By Jack Denton
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 /zigman2/quotes/210599654/delayed XX:SXXP +0.75% fell 0.9%, while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.76% was just below flat. In Paris, the CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.80% was 0.2% lower, and Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX +1.01% fell 1.3%.
Dow futures /zigman2/quotes/210598065/realtime DJIA +0.04% were pointing down around 20 points, set for a weak open after the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.04% 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.
“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 /zigman2/quotes/208070069/delayed UK:IAG +2.30% and Air France–KLM /zigman2/quotes/205396176/delayed FR:AF +1.42% were near 7% higher, with Lufthansa /zigman2/quotes/201210530/delayed XE:LHA +2.81% stock lifting more than 5.5%. In the aircraft manufacturing sector, Airbus /zigman2/quotes/208224336/delayed FR:AIR +1.72% stock rose 4% and shares in troubled British engineer Rolls-Royce /zigman2/quotes/203646520/delayed UK:RR +1.83% jumped near 9%.
Optimism was also present in hotel stocks, with shares in InterContinental Hotels Group /zigman2/quotes/202865596/delayed UK:IHG +2.63% , restaurant and hotels group Whitbread /zigman2/quotes/207954631/delayed UK:WTB +4.37% , and French hospitality giant Accor /zigman2/quotes/203800565/delayed FR:AC +3.09% all climbing.
The major European oil companies also lifted as crude prices remain at 13-month highs. Benchmark Brent was near 1.5% higher, trading at more than $66.15 per barrel.
Shares in BP /zigman2/quotes/202286639/delayed UK:BP -0.40% , Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA -0.11% , Total /zigman2/quotes/202121430/delayed IT:TOT -0.38% , and Eni /zigman2/quotes/209584888/delayed IT:ENI +0.65% all rose.
Strong commodity prices boosted shares in mining giants Rio Tinto /zigman2/quotes/208934945/delayed UK:RIO -0.87% , Anglo American /zigman2/quotes/201381512/delayed UK:AAL +0.21% , and BHP Group /zigman2/quotes/203323256/delayed UK:BHP -0.81% , which all rose more than 1%.
HSBC /zigman2/quotes/203901799/delayed UK:HSBA +0.93% 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 /zigman2/quotes/204858474/delayed UK:SMT +2.26% were down more than 5%. The publicly traded trust has significant holdings in big technology stocks like Alibaba /zigman2/quotes/215112034/delayed HK:9988 -2.59% and Tesla /zigman2/quotes/203558040/composite TSLA -0.63% , which have suffered recent share-price slides.