Shipping stocks are soaring Monday, led by a 56-percent gain by TOP SHIPS Inc TOPS. Here’s a look at what may be driving the big gains.
The Trump Administration on Oct. 17 announced the U.S. would be withdrawing from the Universal Postal Union, a treaty among 192 nations that helps set international postage rates. The decision to withdraw seems to be aimed at China as part of the ongoing trade war.
Why It’s Important
Traders may see the decision to withdraw from the 144-year-old UPU as a bullish decision for international shipping rates.
Long-time shipping stock traders know any fundamental news coupled with the extremely low floats and relatively large short positions in popular shipping stocks has been a recipe for extreme volatility.
According to Yahoo Finance, Top Ships currently has a float of just 16.9 million shares and a short percent of float of about 7.9 percent.
Other shipping stocks are on the move Monday:
- Diana Containerships Inc DCIX is up 23.9 percent.
- Sino-Global Shipping America, Ltd. SINO was up 17.6 percent.
- Globus Maritime Ltd GLBS was up 13.5 percent.
- DryShips Inc. DRYS was up 4.6 percent.
- Seanergy Maritime Holdings Corp. SHIP was up 7.9 percent.
- Euroseas Ltd. ESEA was up 56.3 percent.
Traders will be watching to see if Monday morning’s surge in shipping stocks has legs or if the flood of buying volume is only temporary.
Traders will also be watching the Baltic Dry Shipping Index for signs that Trump’s actions are actually having the impact on shipping rates that some are anticipating. The BDI traded higher by 0.7 percent Monday morning.
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