Being the first to release their results and with the strongest profit growth expected, DBS may be the best to capture movements in this upcoming earnings season. Watch for a retest of the January 25 high of $27.40 with immediate support at $26.15. Do note that any dip pass the 50% retracement level at $25.725 could see the uptrend giving up to a head-and-shoulder pattern for further downsides.
While political and geopolitical concerns did hit the market, the receding of which in recent sessions had certainly helped prices to regain its upward momentum in anticipation of the earnings releases. All three banks had also clocked substantial year-to-date gains, DBS Group Holdings Ltd. at the fore with an impressive 20.7% gain when last checked.
All things said, it is also worth considering the reactions with the delivery of the earnings. This is particularly given the lack of enthusiasm seen in the US following the update of impressive financial sector results. The KBW NASDAQ bank index had actually fallen sharply on the day of JPMorgan Chase & Co. and Citibank’s updates though the geopolitical backdrop did play a part as well. For investors that have long basked in the warm glow of positive economic conditions, the focus shifts ahead to guidance with the outlook likely to be the key here in Asia as well. As such, it would be critical to assess the views from the senior management in this upcoming release.
As the first to release its Q1 results, DBS Group Holdings Ltd. may be the best to capture the reactions, though the impact will likely ripple across the local banking sector. Certainly, we have the macro picture, valuations and technical all showing positive signs but a sell-the-news phenomenon should still not be ruled out. The consolation for DBS may be the fact that its strong suite of digital strategy favours this local bank which could see bargain hunters swooping in. On the flipside, upsides could find limitation as prices close in on analysts’ 12-month price target towards $30.82, as surveyed by Reuters.
Prices broke past its February high this month, reflecting an apparent breakout for DBS in the current uptrend. Any retracement to mark this higher high could find support at the 23.6% Fibonacci retracement level of $28.83.