Here’s Why the IAG Share Price is in a Freefall

The IAG share price has experienced a substantial selling pressure as the Delta variant continues to cause havoc globally. The stock ended last week at 167p, which was slightly above the weekly low at 164.90p. Other airline shares like EasyJet, Wizz Air, and Ryanair have also struggled.

IAG news. The British Airways owner will be in focus as the UK moves to fully reopen its economy following months of lockdown measures. The country will from today lift its mask mandates and restrictions on businesses. In theory, this should be a good thing for IAG share price since it will mean more travel to and from the UK. 

However, there are concerns that the reopening will likely lead to more cases. Indeed, a scientist behind the country’s lockdown said that the number of new cases could rise to 200k per day.

Meanwhile, other countries are recording more Covid cases, posing risks to the aviation industry. For example, Thailand reported record new infections for the fourth day in a row. Similarly, in Australia, the number of cases kept rising, pushing Victoria to extend its lockdowns. At the same time, France has not ruled out the re-imposing of curfew measures to curb the spread after the country recorded more than 12,500 new cases on Sunday.

The IAG share price will also be in focus ahead of the latest United Airlines earnings set for tomorrow. The earnings are expected to show that the company recorded higher sales in the second quarter helped by local demand. Last week, Delta Airlines posted a $652 million profit, helped by the government’s aid. It also said that it will be profitable in the second quarter. These results are important because they will give investors a clear picture of the aviation industry.

IAG share price forecast

In my last article on IAG, I warned that the shares would likely remain weak thanks to the break and retest price action that happened. This happens when a stock makes a breakout and then it retests the previous support or resistance levels. 

The shares have also moved below the 200-day and 50-day exponential moving averages (EMA) and the lower side of the rising wedge. Therefore, in my view, I suspect that the shares will keep slumping as bears target the next key support at 150p. This view will be invalidated if the price moves above the support of the rising wedge at 200p.

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IAG stock chart

IAG share price

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