719 million of the provisions for bad loans that it allocated last year. This happened as the economy in its key markets did relatively well in the first half of the year. It also decided to target its dividend payout ratio of between 40% and 55%. 

HSBC’s strong results happened at a time when the bank is at a crossroads. Its Western roots seem to be hindering its China ambitions. Last year, China added the company into a so-called entity list, meaning that it could sanction the company if relations sour. This is notable since the company is pegging its recovery to the Chinese market. Worse, some analysts expect that China will shift its focus on regulations to the banking sector.

The bank is also narrowing its business interests in Western markets. In the first half of the year, it announced that it was leaving its French and American retail operations.

The company’s performance was generally in line with how other banking groups performed. Last week, results from groups like Barclays, Lloyds Bank, and NatWest were generally positive. Two weeks earlier, banks like Goldman Sachs, Morgan Stanley, and JP Morgan published strong results.

HSBC share price forecast

HSBC share price

The daily chart shows that the HSBC stock declined to 390p last week. This was a notable level since it was below the important support level at 413p. The stock will likely rise above this resistance after the strong quarterly results. Still, this will likely be part of a break and retest price action.

Therefore, we can’t rule out a situation where the shares retreats later this week. In fact, share prices of firms like Goldman Sachs are still lower than where they were after earnings. The bearish view will be invalidated if the price moves above425p.