Hospitality and Leisure stocks tumble ahead of Government Covid announcement

Danni Hewson, AJ Bell Financial Analyst, comments on market falls for hospitality and leisure stocks ahead of the expected extension of coronavirus restrictions in England.

“It’s just four weeks, but for some businesses it will be four weeks too many especially as there are no guarantees 19 July will really bring an end to restrictions. There are many reasons to delay, but delay will bring hardship for some, ruined plans for others and the end of the line for a few. My first five jobs were in the hospitality sector, it’s peaks and troughs made it ideal to amass some cash in long student holidays, but the most important peak for much of the industry is now, so losing the next four weeks is particularly cruel.

“Both the FTSE 100 and 250 tell the tale. Whitbread, The Restaurant Group and Wetherspoons have all tumbled. With big soirees and June wedding parties seemingly off the cards Primark’s owner Associated British Foods finds itself among the fallers as does the Intercontinental Hotels Group. And with current lockdown measures at home standing still, investors seem to have given up on the likelihood of foreign travel opening up in the short term knocking back Wizz Air, EasyJet, IAG and Rolls Royce Holdings.

“There are already calls for changes to the furlough scheme to be delayed and the scheme itself to be extended into next year, plus a continuation of business rate relief. But even if extra help is given there will be those who will miss out as so many sectors will be indirectly affected by the changes. Make no mistake, even for some businesses that have reopened, recovery feels a bit like a carrot being dangled on a stick that keeps being pulled just out of reach.

“But no one wants the train we are all on to be thrown into reverse, that would have a hugely detrimental impact to the country’s psyche. And so we wait for the inevitable podium moment and hope it’s the last and that this time support measures come immediately and not after anxious days and weeks for those left waiting once again.”

These articles are for information purposes only and are not a personal recommendation or advice.

The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.