Barclays share price to soar as US investment banking growth soars

Barclays share price has moved sideways this week as investors focus on the ongoing earnings by its biggest American peers like JPMorgan, Goldman Sachs, and Morgan Stanley. BARC was trading at 380p, inside a range it has been in the past few days. This price is about 72% above the lowest level in April.

US bank earnings are tailwinds for Barclays 

A potential catalyst for the Barclays share price this week is the ongoing earnings by the biggest American banks, which have published strong numbers across the board.

Bank of America, the second-biggest bank in the US, published strong numbers, with its net income soaring by 23% to over $8.47 billion. This growth was driven by a 43% surge in its investment banking business, which made $2.05 billion.

Similarly, Morgan Stanley said that its revenue rose to $18.2 billion in the third quarter, higher than the median estimate of $16.7 billion. Its earnings per share was $2.80, also higher than the expected $2.10. 

The company’s fixed income, commodities, and forex had strong growth because of the recent volatility. Its investment banking revenue jumped by 44% to $2.1 billion, while the wealth management rose by 13% to $8.23 billion.

JP Morgan, to biggest bank in the US, also released strong numbers, with its investment banking revenue rising by 16% and its markets division growing by 25%.

Other American banks like Citigroup, Goldman Sachs, and Well Fargo released solid numbers, pushing their stock prices higher. The closely-watched SPDR S&P Bank ETF (KBE) and the Invesco KBW Bank ETF (KBWB) have jumped to their highest levels in months.

Implication for Barclays 

Results by American mega banks always imply Barclays because of their similar business models, especially in the important investment banking division.

These numbers mean that the company’s investment banking business will do well when it publishes its results later this month. The most recent results showed that the investment banking division made over £7.1 billion in revenues, a 13% increase from the same period last year. 

It was its second-best performing division after UK Corporate Bank, whose revenues rose by 14% to £1 billion. Barclays UK made £4.1 billion, while the private bank and wealth management made £697 million. 

A closer look at its investment banking division shows that its FICC and equities divisions rose by 23% and 16% in the first half of the year. Results by American banks mean that Barclays will keep doing well. 

The most recent consensus figure posted on its website shows that analysts expect that its total income rose to £7 billion in Q3, while the profit after tax rose to £1.65 billion. Its investment banking revenue is expected to be £3 billion in Q3, £12.9 billion, £13.1 billion, and £13.5 billion in the next three full years.

Barclays share price technical analysis 

The daily chart shows that the BARC stock price has done well in the past few months. It has jumped from a low of 221p in May to 380p today. 

Most recently, the stock formed an ascending channel and remained above all moving averages. It has also formed a small bullish flag pattern, which is a common continuation sign. 

Therefore, the most likely outcome is where the stock keeps rising, with the next key level to watch being the psychological point at 400p.

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