Travel companies lead European stocks higher as global markets rally

Travel companies lead European stocks higher as global markets rally

Travel stocks rallied in Europe on Tuesday on Spain’s decision to let in foreign visitors, as stocks climbed for a second day on optimism over a slowly recovering world economy.

The FTSE 100 UKX, 1.04% climbed 1.8% after a three-day break. TUI TUI, 44.80% surged 35% as the London-listed, German-headquartered travel operator plans to resume flights at the end of June, according to an interview its chief executive gave to the Rheinische Post, as he also talked positively about Spain’s decision to allow foreign tourists in July.

Iberia owner International Consolidated Airlines Group IAG, 18.76% surged 20% and InterContinental Hotels IHG, 10.06% rose 13%.

The German DAX DAX, 0.97% rose 0.9% and the French CAC 40 PX1, 1.39% added 1.6%.

“The recovery theme continues to support risk assets as more businesses around the world are given the green light to reopen, fueling hopes of a sustainable recovery as economic life is resuscitated after weeks of shutdowns,” said Raffi Boyadjian, senior investment analyst at XM.

In Germany, GfK’s forward-looking consumer-sentiment index is set to increase to minus 18.9 points in June, from an upwardly revised minus 23.1 points for May. “They continue to point to difficult conditions for consumers, but the rebound in the sub-indices this month is a good sign. If it continues, the foundation for a very strong Q3 is looking solid,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

This image has an empty alt attribute; its file name is MW-IH137_tui_cl_20200526031907_OR.jpg
A notice tells customers of the closure of a branch of the travel firm TUI in Berlin on May 13, 2020, amid the COVID-19 coronavirus pandemic. TUI shares surged on Tuesday. 

While fending off attacks on the lockdown travels of his top aide, U.K. Prime Minister Boris Johnson announced the reopenings of the retail sector, with car dealerships opening at the beginning of June and nonessential retailers opening in the middle of the month.

Japan is planning new stimulus measures as it reopens its economy this week, and People’s Bank of China Governor Yi Gang reiterated the central bank would be “flexible.” The Nikkei 225 NIK, +2.55% rallied 2.6% in Tokyo and the Shanghai Composite SHCOMP, +1.01% rose 1%.

The announcement that a trial was starting for a COVID-19 vaccine from Novavax NVAX, 15.04% also boosted sentiment.

Futures on the Dow Jones Industrial Average YM00, 2.53% rose 555 points.

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