Tourism and travel stocks fell on Monday in the wake of Friday’s jihadist attacks in Paris – as a leading European policymaker warned that the killings could compound the region’s economic woes.
The worst terror atrocity in Europe for more than a decade failed to significantly dent markets overall – with most major indices virtually flat yesterday – but airlines and tour operators were on the back foot. At the same time, oil prices rose on the prospect of heightened Middle East tensions as the French military stepped up the bombing of Raqqa, the Syrian stronghold of Isis.
Most analysts believe the impact of the massacre on stocks will be short-lived. But the European Central Bank vice-president, Vitor Constancio, voiced fears that the “terrible” attacks could shake investor confidence, although he said “markets so far are taking it calmly”. He warned of potential “risk aversion”, adding: “It [the attacks] can compound all the problems that we were already facing.”
European growth slowed unexpectedly between July and September, cementing expectations of more quantitative easing from the ECB next month.
Chris Beauchamp, a senior analyst at IG, said: “Concerns are rife that tightened border controls will lead to lower economic growth, thus prompting the ECB to boost or lengthen its stimulus programme.”
France is the world’s most popular tourist destination and tourism accounts for 7 per cent of its economy. Experts remain worried about the impact of the attacks, which represent the biggest single loss of life on French soil since the Second World War.
The Louvre and attractions such as the Opéra National de Paris reopened yesterday, but Disneyland Paris remains closed until tomorrow and the Eiffel Tower will not reopen until further notice.
Georges Panayotis, president of the hospitality research group MKG, said: “It is going to be very difficult in the coming days. The sector is going to hurt. The entire world is looking at France.”
Shares in the tour operator TUI – already reeling from an attack in Tunisia in June in which 38 holidaymakers were killed – sank 44p or 4 per cent to 1090p. Shares in its rival Thomas Cook fell 5.1p to 101.9p.
Luxury goods stocks such as Kering, the owner of brands including Gucci – also suffered, dropping €1.15 to €1,641. Airlines and travel stocks were sold off, with the Channel Tunnel operator Eurotunnel sinking by 37c, or 3 per cent, to €11.95p. EasyJet recovered from earlier heavy losses to finish 7p lower at 1,783p and Ryanair fell €0.20 to €14.19. But the British Airways owner IAG was hit harder, losing 16.5p to close at 576p.
Gert Zonneveld, a transport analyst at Panmure Gordon, said: “What has happened in the past is that initially there is a sharp drop in bookings as people stop flying. Then the airlines respond by aggressively discounting to get people to change their minds again. There won’t be a lasting impact but there will be in the short term. People will be asking, ‘Do I really want to go to Paris for Christmas?’”
