What happened
Shares of Melco Resorts (MLCO -1.36%) jumped as much as 13.5% in trading on Tuesday after China announced it was reducing some COVID-19 restrictions. Shares slid slightly from their highs by the afternoon and were up just 8% at 2:30 p.m. ET.
So what
China's strict COVID-19 restrictions are starting to ease in some of the country's largest cities, and that's seen as a good thing for gambling stocks in Macao. Case numbers in Shanghai have fallen, and restrictions on dining and school have been reduced, so it's possible that travel will open up to Macao relatively soon.
The stock move wasn't driven by news of an actual increase in gambling or travel, but rather, speculation that revenue will pick up. Keep in mind that today's bounce can easily reverse if lockdowns take place again.
Now what
Gambling in Macao is back to anemic levels, falling 44% from a year ago and nearly 90% from pre-pandemic levels. Any ray of hope is seen as a good sign for gambling stocks at this point -- that's how dark it's gotten for the industry. I'm not sure this is the bullish news the market thinks it is and will be waiting for a more complete recovery to jump into Macao's gambling stocks.
