Shipping and energy stocks experienced further gains on Friday after the United States and the United Kingdom conducted airstrikes on Houthi targets in Yemen. The attacks contributed to an increase in crude oil prices, fostering expectations that shipping rates will continue to rise. German shipping company Hapag-Lloyd AG saw a rise of up to 4.8%, while A.P. Moller – Maersk A/S gained up to 3.9%. Oslo-based Frontline Plc surged more than 5%, and Danish peers DSV A/S, D/S Norden A/S, and DFDS A/S also witnessed advances. In US premarket trading, ZIM Integrated Shipping rose by 5.8%.
Earlier in the day, Asian shipping names experienced significant surges, with Korea Line Corp. jumping as much as 24%.
Many of these shipping stocks are on track for a second consecutive month of gains due to the anticipation that lengthy detours to avoid Red Sea rebel attacks will elevate freight rates. The Houthis initiated attacks on ships in mid-November, ostensibly in support of Hamas, and have asserted that they will continue until Israel ceases its actions in Gaza.
Additionally, shares in European oil majors like Shell Plc and TotalEnergies SE received a boost as Brent crude futures surpassed $80 a barrel for the first time this year.
Bloomberg Intelligence analyst Lee Klaskow noted, “The ripple effects from increased geopolitical tensions in the Red Sea are driving shipping rates and valuations up.”
Dry-bulk freight rates, encompassing large shipments, including commodities, have surged by an average of 75% in 2024, potentially enhancing shippers’ earnings. Hapag-Lloyd shares have risen almost 20% this year, while Maersk is up about 9%. Klaskow emphasizes that the sector still trades at a discount compared to the broader markets.
However, some market participants view the Red Sea disruption as temporary. Joachim Klement, a strategist at Liberum, stated, “As such, we don’t expect a lasting impact on inflation or a major long-term shift in earnings for logistics and shipping companies.”
