Airline stocks lead huge sell-off as UK reopening sparks Delta panic

As the British government withdrew most Covid restrictions, UK cases approached 50,000 a day — enough to heavily spook the markets

Mon, 19 Jul, 2021 - 18:23

Geoff Percival

Tourism and hospitality stocks — from Ryanair to pub group JD Wetherspoon — plummeted on rising concern that the UK’s mass reopening of society will lead to a surge in Delta variant cases and fresh disruption to trading.

Investors fled airline and leisure stocks on Britain's so-called 'Freedom Day', dragging such shares back to the lows they felt last November when the UK was under its second national lockdown.

As the British government withdrew most Covid restrictions, UK cases approached 50,000 a day — enough to heavily spook the markets.

Pub chains such as JD Wetherspoon and Mitchells and Butlers — in which Irish financiers JP McManus and John Magnier are large shareholders — saw their shares fall between 2% and 4%. But it was the airlines which took the biggest dent.

Ryanair plummets

Ryanair plummeted by well over 6%, with Aer Lingus and British Airways owner IAG shedding more than 5% of its share value. EasyJet, which is due to update on trading this week, fell nearly 7%, with Lufthansa and Air France-KLM also suffering heavy losses.

Cruise line operator Carnival saw a 5% fall, while shares in TUI, the largest holiday company in the world, fell as much as 4%.

On a whole, European shares fell more than 2%, with all sectors in the red — their worst daily rout in nine months. Britain's Ftse-100 slumped 2.3% as rising Covid cases overshadowed reopening optimism. The Ftse's travel and leisure index sank 3.6%, to its lowest since last November.

"Investors are extremely worried that... another lockdown could be a month or two round the corner," said Russ Mould, investment director at AJ Bell.

Covid is spreading fast again and the airlines, restaurants, and leisure companies may not get the strong summer trading they've long hoped for.

"The big concern for the market is whether we [are] going to see a slowdown in the global economic recovery, and this could be the overriding force which results in a bad period for equities in the weeks ahead," said Mr Mould.

Germany's DAX index dropped 2.6%, while Italy saw its biggest one-day stock market drop since last October. The French government warned it could not rule out the re-imposition of curfew measures if infection rates continue to climb.