What happened
Cruise tourism stocks Royal Caribbean (RCL 2.77%), Carnival Corporation (CCL 0.60%), and Norwegian Cruise Line Holdings (NCLH 0.11%) surged out of port Tuesday morning, and continue to sail ahead in afternoon trading. As of 12:20 p.m. ET, Royal Caribbean stock is up 3.2%, Carnival shares have gained 5.6%, and Norwegian Cruise is leading the pack higher with a 5.6% gain.
And you can probably thank Vladimir Putin for all of the above.
So what
Last month, if you recall, worries over an imminent Russian invasion of its neighbor Ukraine "helped" to torpedo cruise stocks that were already taking on water in the face of then-rising omicron cases and rumblings of interest rate hikes at the Federal Reserve.
Today, however, the opposite is happening.
This morning, Russian President Vladimir Putin held a joint press conference with German Chancellor Olaf Scholz, at which Putin once again denied that Russia is planning to invade its neighbor, and furthermore promised to "put forward proposals on a negotiating process that should result in an agreement ensuring equal security for all." And in what might be designed as a demonstration of good faith, Russian Ministry of Defense spokesperson Maj. Gen. Igor Konashenkov stated that at least some of the 130,000 Russian troops massed on Ukraine's border have been ordered to return to their bases instead.
Why is this relevant to cruise tourism stocks? Basically, because Russia has been threatening invasion of Ukraine on multiple fronts -- including by sea. Russian warships currently holding live fire exercises along Ukraine's coast in the Black Sea is not something conducive to encouraging cruises in that particular body of water. And if actual war breaks out, it's all but certain that any Black Sea cruises on the schedule will be canceled.
Now what
Now, the Black Sea isn't a huge market for cruising, but all three of the major cruise lines do operate in the Black Sea market. For this reason, a renewed hope that war will not break out between Russia and Ukraine is good news for all three tickers.
Furthermore, because you can assume that war in the Black Sea might disrupt vacation planning even as far west as the Atlantic, the knowledge that tempers may be cooling down should help ease fears about the cruise business in Europe in general. So long as this good news holds, I'd expect it to have at least a modestly positive effect on cruise stocks.