Travel and cinema stocks leap as England lockdown and quarantine eased

Travel and leisure stocks leapt on Tuesday, after the UK government confirmed an easing of travel quarantine rules and lockdown restrictions in England.

Airlines, hotels, cinema chains, cruise, bus and rail firms were among the biggest risers on the London Stock Exchange as investors reacted to the more promising outlook on top of vaccine hopes.

Quarantine periods for new arrivals in England will be slashed from a fortnight to as little as five days if they pay for a private test and have negative results. The UK department for transport announced the changes will take effect on 15 December, after months of intense lobbying by the travel industry over the heavy hit to passenger numbers from the strict rules.

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Shares in travel and tourism giant Tui (TUI.L) skyrocketed 10.2% in early trading on the news, leading gains on the FTSE 250 (^FTMC) index. Cruise firm Carnival (CCL.L) was the second biggest riser, up 5.8%.

UK and US cinema chain Cineworld (CINE.L) saw the third biggest gains, up 5.5% as the government confirmed English cinemas can reopen next week. Stocks had surged higher on Monday as it announced it had secured a £336m ($450m) debt lifeline.

Meanwhile rail and bus group FirstGroup (FGP.L) rose 5.2% as curbs on non-essential travel were dropped.

On the FTSE 100 (^FTSE), plane engine-maker Rolls-Royce (RR.L) saw the largest gains on hopes of a resurgence in demand from its airline clients, jumping 4.8%. British Airways, Aer Lingus and Iberia owner IAG (IAG.L) saw the second highest gains on the index of Britain’s top 100 listed companies, up 4.5%, while budget airline EasyJet (EZJ.L) on the FTSE 250 was up 5%.

Michael Hewson, chief market analyst at CMC Markets UK, noted not only eased quarantine rules but also vaccine news continued to boost travel stocks.

“The usual suspects appear to be leading the gainers on the back of the more optimistic outlook with IAG and Rolls Royce continuing their almost symbiotic moves up and down as vaccine news ebbs and flows.

On quarantine, he added: “This has been welcomed by the travel sector as being long overdue, sending the likes of Air France, Lufthansa and EasyJet higher as well.”

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