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Shipping stocks were under pressure Wednesday as global stagflation worries appeared to hit the industry.
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On Wednesday, the Organization for Economic Cooperation and Development cut its global growth estimates to 3% in 2022, down from its 4.5% estimate. The OECD noted the invasion of Ukraine and China’s Covid-19 shutdown as key factors.
On Tuesday, the World Bank slashed its 2022 GDP forecast from 4.1% to 2.9%. Also Tuesday, Treasury Secretary Janet Yellen said the U.S. economy is likely facing a prolonged period of high inflation.
Some of the groups stocks may be falling on news that Russia-Turkey talks ended without a significant breakthrough toward creating a pathway to export grain from Ukraine across the Black Sea.
Today, the shipping industry group tumbled around 7.5% midday. Its sell-off marked a bearish day for an industry group that had climbed to No. 10 out of 197 groups and included a few of those companies in the IBD 50.
Golden Ocean (GOGL) slid 6.6% midday. Matson (MATX) tumbled more than 10%. Star Bulk Carriers (SBLK) dropped 10.5%. And Zim Integrated Shipping (ZIM) dived more than 12%. All four shipping stock saw big volume, indicating institutional selling.
Zim Shipping Triggers Sell Rule
Israel-based container-freight operator Zim Shipping lost more than 11% midday Wednesday in heavy turnover. Earlier this week, Zim shares broke out past a 68.80 buy point in a cup with handle, according to IBD MarketSmith chart analysis. But that breakout has now failed, with the stock down more than 7% below the correct buy point.
Despite the sell signal, the stock is trying to stem today’s slide around its key 50-day moving average. If Zim stock is able to find support, then another handle entry could eventually come into play.
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Other Shipping Stocks Dive
Golden Ocean skidded more than 6% midday, trading at its lowest level since mid-May. Shares remain above their 50-day line, so they aren’t in imminent danger of a sell signal. Still, Wednesday’s action is worth monitoring. Shares did fall below the 21-day exponential moving average.
Matson stumbled more than 10% Wednesday. Shares are breaking down below their long-term 200-day line. Matson had already triggered a sell signal on April 4 when it plunged through its 50-day moving average. Shares are more than 30% off their 52-week high.
Star Bulk Carriers slid around 10.5% in big volume, falling below the 50-day line in midday action. If the stock is unable to recover this 50-day line by the close, then more weakness would be likely.
Shares are about 30% above a 21.73 cup-with-handle entry, so investors with that type of profit cushion could decide to wait until the end of the week before making a decision.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on IPO stocks and the stock market.
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