Barclays share price waits for US bank earnings season: is it a buy?

Barclays (LON: BARC) share price will be in the spotlight this week as its American counterparts publish their quarterly results. The stock has gone nowhere in the past few months and is trading at 147.68p, a few points below June’s high of 163.36p.

US big bank earnings

The biggest bank and finance news this week will be the start of American bank earnings season. Big companies like JP Morgan, Bank of America, Citigroup, and Morgan Stanley will publish their Q2 earnings this week.

Analysts expect most American banks will set aside $7.6 billion in loan provisions to cover loans that could go bad as interest rates jumped. While default rates dropped during the pandemic, they have started rising recently because of the rising interest rates and elevated inflation. 

Credit cards and commercial real estate have been the worst performers. Barclays is a leading provider of credit card debt.

Banks are also going through other challenges. Trading revenue, which boomed during the pandemic, has started to drop in the past few quarters. Similarly, deal-making is still recovering at a slower pace than anticipated. 

Despite these risks, most analysts believe that companies like JP Morgan and Bank of America will report positive results as benefits of high rates outweigh the risks. Expectations are that bank earnings jumped by 6%.

Barclays will not publish its results this week. Instead, the company will publish its results on July 27th. However, the stock will react to American bank earnings because of its similarities. 

Barclays share price forecast

BARC chart by TradingView

Is it safe to buy Barclays stock? Barclays and other UK banks like Standard Chartered and Lloyds have underperformed the market recently. They have also lagged their American counterparts like JP Morgan and Citigroup.

The stock has moved slightly below the 50-day and 25-day moving averages. It has also moved to the lower side of the Ichimoku cloud. The Average True Range (ATR) has moved to the lowest level since February, signaling that volatility has been dropping. 

Therefore, at this stage, the outlook of the stock is neutral with a bearish bias ahead of the upcoming bank earnings. The key support and resistance levels to watch will be at 140p and 157p.