Cathay Pacific Airways' stock soared 5.08% during intraday trading on Wednesday, as aviation stocks rebounded collectively.
The surge comes after Iranian President Pezeshkian stated that Iran is prepared to end its current retaliatory actions against U.S. and Israeli aggression, provided it receives concrete guarantees against future attacks. This development signals a potential easing of Middle East geopolitical tensions, which have been driving oil prices higher and negatively impacting airline stocks due to increased fuel costs.
Analysts note that should the Middle East situation improve, the negative sentiment suppressing airline stocks and pushing up oil prices is expected to ease. However, they caution about the potential erosion of profits from sustained high oil prices in the medium term, with fuel surcharges anticipated to see a significant increase in April.
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