International Consolidated Airlines Group SA (LSE:IAG) and Intercontinental Hotels Group PLC (LSE:IHG) were among the sharpest fallers on the FTSE 100 on Friday, as growing concerns over the global economic outlook weighed heavily on travel and leisure stocks.
IAG, the owner of British Airways and Iberia, dropped 2.5% to 239.6p, while InterContinental Hotels Group fell 1.5% to 7,675p.
The declines came as investors reacted to the escalating trade tensions between the United States and China, with President Donald Trump vowing to press ahead with punitive tariffs that risk triggering a broader slowdown in global commerce.
Analysts warned that the tit-for-tat measures between the world’s two largest economies are likely to dampen consumer and corporate travel spending, particularly on long-haul routes and international accommodation, areas where both IAG and IHG are heavily exposed.
While sectors such as energy and financials also registered losses (BP slipped 1.5% after downgrading its forecasts), the travel and hospitality sector bore the brunt of a market increasingly pricing in a slowdown in global activity.
The latest tariffs (and the 90-day pause on other levies) come at a delicate time for the aviation industry, which is already grappling with higher fuel costs, labour pressures and a recovery in demand that remains patchy across regions.
For IHG, the risks are more closely tied to corporate travel and the business conference cycle, both of which could be vulnerable if economic confidence deteriorates.
Informa PLC (LSE:INF), the exhibitions and publishing group, was also hit, falling 1.8% to 670.6p, reflecting the same concerns around international business travel and events spending.
The moves follow a choppy week for equity markets, as hopes of a trade truce were dashed by increasingly hawkish rhetoric from Washington.
While traders welcomed news earlier this week that tariffs on some international imports would be delayed by 90 days, the broader tone has shifted back towards risk aversion. The imposition of an import tax on Chinese goods still stands.
With little clarity on how far the US administration intends to go (or how China and other trading partners might respond) companies with international exposure, particularly in travel and hospitality, remain in the firing line.