Lloyds (LON:LLOY) share price has met technical support this morning, as a post-results rally fades.
Lloyds Banking Group updated the market on the 25th October, subsequently rallying to hit intraday highs of 69.66p.
Since then a combination of fears over the UK economy and political turmoil have led to declines in the banking sector with Lloyd’s shares being one of the casualties.
Lloyds has declined over 4.5% from recent highs but this morning found support at the 50 days moving average in the 66.5p region.
Lloyds gave a fairly positive update to the market in October, pointing to a 8% increase in underlying profit for the nine months to 30th September compared to the same period a year ago.
In addition its Net Interest Margin, a key gauge of a bank profitability, increased to 2.85% from a year prior.
CEO Antonio Horta-Osorio said of the results:
“We continue to focus on supporting people, businesses and communities, as set out in our Helping Britain Prosper Plan while making good progress against our strategic priorities of creating the best customer experience; becoming simpler and more efficient; and delivering sustainable growth.
“We are ahead of schedule with the integration of MBNA and now expect completion in the first quarter of 2019. We have also recently announced the acquisition of Zurich’s UK workplace pensions and savings business which is in line with the Group’s targeted growth strategy and accelerates the development of our financial planning and retirement business. A new organisational structure has also been implemented ahead of the announcement of our strategic review in February.”
Notwithstanding the strong performance from Lloyds in the recent period, Lloyds shares have failed to break out of their trading range as the UK economic backdrop deteriorates and Theresa May’s government suffers crisis after crisis.
Two senior cabinet members have resigned in the past week and another may not be far behind them, raising concerns Theresa May is losing her grip on power which could lead to another general election.
Compounding the political turmoil, UK economic data has weakened recently with sharp drops in consumer activity.
Despite the potential slowdown in the UK economy, some analysts are still bullish on Lloyd’s shares. RBC Capital Markets recently reiterated their ‘outperform’ stance on the stock with a 90p target.
However, some are still negative on the stock with Citigroup rating the stock a sell and targeting 61p.