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Shares in Clarkson have traded as low as 1960p (-36%), as the world’s largest shipbroker warned that both half-year and full year 2018 profits will be “materially below” those of last year on the back of “the challenging environment in shipping and offshore capital markets”. Maritime trade is the life-blood of world economy, so such a dire warning from an influential mover of the world’s goods does not bode well for global growth prospects.
“Lower freight rates within the tanker market”, “a quiet period in sale and purchase activity” and “the fall in the value of the US Dollar” all add to the looming threat that a US-China trade/tariff war could be the least of the world’s economic problems if underlying trade is even weaker than markets believe (Eurozone recovery faltering?).
This bombshell from Clarkson this morning has sunk an otherwise solid share price uptrend, going back to early July, when markets digested Brexit referendum results. It is also in stark contrast to a rather upbeat report just a month ago, announcing a “recovery” for the long-suffering ship hiring sector.
With such a stunning reversal of outlook, is there more bad news for trade on the horizon? While economic growth in China and the recent rally on the commodity markets might have added some much-needed support to the sector, the latest news from Clarkson will do nothing to reassure not just shipping peers, but global markets in general about growth and growth recovery.
The share trade well off their lows, close to their highs of the day. Will they manage to float higher, or sink further by the close?
Artjom Hatsaturjants, Research Analyst, 23 Apr 2018
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