US chem shares plunge for third day amid fears of hard landing
Al Greenwood
05-Aug-2024
HOUSTON (ICIS)–Shares of US-listed chemical companies fell sharply for the third consecutive trading day on Monday amid growing concerns that the US economy could head towards a hard landing and enter a recession.
The following table shows the major indices followed by ICIS.
| Index | 5-Aug | Change | % |
| Dow Jones Industrial Average | 38,703.27 | -1,033.99 | -2.60% |
| S&P 500 | 5,186.33 | -160.23 | -3.00% |
| Dow Jones US Chemicals Index | 860.73 | -19.78 | -2.25% |
| S&P 500 Chemicals Industry Index | 897.91 | -19.43 | -2.12% |
Other market indicators also showed distress.
- The volatility index (VIX) rose by more than 43% to 33.57, reaching its highest level since the COVID-19 pandemic, according to the financial news network CNBC.
- The yield on the 10-year Treasury note fell to 3.8%, its lowest level in more than a year.
- Brent crude oil futures fell farther below $80/barrel.
- Natural gas futures fell farther below $2/MMBtu.
Earlier on Monday, stocks in Asia and Europe were also sharply down, with Japan’s benchmark Nikkei 225 posting exceptionally steep losses.
The financial press concentrated on Japan and highlighted what is known as the carry trade. Under it, investors took advantage of low interest rates in Japan to fund purchases of riskier investments such as US stocks.
The strategy backfired after the Bank of Japan started raising interest rates.
CHEM STOCKS PUMMELED IN PAST THREE
DAYS
The total losses during the
three-day stretch are much worse. The Dow Jones
Industrial Average and the S&P 500 have
fallen by more than 5% since then.
Chemical producers have warned that their performance will get no help from the economy during the second half of the year. They gave up on a recovery, and some pointed to weakness among consumers, particularly those that perform do-it-yourself (DIY) projects on their homes, a segment that is especially sensitive to cost.
Other chemical producers either missed their second quarter guidance, lowered their full year guidance or both.
Since then, US economic statistics have shown more weakening than what was expected in the market.
- The US added fewer jobs in July than most economists expected, and the unemployment rate rose to 4.3%.
- US manufacturing activity shrank for the fourth consecutive month in July, with the purchasing managers’ index (PMI) falling faster than expected.
- June construction spending fell 0.3% from May.
Despite the pessimistic economic news, there were some statistics and trends that were not as poor.
The collapse of the 10-year yield on Treasury notes indicates that the Federal Reserve has kept its benchmark federal funds rate too high for too long.
That increases the likelihood that the central bank could lower rates at a faster pace. They could fall by half a point during its next scheduled meeting in September, and subsequent cuts could take place in November and December.
Meanwhile, following a contraction in June, the US service sector expanded in July, according to the services PMI published by the Institute for Supply Management (ISM).
Services make up 7/8 of the US economy.
The following table shows the US-listed chemical shares followed by ICIS.
| Symbol | Name |
$ Current
Price | $ Change | % Change |
| ASIX | AdvanSix | 24.74 | -2.52 | -9.24% |
| AVNT | Avient | 40.395 | -2.435 | -5.69% |
| AXTA | Axalta Coating Systems | 33.84 | -1.37 | -3.89% |
| BAK | Braskem | 5.45 | -0.33 | -5.71% |
| CC | Chemours | 18.565 | -1.975 | -9.62% |
| CE | Celanese | 125.73 | -5.82 | -4.42% |
| DD | DuPont | 77.15 | -1.97 | -2.49% |
| DOW | Dow | 50.52 | -1.49 | -2.86% |
| EMN | Eastman | 94.16 | -3.33 | -3.42% |
| FUL | HB Fuller | 77.3 | -3.92 | -4.83% |
| HUN | Huntsman | 21.27 | -1.21 | -5.38% |
| KRO | Kronos Worldwide | 10.2 | -0.64 | -5.90% |
| LYB | LyondellBasell | 91.93 | -2.46 | -2.61% |
| MEOH | Methanex | 40.22 | -2.81 | -6.53% |
| NEU | NewMarket | 530.05 | -20.86 | -3.79% |
| NGVT | Ingevity | 35.52 | -5.68 | -13.79% |
| OLN | Olin | 40.835 | -2.135 | -4.97% |
| PPG | PPG | 120.02 | -3.44 | -2.79% |
| RPM | RPM International | 114.305 | -3.465 | -2.94% |
| SCL | Stepan | 73.33 | -4.73 | -6.06% |
| SHW | Sherwin-Williams | 340.505 | -6.745 | -1.94% |
| TROX | Tronox | 12.69 | -0.62 | -4.66% |
| TSE | Trinseo | 2.375 | -0.215 | -8.30% |
| WLK | Westlake | 132.31 | -4.75 | -3.47% |
Focus article by Al Greenwood
(recast with closing prices for indices and shares)
Additional reporting by Jonathan Lopez
Thumbnail image shows a stock exchange. Image by Costfoto/NurPhoto/Shutterstock
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