Travel stocks drag Europe lower after UK’s quarantine move on Spain

European equities fell for a second day as new virus data suggested setbacks in global efforts to contain the coronavirus pandemic. The Stoxx Europe 600 index closed down 0.3 per cent, with travel and leisure shares and lenders leading declines. Spain's Ibex 35 was the worst-performing benchmark, 1.7 per cent lower, after fresh outbreaks prompted the UK to impose a quarantine on travellers returning from the country.

Equities in the region retreated from their crisis highs last week amid concerns over global trade as Sino-US relations deteriorated, and worsening outbreaks in some of Europe’s key export markets.

Dublin

The Iseq was down 0.6 per cent at 6,155, roughly in line with the rest of Europe. The main drag was Ryanair, which fell 3.7 per cent to €10.50 after reporting a first-quarter loss of €185 million compared with net profit of €243 million for the same period last year. The airline described the prospect of a second wave of Covid-19 as its "biggest fear" right now.

Shares in Swiss-Irish baked goods specialist Aryzta fell by 3.4 per cent to 52 cent, giving up some of the ground made last week on foot of news the group is likely to be sold. The States's two main banks were also softer as countries and economies mulled the prospect of a second wave. Bank of Ireland was down 1.3 per cent at €1.77, while AIB down 2.5 per cent at €1.18.

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PaddyPower Betfair owner Flutter was down marginally at €125.55 but has been stronger in recent weeks as the sporting calendar resumes. Packaging company Smurfit Kappa was up 1.9 per cent at €27.52.

London

UK shares slipped on Monday as a two-week quarantine on all travellers from Spain hammered travel and leisure stocks. A rally in miners helped the blue-chip index cut some session losses.

A 5.9 per cent plunge for Aer Lingus and British Airways owner IAG saw the stock experience its worst day in a month, while London-listed shares of Europe's biggest holiday company, TUI, tumbled 11.4 per cent after it decided to cancel all holidays to mainland Spain through August 9th.

EasyJet and Carnival were also among the biggest decliners on the FTSE 250, with the wider travel and leisure sector losing 2.9 per cent.

The mid-cap index was off 0.6 per cent with Britain saying it was also closely watching rises in coronavirus cases in other European destinations such as France and Germany. "[This] raises the potential for earnings estimates to be downgraded once again for travel-related industries . . . and effectively derails their strategy for clawing back some of the losses experienced earlier this year," said Russ Mould, investment director at AJ Bell.

Europe

Europe’s main stock markets were still hurting after their first weekly drop in four even as the euro’s fastest gains since early 2016 took it past $1.17. Major country benchmarks diverged in their recovery, with Germany’s Dax outpacing Britain’s FTSE 100 and France’s CAC 40.

Software firm SAP rose 2.7 per cent after announcing plans to spin off its Qualtrics unit and boosting full-year guidance. Insolvent payments firm Wirecard rose 16 per cent after its administrator said late on Friday that 77 parties had shown interest in its core business.

New York

US stocks rebounded as investors shrugged off surging Covid-19 cases and US-China tensions, betting instead on more stimulus to revive a battered domestic economy ahead of a week packed with quarterly earnings reports.

Still, safe haven assets were in demand with gold prices at record levels amid concerns over a diplomatic row between the United States and China, escalating Covid-19 cases in southern and western US states and an unexpected rise in US jobless claims last week.

Apple, Amazon, Facebook and Alphabet were up by between 1 per cent and 1.9 per cent, and were among the top driver of the S&P 500 and Nasdaq. The four FAANG companies are among the 189 S&P 500 firms expected to report results this week.

"It's probably going to be the biggest week of the year in terms of what people are expecting due to the impact from the coronavirus outbreak," said Brian Pirri, principal at New England Investment and Retirement Group in Boston. – Additional reporting: Bloomberg/Reuters