Travel and leisure stocks surge in standout trading as European markets stall

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Travel and leisure stocks surge in standout trading as European markets stall


Optimism over an end to social restrictions is driving travel and leisure stocks higher, adding buoyancy to European markets on Tuesday as indexes across the continent hovered around flat or fell. Commodity prices at multiyear highs have also added strength to markets.

The pan-European Stoxx 600
XX:SXXP
fell 0.9%, while London’s FTSE 100
UK:UKX
was just below flat. In Paris, the CAC 40
FR:PX1
was 0.2% lower, and Frankfurt’s DAX
DX:DAX
fell 1.3%.

Dow futures
DJIA FUTURES
were pointing down around 20 points, set for a weak open after the Dow Jones Industrial Average
DJIA
eked out a slightly higher close on Monday to close at 31,521.

British stocks led European trading, as the market absorbed Monday’s news from U.K. Prime Minister Boris Johnson on the plan to gradually reopen the country.

The U.K. is among the world’s leaders in COVID-19 vaccinations, and Johnson’s government has set a tentative early date of Jun. 21 for all social restrictions to be lifted. Domestic holidays could become possible by mid-April.

Also read: Boris Johnson outlines road map to take England out of lockdown

“The FTSE 100 [is] leading the way buoyed by outperformance in travel and leisure stocks as well as the basic resources sector, with commodity prices sitting at eight-year highs,” said Michael Hewson, an analyst at CMC Markets.

All the major European markets opened higher but have since given up gains, with most indexes falling.

“Travel and leisure stocks are getting a lift this morning after yesterday’s announcement of a reopening schedule in the U.K. prompted a surge in holiday bookings,” Hewson said.

Shares in both British Airways owner IAG
UK:IAG
and Air France–KLM
FR:AF
were near 7% higher, with Lufthansa
XE:LHA
stock lifting more than 5.5%. In the aircraft manufacturing sector, Airbus
FR:AIR
stock rose 4% and shares in troubled British engineer Rolls-Royce
UK:RR
jumped near 9%.

Optimism was also present in hotel stocks, with shares in InterContinental Hotels Group
UK:IHG,
restaurant and hotels group Whitbread
UK:WTB,
and French hospitality giant Accor
FR:AC
all climbing.

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The major European oil companies also lifted as crude prices remain at 13-month highs. Benchmark Brent
UK:BRENT CRUDE
was near 1.5% higher, trading at more than $66.15 per barrel.

Shares in BP
UK:BP,
Royal Dutch Shell
UK:RDSA,
Total
IT:TOT,
and Eni
IT:ENI
all rose.

Strong commodity prices boosted shares in mining giants Rio Tinto
UK:RIO,
Anglo American
UK:AAL,
and BHP Group
UK:BHP,
which all rose more than 1%.

HSBC
UK:HSBA
was a major faller in European trading, with the global banking giant down as much as 2% after posting a 34% fall in profits through 2020.

Shares in Scottish Mortgage Investment Trust
UK:SMT
were down more than 5%. The publicly traded trust has significant holdings in big technology stocks like Alibaba
HK:9988
and Tesla
TSLA,
which have suffered recent share-price slides.



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