Will Lloyds’ share price vaccine rally continue or fizzle out?

Lloyds shares have soared 21% over the last week, with investor optimism returning in the wake of the reported 90% efficacy of Pfizer’s Covid-19 vaccine and analysts at Credit Suisse believing bank’s dividends will return in 2021.

  • Lloyds share price soars 21% on Covid-19 vaccine hopes
  • UK banks set to see dividend ban dropped after Covid-19 vaccine news, says Credit Suisse
  • FTSE 100 weakens as investors take profits, but further are likely, says IG analyst

Lloyds share price has soared 21% over the last five trading sessions, with UK stocks benefitting from Joe Biden winning the US presidential election last week and the reported 90% efficacy of Pfizer’s Covid-19 vaccine.

The lender is also expected to have the best chance for a re-rating and see its shares climb even higher if a coronavirus vaccine does manage to make it to market in the coming months, according to analysts at Credit Suisse earlier this week.

Lloyds is trading at 33p per share on Thursday, with the stock down 47% year-to-date.

Lloyds and other UK lenders likely to see dividend band reversed

Analysts at the Swiss investment bank also said that the Bank of England (BoE) will likely provide an update on their dividend bans in December now that a Covid-19 vaccine could see Europe returning to some semblance of normality by the spring.

‘Even in the absence of a vaccine, we think the blanket ban will likely be dropped in 2021, albeit dividend payments could be delayed until mid-year so as be informed by stress tests,’ Credit Suisse said in a note on Tuesday.

‘With a successful vaccine, we think regulators will be more willing to allow banks to pay a normalised dividend for 2020, as well as some catch-up for 2019.’

The BoE advised UK banks to suspend their pay-outs to shareholders earlier this year to ensure that lenders were adequately capitalised to support British businesses recover from the economic fallout from the Covid-19 pandemic.

FTSE 100: technical analysis

The FTSE 100 has weakened overnight, leading to the negative open we are seeing this morning, according to Josh Mahony, senior market analyst at IG.

‘Given the substantial gains we have seen of late, this is somewhat unsurprising,’ he said. ‘Nevertheless, the trend remains intact for now, with a break below 6103 required to bring about a more bearish outlook.’

‘Until then, further gains are likely, with the current pullback looking like a temporary retracement,’ Mahony added.

How to trade stocks with IG

Looking to trade Lloyds and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘Lloyds Banking Group PLC’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.