Airline shares took another battering, with Ryanair, EasyJet, and Aer Lingus-and-BA-owner IAG all falling sharply, after the UK imposed fresh quarantine measures on travellers from France and other countries, taking the shine off a strong week of stock market gains.
Ryanair shares fell 4.5% and EasyJet and IAG slid by over 7% and 5% on the news that increased the financial pain for the travel companies.
“All the travel stocks are getting a bit of a pounding today on the back of those tightening of quarantine rules,” said Michael Hewson, market analyst at CMC Markets UK.
“Investors are also taking money off the table simply because you’ve got equity markets near their recent range highs, and heading into the weekend, it’s probably a good idea to take a little bit of risk off the table,” he said.
Rising infections, stalling macroeconomic activity and worries over China-US relations have held back global equity benchmarks from fully recovering their coronavirus-driven losses, with the MSCI world index hovering at about 2% below its record high set just before the onset of the health crisis.
Data today showed US retail sales slowed sharply in July and China's retail sales unexpectedly slipped, while the factory sector's recovery struggled to pick up the pace.
Citigroup analysts said they expected dividends issued by UK firms to drop 50% this year, although miners could outperform if commodity prices showed resilience in the second half.
EasyJet said it would continue to assess further funding opportunities after raising an extra £203.6m from the sale and leaseback of aircraft, as the pandemic continues to wreak havoc on travel and its finances.
EasyJet has spent recent months strengthening its balance sheet after Covid-19 halted travel, and while flying has restarted, the pandemic is still causing restrictions.
By deterring people from flying to France, a major holiday destination which joins top destination Spain on the list, EasyJet could be forced to cancel more flights.
The airline said today it had raised £608m from a sale and leaseback plan for 23 aircraft, at the upper end of guidance for proceeds.
“EasyJet will continue to review its liquidity position on a regular basis and will continue to assess any further funding opportunities,” the airline said.