HSBC forms bullish candlesticks; shares test 1,400p

HSBC shares rebounded this week from a low of 1,267p to 1,320p on Thursday, about 4.2% above the week’s low. On the daily chart the stock produced a dragonfly doji and what resembles an abandoned baby candlestick, and the recent low remained above the 100-day exponential moving average.

A dragonfly doji has a long lower shadow and a small body, indicating the session opened and closed at similar prices after intraday selling. An abandoned baby appears as a small candle that gaps away from surrounding candles during a downtrend and is commonly followed by a sharp reversal. The chart patterns and the position relative to the 100-day EMA mark nearby technical levels.

Traders identify the next chart resistance near 1,400p, a few points below the year-to-date high of 1,416p. A sustained move above 1,416p would expose resistance around 1,500p.

HSBC is the largest European bank by assets and market capitalisation and is implementing a multi-year turnaround under group chief executive Georges Elhedery. The bank has announced a restructuring that could cut about 20,000 jobs, roughly 10% of the workforce, as part of cost-reduction plans. Elhedery urged staff “not to fight artificial intelligence”, warning the technology would lead to job losses while creating new roles. The bank has said it is considering further cost measures, including a possible privatization of Hang Seng Bank.

In first-quarter results HSBC reported a pre-tax profit of $9.4 billion, below analyst expectations, while revenue rose to $18.6 billion, slightly above forecasts. Credit impairments widened to $1.3 billion, up about $400 million from the same period a year earlier; HSBC attributed much of the increase to fraud-related losses linked to exposure to UK firm MFS. The bank has paused parts of its private credit push announced last year in response to that exposure.

HSBC has flagged geopolitical risks, citing the US-Iran conflict as causing disruptions to some assets. The bank reiterated a target return on tangible equity of 17%, while noting outcomes depend on how the conflict unfolds.

HSBC’s dividend yield stands at 4.13%, compared with 3.62% at Lloyds and 2.45% at Barclays. Management has identified growth opportunities in China, where the bank aims to expand its wealth-management business. Market participants will monitor chart developments and company updates as the bank executes its turnaround.