Europe starts reopening for business
Fiona Cincotta April 16, 2020 10:14 AM
European shares are doing slightly better than the FTSE this morning as some euro-zone countries start reopening for business.
European shares are doing slightly better than the FTSE this morning as some euro-zone countries start reopening for business. Germany, which went into lockdown slightly before the UK, will allow shops of a certain size to reopen from next week but keep social distancing in place. Schools there will restart from 4 May but worryingly for the leisure industry bars, cafes, cinemas and music venues will remain closed until the end of August.
For many tourist, travel and entertainment companies now, the key question is if they can either shrink to fit reduced demand or if the government injections will be enough to keep them afloat for what could be months rather than weeks.
EasyJet came out with the most optimistic view yet saying that it can remain cash-positive even if its fleet is grounded for nine months and that it would look for additional funding if the grounding lasts longer than that. If need be, its CEO said, the company can reduce its fleet through leases and sell a number of old airplanes. The 7.6% bounce in its share price helped to also lift cruise operator Carnival and British Airways parent IAG.
Other firms are hanging by a thread like Mitchells & Butlers, the owner of O’Neill's pubs and Harvester restaurants, which managed to postpone its debt obligations until May 15 while furloughing almost all staff. Germany’s example makes it clear that the company may need an extension far beyond that date before it is likely to reopen.
Netflix to report results
In amidst the gloom that is the US earning season Netflix is expected to provide some positive news later today as over the last few weeks large numbers of home bound viewers took to the streaming provider with gusto. The firm’s shares hit an all-time high Wednesday raising its value above that of Disney. With cinemas likely to remain closed for a while longer in Europe and the US, Netflix will continue to remain in high demand.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.