Market’s sunny mood returns as focus switches to lockdown lifting, and Carnival clarifies restart plans

“After an iffy few days for the markets, mainly linked to US sabre rattling towards China, Tuesday saw a return to more positive sentiment,” says AJ Bell Investment Director Russ Mould.

“Following a solid showing on Wall Street and in Asia overnight, the FTSE 100 was up markedly as it looked to mount another assault on the 6,000 mark to which it ascended a little under a week ago.

“As the UK reveals plans to exit lockdown and as other countries already begin to relax measures, attention is turning once again to a rebound in economic activity, with oil prices also bouncing on hopes for an associated boost to demand."

Carnival

“Transitioning to a new normal is likely to be more difficult for some businesses than others. Less than 24 hours after announcing plans to restart cruises in the US in August, cruise operator Carnival is forced to row back a bit – saying it will only do so if given the green light by relevant authorities.

“The company also says it would operate in line with social distancing guidelines. Even if its runs its ships well below capacity, this seems like a big ask.

“Navigating a route back to calmer waters is likely to be an extreme challenge for Carnival, reflected in the extension of a pause in its P&O subsidiary’s cruises in Australia and New Zealand until the end of August. A decision which means another round of costly refunds.

“Cruises have been at the sharp end of this crisis, both because of the pause in travel and tourism and because cruise ships themselves have seen significant coronavirus outbreaks.

“These factors seem likely to depress demand as people, particularly the older demographic which still dominate passenger lists, are wary of being in close quarters with other people for an extended period of time.

“A longer term impact on appetite for this type of holiday sits uncomfortably with the high fixed costs associated with the maintenance of Carnival’s fleet of vessels. And if all that wasn’t enough the company’s response to disease outbreaks on its ships is under investigation by the US Congress.”

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