Shipping Stocks Dive As Stagflation Fears Hit Market; Zim Triggers This Sell Rule

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 more than 8%. 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 7.7%. Matson (MATX) tumbled 11.7%. Star Bulk Carriers (SBLK) dropped 10.7%. And Zim Integrated Shipping (ZIM) dived 14.7%. All four shipping stock saw big volume, indicating institutional selling.

Zim Shipping Triggers Sell Rule

Israel-based container-freight operator Zim Shipping lost 14.7% 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.

Amid the sell signal, the stock slid below its key 50-day moving average, which is another sign of weakness. If Zim stock is able to regain its 50-day benchmark, then another handle entry could eventually come into play.

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Other Shipping Stocks Dive

Golden Ocean skidded nearly 8%, 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 nearly 12% 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 10.7% in big volume, falling below the 50-day line. Following the stock’s weak close, it appears that more weakness is 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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