Westpac Share Price Forecast Ahead of the RBA Rate Hike


Westpac share price has bounced back in the past few days as investors wait for the upcoming interest rate decision by the Reserve Bank of Australia (RBA). The WPC share price jumped to a high of $21.66, which was the highest point since June 9th of this year. It has risen by 15.30% from the lowest level in June. Other Australian banks like ANZ and CBA have also rebounded. 

RBA interest rate decision

Westpac is one of the big four banking groups in Australia. The company serves milions of customers in Australia and New Zealand. These customers include both individuals and businesses. Its three key divisions are personal, business, and corporate. In corporate, the firm offers solutions like trade finance, instititional, financial markets, and structured finance.

As one of the biggest lenders in Australia, the companyy benefits substantially from high interest rates. Recently, the bank has been forced to hike its interest rates following the aggressive tone by the Reserve Bank of Australia. It has already increased rates three times this year and analysts expect that it will continue with that pace.

The RBA will conclude its two-day meeting on Tuesday. Analysts believe that it will push rates higher by 0.50% and point to further rate hikes. The hawkish tone is mostly because of the recent increase in inflation. Data published last week showed that inflation surged to 5.1% in the first quarter. Analysts believe that it will hit about 8% this year.

Westpac financial performance

Meanwhile, results by other comparable banks in the US and Europe point to a strong recovery this year. On Monday, HSBC said that its profits soared in the second quarter. As a result, the company now hopes to push its dividend to where it was before the pandemic. Companies like Northern Trust, Barclays, and Lloyds also published strong results.

The most recent results by Westpac showed that its net profit rose by 63% to $3.2 billion. This increase was mostly because of more business activity and the ongoing cost-cutting program. Its costs declined by 27% as its headcount fell by 4,000. Its deposit to lending ratio rose to $8.8 billion while the amount of deposits increased to $20.6 billion.

The most recent news about Westpac is its decision to sell its life insurance business to Dai-Ichi in a deal worth about $900 million. The company has also accelerated its branch closures as it shifts its focus on digital banking.

Westpac share price forecast

Westpac share price

The daily chart shows that the WPC stock price has staged a strong recovery in the past few days. It has managed to move above the 25-day and 50-day moving averages while the MACD has managed to move above the neutral point. This price is an important point since it was the lowest point on March 4th of this year.

Therefore, the outlook of the Westpac share price is bearish since it has already done a break and retest pattern. As such, it will likely resume the bearish trend and retest the key support level at $20. A move above $22 will mean that bulls have prevailed and see it rise to the next resistance at $24.66.

Leave a Reply

Your email address will not be published.