Insurance, construction stocks falling before Hurricane Florence hits

Reuters / Anna Driver

• Equity investors are scrambling to position themselves
  ahead of Hurricane Florence’s expected landfall on Friday
  morning.
• Insurance and construction-material stocks have been
  the worst hit so far, while companies specifically tied to the
  roofing industry have climbed.
• Oil remains a wild card. While it’s historically spiked
  amid natural disasters, some experts have noted that there
  aren’t any major refineries in Hurricane Florence’s
  path.

With Hurricane Florence barreling
down on the Carolina coast, investors are scrambling to get
ahead of the inevitable market fallout.

As soon as it became clear that the storm was bound to reach the
US mainland, traders started fleeing their holdings in companies
and industries seen as particularly exposed to the storm.

That’s certainly been true of insurance and construction-material
stocks. Both are heavily exposed corners of the market that have
absorbed deep losses over the past three trading days.

Here’s a breakdown of the pre-hurricane market damage:

Insurance

Investors are likely anticipating large payouts from the insurers
to policyholders in areas affected by the hurricanes. A sudden
glut of such payments can eat into an insurance company’s bottom
line.

An index of insurers in the S&P 500 has slipped 1.3%
over the past three days, with 19 of 23 companies declining
during the period. Notable movers have included:

Cement and building materials

Traders are bracing for weakening sales from manfacturers of
construction materials, specifically cement. If the hurricane
causes widespread damage, new home construction will take a hit,
at least in the short-term before the rebuilding commences.
Notable movers over the past three days have included:

Roofing stocks have rallied, and oil could be next

But it hasn’t been all bad for stocks. Companies closely linked
the business of roofing have climbed since news of the hurricane
started gathering steam.

That includes Quanex Building Products (+14% over
three days), Beacon Roofing Supply (+10%) and
Owens Corning (+5.2%).

The wild card now will be oil, which should theoretically see its
price increase as supply weakens. But while the resource spiked more than 2% on
Tuesday, some experts have downplayed the effect of the
hurricane, since no major oil refineries are in the path of
the storm.

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