IAG’s market value falls sharply after latest Spanish announcement

At the beginning of this month, we commented that the European tourism sector was waiting on an update to the green list of the United Kingdom in view of the upcoming summer holiday season. Last week, a decision was finally made, as the UK government added the Balearic Islands to the list of safe destinations for its citizens, subsequently offering encouragement in terms of the movement of tourists.

This optimism has been short-lived because, as announced this morning, the Spanish government will require negative PCR test (taken within the past 72 hours) or evidence of a complete vaccination certificate to citizens of the United Kingdom who decide to travel to Spain for their holidays.

This news has been very badly received by the main airlines of both countries, since the holding company formed by British Airways and the Spanish Iberia lost more than 5% in the stock market losing €2.10 per share.

IAG has been one of the companies that has best weathered the storm over the previous few months, thanks to the significant volume of liquidity that it had during the past year. This was in part due to its good position in the sector and the capital increase that it carried out during the month of September. However, its stock market price is still quite punished, despite the good future prospects, thanks to the good pace of vaccination, although the decisions taken by both the British government and the Spanish government are not favoring the definitive takeoff of this company.

If we look at the daily chart, we can see how this company, after marking lows, began an uptrend that has led it to perform two strong sideways patterns of similar price consolidation after experiencing a strong rebound.

The first of these side ranges was surpassed last February, where the price was finally able to overcome the high band of that channel, after exceeding 200 GBX per share and its average of 200 sessions. Following that move, the price again began another sideways move between the March highs and an area near the upper band of the previous channel acting as the main support level.

These sharp declines are leading the price to fight for the lower band of this second side channel, so the loss of this important support level could trigger a new wave of shorts on this instrument.

For the moment, we will have to wait for the measures that are announced by both countries, but a clear upward trigger could be the possible inclusion of the rest of Spain, including the mainland, and new countries to the green list of the United Kingdom in the next revisions of the green list and the advanced vaccination process.

Source: IAG daily chart of Admiral Markets’ MetaTrader 5 platform from March 6, 2020 to June 28, 2021. Held on June 28 at 12:30 p.m. CEST. Note: Past performance is not a reliable indicator of future results or future performance.

Evolution of the last 5 years:

1. 2020: -61,40%
2. 2019: 1,20%
3. 2018: -5,07%
4. 2017: 47,65%
5. 2016: -27,78%

With the Admirals Trade.MT5 account, you can trade Contracts for Differences (CFDs) on IAG and more than 3000 stocks! CFDs allow traders to try to profit from the bull and bear markets, as well as the use of leverage. Click on the following banner to open an account today:

INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:

1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
4. The Analysis is prepared by an independent analyst, Roberto Rojas (analyst), (hereinafter “Author”) based on their personal estimations.
5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
6. Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.