US airline shares continue to reel after Trump travel ban

Shares in US airlines were near the bottom of the pile again at the start of the week, following the new president's executive order, signed on 27 January, temporarily suspending the refugee admissions programme, imposing a temporary ban on refugees travelling from Syria specifically and on the entry of so-called 'aliens' from seven countries.

The temporary suspension of the refugee admissions program would extend for 120-days after which time it would be reinstated for those countries which were deemed to meet the possible additional procedures necessary to ensure national security, according to a text of the executive order supplied by the White House to the New York Times.

The same would apply to Syria.

Another 90-day temporary ban on the entry into the country of so-called 'aliens' was also be put in place.

Multiple reports over the weekend following the executive order indicated there was confusion regarding whether the bans would extend to those who had already been issued visas but were travelling from one of the countries listed by the Department of Homeland Security (two days later, on Sunday, it transpired it would not).

US official said 109 travelers had been detained at various US airports, with some of those having later been allowed to enter the country.

Commenting over the weekend, John McCain, one of two US Senators for Arizona, said: "Our government has a responsibility to defend our borders, but we must do so in a way that makes us safer and upholds all that is decent and exceptional about our nation.

"It is clear from the confusion at our airports across the nation that President Trump’s executive order was not properly vetted. We are particularly concerned by reports that this order went into effect with little to no consultation with the Departments of State, Defense, Justice, and Homeland Security. [...]."

As of 1506 GMT, a sub-index of Airline stocks was down by 2.96%, with stock in Delta Air Lines off by 3.22% and American Air Lines retreating 5.32%.

From an investment perspective, some analysts mused aloud on Monday whether the weekend's events were an indication of what might lie ahead.

"Concerns [have risen] that the US may become a much less predictable place to do business.

"For all the early optimism about the so called “Trump trade” it would appear that for some the rose tinted glasses may well be starting to fall away as they digest this new entirely predictable turn of events," said Michael Hewson, chief market analyst at CMC Markets UK.

For his part, Michael Every, Head of FMR Asia Pacific at Rabobank, said: "For markets, the most important thing to glean from this latest barrage of Trump news is not just that, as Bloomberg states, “Confusion Grips Airports as Courts Limit Trump Travel Curbs”, nor that the new administration seem either accidently or deliberately chaotic, which is usually a negative for sentiment. Even arguments for and against the executive order itself are secondary.

"The real underlying issue must surely be if the market’s belief - and continued pricing for - a politically liberal, economically neoliberal global economy regardless of who is in office is still appropriate."