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easyJet and IAG set to trade higher over the long-term

easyJet and IAG shares have taken a beating this year, with the coronavirus pandemic grounding the airline industry. But with lockdown measures being lifted, both company’s are expected to see shares rebound in 2021.

easyJet Source: Bloomberg

easyJet and British Airways owner IAG have seen their shares take a beating this year, with the coronavirus pandemic grounding the airline industry. But with lockdown measures being lifted, both companies are expected to see shares rebound in 2021.

Both easyJet and IAG have been hit hard by the Covid-19 outbreak, with two stocks down 44% and 60% year-to-date. However, since May both stocks have begun to claw back some of those losses, with investor sentiment improving after European airlines are expected to return to the skies in July.

easyJet closed 1.25% lower at 787p per share on Tuesday, while IAG finished the session 2.74% in the red at 251p.

Spain to allow UK tourists without quarantine

In a rare bit of good news for European airlines, the Spanish foreign affairs minister told British travellers that they will be allowed to enter the country without having to self-isolate for two weeks.

European airlines will be hoping that the news will prompt British citizens, particularly the 400,000 that have second homes in Spain, to visit this summer.

However, if British tourists do decide to fly to Spain they will still need to self-isolate for 14 days when they return home under new guidelines from the UK government.

IAG, easyJet and Ryanair have already launched legal action over the UK government’s quarantine rules, with the three airlines arguing that the policy will deter travellers from taking flights and derail any hopes of a recovery for the travel industry.

Earlier this month, a Ryanair spokesperson said that the ‘measures are disproportionate and unfair on British citizens as well as international visitors arriving in the UK’.

‘We urge the government to remove this ineffective visitor quarantine which will have a devastating effect on UK's tourism industry and will destroy even more thousands of jobs in this unprecedented crisis,’ the airline added.

FTSE 100 rallies back into resistance zone

The FTSE 100 has managed to regain ground since Friday's losses, with the index rising back towards a zone of resistance, according to Josh Mahony, senior analyst at IG.

That 6300-6320 region has capped price action over the past week, bringing a consolidation phase after the mid-June surge seen from the 15 June lows, he said.

‘With the stochastic oscillator tightening into a symmetrical triangle alongside this consolidation in the price action, we are awaiting the next breakout from this zone,’ Mahony added.

‘With that in mind, the bullish continuation signal comes with a break through the 6320 peak from Friday. Until then, be aware that the current rally is at risk of another turn lower to continue this consolidation phase.’

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