A V-shaped recovery still seems overly optimistic, but reports of eased travel restrictions and low infection rates amid businesses reopening is a strong argument for something more accelerated than an L-shaped recovery to Europe's travel sector. That was enough to convince investors.
European travel and leisure stocks soared on Tuesday amid reports Spain and Germany would ease travel restrictions, and no noticeable increase in infections were reported during the re-opening of businesses after a two-month lockdown.
Travel and leisure were among the businesses hardest hit by coronaries lockdown as countries closed borders, leaving airlines grounded, and strict social-distancing rules closed restaurants, cinemas and pubs.
But Germany and Spain’s plan to ease travel restriction for the peak summer holiday season revived their stocks. TUI , British Airways owner IAG , easyJet and Whitbread shares jumped 15% to 30%, driving London stock indices higher.
London stocks were top gainers as they played catch-up with continental European stocks, which soared on Monday. The travel and leisure stocks sub-index jumped to its highest levels since April 30.
“There is a lot more hope that travel restrictions across Europe will be eased in time for the summer holidays,” said Neil Wilson, chief market analyst at Markets.com. “If the summer holiday season can be saved, it would be a big plus after most of us wrote it off.”
European airport operators Fraport , Aeroports de Paris and Aena were rising 5% to 10%.
The German government wants to end a travel warning for tourist trips to 31 European countries from June 15 if the coronavirus situation allows, the dpa new agency reported, according to the magazine Focus. Spain urged foreign holiday-makers to return from July.
Pub operator Mitchells & Butlers and Cineworld shares jumped more than 20% on re-opening hopes after UK Prime Minister Boris Johnson said thousands of shops would re-open next month in easing of coronavirus lockdown.
(This story corrects to fix typo in TUI, in third paragraph)
(Reporting by Thyagaraju Adinarayan, editing by Larry King)
Photo credit: European travel stocks surged Tuesday amid reports countries like Spain and Germany would ease travel restrictions ahead of the summer. Trevor Hannant / Wikimedia