Why ASX 200 travel shares are having a bumper day

A woman holds her arms out as a plane flies overhead

The S&P/ASX 200 Index (ASX: XJO) is up more than 1% right now, but the ASX 200 travel shares are having an even stronger start to the week.

Looking at the gains, the Flight Centre Travel Group Ltd (ASX: FLT) share price is up more than 8%, the Corporate Travel Management Ltd (ASX: CTD) share price is up over 3%, the Webjet Limited (ASX: WEB) share price went up more than 5% and the Qantas Airways Limited (ASX: QAN) share price is up over 2%.

An even stronger reaction has been for the Helloworld Travel Ltd (ASX: HLO) share price, which is up around 12%.

What’s happening with the ASX 200 travel share?

There is an ongoing global recovery for the worldwide travel industry, with investors bidding up prices.

Internationally, global travel shares saw a large rise of share prices on Friday. For example, the United Airlines Holdings Inc (NASDAQ: UAL), share price increased around 8%, the Booking Holdings Inc (NASDAQ: BKNG), the Hilton Hotels Corporation (NYSE: HLT) share price rose 4.6% and the Marriott International Inc (NASDAQ: MAR) share price increased 5.3%.

Prior to some hopeful healthcare news, which I’ll get to later, the ASX 200 travel industry was already seeing a recovery, which was getting stronger as the months go on.

For example, Webjet said at the end of August that vaccine rollouts were underway and directly correlated to travel recovery. Management said the USA and UK vaccine rollout programs are well advanced, with the North American and European markets starting to open up. It also said that vaccine rollouts were expected to help in the 2022 calendar year, particularly in the US and UK, although the timing of removal of border restrictions is still uncertain.

ASX 200 travel share Corporate Travel said that it’s seeing momentum building in the northern hemisphere, with July delivering a record revenue result during this COVID era. The company also noted that domestic travel was quickly recovering in the UK, and the trend is expected to accelerate across Europe after the summer holiday period.

The “lucrative” trans-Atlantic and intra-European segments are opening or were expected to re-open in the first half of FY22.

Healthcare news

The ASX 200 travel share industry investors may also be taking into account an announcement regarding a potential COVID-19 treatment.

According to global media, such as reporting by the BBC, a new drug for treating COVID cuts the risk of hospitalisation or death by around half. It was reported that the tablet, called molnupiravir, was given to patients twice a day that had recently been diagnosed with the disease. This could be the first authorised oral antiviral medication for COVID-19.

The BBC reported that:

US drug-maker Merck said its results were so positive that outside monitors had asked to stop the trial early.

It said it would apply for emergency use authorisation for the drug in the US in the next two weeks.

Merck’s vice-president of infectious disease discovery, told the BBC: “An antiviral treatment for people who are not vaccinated, or who are less responsive to immunity from vaccines, is a very important tool in helping to end this pandemic.”

Time will tell how the ASX 200 travel share responds to this over the longer-term.

The post Why ASX 200 travel shares are having a bumper day appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Helloworld Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, Helloworld Limited, and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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