(Bloomberg) – Travel and leisure stocks are the only group in Europe to be in the red this year, but today’s gains may suggest that the risks of the Omicron variant are already factored in.
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The Stoxx 600 Travel & Leisure Index rose as much as 2.4% on Thursday, joining a widespread market rally after the Federal Reserve tightened stance. The subsector made progress despite heightened coronavirus concerns, with stricter rules being imposed on travel from the UK in France and increased requirements for Covid testing from Italy and Greece. The British government meanwhile urged people to socialize less.
Today’s move could indicate that omicron’s impact on travel stocks is waning after falling nearly 7% since the new variant launched in late November. The subgroup remained in the red by around 4% over the course of the year and missed a rally that drove the reference index Stoxx 600 to record levels.
In terms of individual stocks, British Airways owner IAG SA, hotel group Accor SA and TUI AG recorded double-digit percentage decreases in 2021, while the average annual profit of Stoxx 600 members was 19%.
However, as Omicron is discounted and countries adjust to the recent outbreak, the context for travel action may improve. Nannette Hechler-Fayd’Herbe, director of International Wealth Management Investments at Credit Suisse, told Bloomberg Television that it is too early to assess Omicron’s impact on economic growth while it suggests a strong recovery is taking place could.
Troubled travel stocks are Europe’s only losers this year
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