Bad for tanker owners, good news for operators of bulkers and containerships.
That was the conventional wisdom heading into Tuesday's US presidential election, and it played out in how investors laid their money on New York-listed shipping stocks as they anticipated a win by Democratic challenger Joe Biden.
Most US-listed tanker owners ran in the red, with Teekay Tankers dropping 4%, Diamond S Shipping and Tsakos Energy Navigation both 3%, Ardmore Shipping and Nordic American Tankers 2%, and Ardmore Shipping and International Seaways falling a fraction of 1%.
Meanwhile, the day's winners included Eagle Bulk Shipping and Scorpio Bulkers with 4% gains in the dry cargo sector, and containership owners Danaos Corp and Costamare logging gains of 5% and 3%, respectively.
Uncertainty
The action appeared to reflect investor expectations of a Biden win, which remains likely but uncertain on Wednesday as vote counting continues with several states still too close to call.
The diverging outlooks for the sectors turn on analyst views that a Biden presidency would be less favourable to the traditional energy sector in petroleum products and the shipowners who carry them.
There is also a perception that continued Trump sanctions against Iran and Venezuela would fuel volatility and earnings in those markets.
The converse is true in dry bulk and the container trade, with an expectation that a Biden administration would curtail Trump's protectionist tariffs and provide a better climate for global trade.
"That certainly appears to be the case. I can see the argument for dry bulk and containerships to outperform while tankers underperform in a Biden administration," Jefferies lead shipping analyst Randy Giveans said in assessing Tuesday's results.
"I don't think the results will be finalised [immediately], so I think any trading on potential outcomes will continue in the coming days."
Giveans' prediction may be coming true quickly, with shipping stocks in all sectors heading into red numbers in early trading on Wednesday in New York, even as the Dow Jones Industrial Average moved higher.
